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A taxing issue for non-residents in Spain

PUBLISHED: January 24, 2013 at 2:00 pm  •  LAST EDITED: January 24, 2013 at 2:00 pm
Lead2, National News  •  33 Comments


A taxing issue for non-residents in Spain

• Non-resident property owners need to be aware of how much tax they owe


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NON-RESIDENT property owners are being warned they are still required to pay tax on their home even if it is not earning them an income.

The Spanish tax authorities are clamping down on those who have failed to pay Deem Income Tax – dubbed the ‘enjoyment’ tax – over the last four years.

Letters are being sent to non-residents who have not paid the charge, along with fines for late payment.

“Unfortunately, ignorance of the existence of this tax does not excuse you from paying it,” said Jose Lopez Avalos, from Manilva Solicitors.

“It is understood that non-resident clients are benefitting through ‘enjoyment’ of the property, and this is taxable.

“It means the taxman not charging tax on real income such as rent, but on a deemed income from the property.

The tax is used to fund airports and motorways used by non-residents in order to to enjoy their properties.”

He added: “The tax is not usually high so it is worth paying on time to avoid the risk of being fined.”

Non-residents can pay the tax using Form 210, available from the Spanish tax office website www.aeat.es.

Payment for the 2012 tax year must be made before the end of 2013.

For more info contact Manilva Solicitors on 952 901 225 or [email protected]

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Reader Comments »



peter

January 24th, 2013 2:34 pm

Well if the Spanish government reformed it’s tax system and actually sent out bills they might collect more tax. We are in the 21st century and to rely on tax being paid by gazing into a crystal ball is ridiculous. I hadn’t received any bills for my rubbish so I asked at the town hall shake of the head and told to enquire at the bank no joy there and told to ask town hall. Finally I went to the local office of APAT surprise surprise yes we have 3 bills here for you…medieval! Spain get your country in order if you want people to pay taxes, relying on people who want to pay their taxes having to go from office to office to track down a bill is no way to run a modern country.

ian R

January 24th, 2013 4:22 pm

Peter,

You are spot on, they seem to think tax will be collected by osmosis

Michael.

January 24th, 2013 6:20 pm

I went to pay a parking fine 6 months ago, they told me it wasn’t on the system yet and they would send the bill when it was, so far.. nothing.
They don’t have a brain cell between them.

Dave

January 25th, 2013 10:01 am

Michael: next thing you know they’ll embargo your bank account for non-payment!

carla

January 25th, 2013 10:41 am

when we first bought our peice of land and house we had two plots together, our crafty spanish neighbour had been paying the ibi on the second plot as after i think 5 years he could have claimed it as his.

tricia

January 25th, 2013 12:42 pm

None of this surprises me in the least..it’s the most ludicrous ‘system’imaginable. To expect expats in a foreigh country, perhaps with little or no understanding of the language, to try and find out IF they owe money to anyone and therefore pay it is nonsensical. But then what can you expect in a region where thousands of people don’t even have ‘proper’ addresses and there is no postal service?? (I used to be one of them!) To paraphrase what someone else has already said…..Andalucia: get real!

jean briggs

January 26th, 2013 10:04 am

no excuses. When you buy property in Spain you are made aware (or should be by your agent or solicitor) of the tax obligations.
Many people claim ignorance as an excuse for not paying. There are too many people getting a big tax free return on their undeclared rental incomes.
If everybody paid their taxes in the first place then maybe the tax bills wouldn’t be so high. Infrastructure has to be financed and those who don’t pay tax are the first to complain about the poor services such as the police, schools etc.

ash c

January 28th, 2013 6:35 pm

do you have to pay if your house has been made illegal so in turn doesnt exist , you cant pay tax on something that doesnt exist , can you ?

peter

January 28th, 2013 6:51 pm

@ean briggs
I think you are sanctimoniously missing the point, nobody commenting on here is advocating not paying their taxes quite the opposite, they want to pay their taxes via a simple system not having to go to the town hall or APAT office and beg to be given a bill. If you think all ex pats are given a list of all the taxes they have to pay, where to pay and on what date they are due I’m afraid you are living in some fantasy world.

tricia

January 28th, 2013 9:01 pm

Totally agree Peter @Jean. That’s EXACTLY what I was trying to say…it’s a ludicrously difficult task just to find out what you owe!!! (BTW Jean…..I think the original point was being made about people who DON’T actually rent their houses out, but are technically non-resident…..hey ho; they’re all sinners, obviously, lol!)
And it’s also a good point about the ‘illegal’ houses……if they say they ‘don’t exist’ then how can they make people pay tax on them??!!!

Michael.

January 28th, 2013 10:09 pm

If everybody paid their taxes in the first place then maybe the tax bills wouldn’t be so high.

you don’t say Jean. Any other snippets of genius?

Tim

May 7th, 2013 10:04 am

@Jean Briggs – you’re the only person who has made any sense in this; and look at the vitriol you get in return.

You’re absoluately right – if people want to live in a foreign ncountry, then they need to abide by it’s rules. If you don’t understand the language, learn it, or pay someone to guide you. If you don’t understand the tax system, there are plenty of people out there who will sort it out for you, for a fee. And if you don’t want to pay the fee, then you can always go back to the UK where you understand the system, the language et al.

Spain’s in a financial nightmare. It needs to raise funds. There’s no point in taxing those who can’t afford it (although that hasn’t stopped them trying), but it makes sense to tax those who can; and non-resident owners definitely fall into that category.

If you can’t stand the heat – well, probably shouldn’t be here in the first place.

Julie Payne

May 7th, 2013 11:42 am

It is worrying that you can be embargoed for something that you didn’t know you owed! This has happened to a friend of mine who did not receive notification of a traffic violation by post! Our post is very infrequently delivered.

tricia johnson

May 7th, 2013 12:57 pm

Tim…you’re missing the point too.NO-ONE is saying expats should try to avoid paying tax — the issue is, that they should perhaps expect to be told what to pay and to whom. Not much to ask. And have you ANY idea how many shysters there are in Andalucia who ‘know everything’ and ‘charge a fee’….then tell the poor bamboozled expat a load of rubbish??? Plus, given that the Spanish officials themselves often don’t understand the system, and that you can go to two different ‘officials’ of a government department and be told two completely different things,really, you’re on a hiding to nothing.
Can you imagine the utter chaos if other countries, such as UK, waited for people to come forward and offer to pay taxes they may or may not owe???
Julie…you’re quite right. It is a nightmare…….where I was, there WAS no post and this is pretty commonplace. A builder friend of mine had 10,000 euros taken from his bank account (put there as a stage payment for a big job he was doing) because he ‘allegedly’ owed Social Security….took him six months to get it back when they found they had made a mistake….plus he very nearly lost the client (understandably).

Bob

July 11th, 2013 9:04 am

Stop moaning about having to pay out! You all seem like intelligent people and know that mañana is the most common word in Spain.
There are plenty of companies that will sort out your liabilities for not very much, and most of you will know this but choose to ignore it.
Most weeks I see it in the local Brit paper.
Pay your taxes and be legal, stop looking for excuses and most of all stop insulting the Spanish. We would be up in arms in Britain if they insulted our system. If you have ever dealt with the IRS in Britain there is a lot wrong with it.
You have to work with the systems in place.
I would however like to know – can you pay these income taxes in England as an EU resident. Anyone?

Kathy

August 12th, 2013 4:37 pm

I have received my first Suma and water bill in nine years.
The trouble with Spain is they can’t get the Taxes from there own kind, so they go after us.Our pensions get paid to us in Spain, so we are a sure bet.
Spain picks and chooses what EU LAWS they want to abide by.
Be fair Spain treat us with some respect, all said & done we
bank with you, we spend all our money in the shops,they take our money,but deep down they don’t realy want us here.
I’ve been coming to Spain since 1970 how it has changed, so much coruption and it still goes on,this is the down fall of Spain,builders,lawyers and notarys.
In the end it is us who has to suffer for there greed.
So Spain get your act together and go after these people.

sharon

September 4th, 2013 12:27 pm

oh please ppl get with the real!! world spain is a complete bloody shambles; hence why most expats are coming back to the uk. couldn’t run a piss up in a brewery if they tried! Everyone needs to take some responsibility, but the spanish authorities more than others. We all deserve to be treated respectfully, and if we need guidance it should be there regardless if its requested or not! I had an accident in spain through no fault of mine and ended up with disabilities 6 yrs down the line i put my faith into the spanish government to put this right ,and what did they do “let me down”, the guy got off, and his insurance had to foot the bill for my injuries, which were a pittance ,and to top it all my spanish solicitor; who was just as useless as its government! pissed off with my money! he too was having problems with his so called government, and although i told the courts not to pay it to my solicitor and explained my earlier concerns they still gave it to him and guess what?! i have been add in the net too so please don’t praise the government system they don’t deserve it!! No expat would ever be treated in the uk like we are in spain!

Fred

September 4th, 2013 5:47 pm

Thanks for the reality check, Sharon.

Geoff Barton

April 11th, 2014 6:19 pm

I’ve just received my bill in the Uk. Paid it on time for the lsst 10 years through my purchasing Solicitor. Just read this one though. Tax €16.00 Fees €93.With taxes €128 EACH.
Any cheaper ways of paying it or is this just a rip off???

Colin

May 1st, 2014 12:37 pm

@GeoffBarton, yes there is a cheaper way. Complete the forms yourself and pay when you are in Spain. It is fairly easy but you need to be computer literate.

dick thornton

May 6th, 2014 5:20 pm

Unfortunately Spain is corrupt at all levels, and most civil servants have a job for life so are particularly lazy. I believe there is no hope of any improvement in sight. However the sunshine is nice, so as always, one has to compromise. Is it worth it? It appears that once people really find out how things are run, many of them decide it is not.

Doug

July 26th, 2014 9:38 am

Eight years ago, I bought a property in Spain, I liked the place, and enjoyed using it for short breaks and holidays, but remained non resident, I therefore paid the ‘Non resident Tax’ through my lawyers, I then bought a second property for letting, and of course paid tax for both, I have now sold the second property, and my lawyer now informs me that Non Res Tax applies only to those who own more than one property in Spain, can anyone tell me if this is correct?
Ps The second property was sold in December 2012 and I am still waiting for the Spanish Tax Office to return the funds retained for Tax/Plusvalia even though all had been paid in full.

Andrew

July 26th, 2014 10:35 am

No, it is not correct. Non-residents have to pay non-resident imputed income tax on any property they own in Spain and normal income tax on any actual rental income that they receive from lettings.

The Spanish tax office does not retain the plus-valía. Any retention made in this respect is held by the purchaser who should pay it then return any balance to you.

A 3% retention on the sale price is withheld by the purchaser and paid to AEAT on account of your Capital Gains Tax. Your representative should then calculate and prepare your Capital Gains Tax return which may result in a reclaim for some or all of the retention or, in some cases, the payment of more tax.

The tax office has six months from the date of submission of your CGT return in which to repay any tax. If it goes beyond this date they have to pay interest unless the delay is caused by the claim being submitted incorrectly. In your case you should have received your refund, if you were due one, by around July 2013.

As so much time has gone by you should ask your representative to enquire about the current status of your claim for a refund.

If your lawyer does not know the rules on non-resident tax maybe he did not know that it was his responsibility to reclaim your retention from the tax office either.

Ernie

July 26th, 2014 1:03 pm

I WAS MOST INTERESTED TO READ ANDREW’S MESSAGE THIS MORNING AS WE HAVE A PROBLEM WITH THE 3% RETENTION/CGT WITHELD AFTER SELLING OUR VILLA IN APRIL 2013. WE USED A SPANISH LAWYER AND STILL RETAIN THEIR SERVICES TO HELP IN GETTING THIS MONEY BACK (29,000 EUROS). WE HAVE SUPPLIED ALL THE CORRECT PAPERWORK TO SUPPORT OUR CLAIM AND PAID THE DEEM TAX AND PLUS VALIA TO THE BENAHAVIS TOWN HALL. THERE ARE NO OUTSTANDING TAXES TO PAY, IN FACT EVERTHING IS 100% CORRECT. CGT FOR US IS AN ABSOLUTE JOKE AS WE LOST OVER 250K EUROS. OUR LAWYER TELLS US THAT THE MATTER IS BEING DEALT WITH IN VARIOUS OFFICES BUT AN ARCHITECT IS LOOKING AT VALUES. I THOUGHT CGT WAS TO MAKE SURE ANY UNPAID TAXES WERE COVERED. OUR LAWYER TOLD US THAT THE INLAND REVENUE ARE DRAGGING THEIR FEET BIG TIME AS THEY HAVE NO MONEY. IS IT POSSIBLE THAT WE DON’T GET ANYTHING BACK AT ALL?? WHAT A BLOODY MESS. THIS MUST BE FRAUD/THEFT ON A GRAND SCALE. WILL THREATS OF LEGAL ACTION WORK?? I DOUBT IT. COMMENTS WOULD BE VERY WELCOME. THANKS IN ADVANCE. I LIVE IN THE UK NOW.

Andrew

July 26th, 2014 7:28 pm

The fiscal value of the property is calculated by multiplying its valor catastral by the municipal coefficient applicable during the year of sale. This is set in stone, is instantly calculable and architects valuations do NOT come into the equation.

If there is some dispute over the figures submitted or some perceived lack of documentation it is highly unlikely that you would be contacted by the tax office and your lawyer will need to get off of his fat backside and visit the AEAT office in Málaga in order to ascertain the reason for the delay. In these days of strict data protection they will not respond to enquiries by email or telephone.

AEAT has a habit of not repaying the retention and when and enquiry is made they will cite the lack of a non-resident tax return for a certain year. This problem may be overcome by showing them the receipt for payment for the year in question. They will not merely deduct the amount claimed to be owing and pay the difference without some input on your part.

Did you leave a bank account open for the return of the retention or is it going to be repaid to your lawyer?

I would suggest that you ask your lawyer for a copy of the form 211 which would have been used by the purchasers to pay the retention to AEAT and the form 210 upon which your capital gains tax declaration would have been submitted by your lawyer and, if all else fails, that you fly to Málaga for a few days and visit the tax office personally armed with the copies of the payment and declaration, your passport, your NIE and all of your non-resident tax declarations and ask them what the hold up is.

Unless your command of the language is sufficient for them not to be able to claim not to understand what you are saying you should also take a translator with you who is well versed in such matters.

Legal action should not be necessary as they have an absolute obligation to either return your retention or give you an explanation in writing as to why they are declining to do so with the opportunity to appeal against their decision.

Most importantly, do not allow yourself to be fobbed off either by your lawyer or AEAT. If you have a legitimate claim for the return of the retention and you are sufficiently persistent you will get the money back.

Ernie

July 26th, 2014 10:04 pm

HI ANDREW. YOUR RESPONSE IS GREATLY APPRECIATED AND GIVES MY WIFE AND I A CERTAIN DEGREE OF COMFORT AS MOST OF WHAT YOU SAY HAS BEEN TOLD TO US BY OUR LAWYER. OUR LAWYER IS A SPANISH FEMALE WHO HAS PRACTICED IN THE UK FOR A NUMBER OF YEARS AND IS FULLY QUALIFIED IN THE UK AND SPAIN. SHE IS PART OF A FAMILY PRACTICE AND HAS VISITED THE TAX PEOPLE IN PERSON ON NUMEROUS OCCASIONS. SHE CAME WITH US WHEN WE PAID THE PLUS VALIA AND ALSO TO THE VILLA WHEN WE HAD A VALUER TO DEAL WITH THE CATASTRAL VALUATION. SHE ALSO DEALT WITH THEM OVER OUR SPANISH BANK A/C AND GAVE THEM A LETTER FROM THE BANK IN PERSON CONFIRMING THAT THE A/C WAS OURS AND WE ARE WHO WE SAY WE ARE. SHE IS SLOW BUT VERY GOOD AND A STICKLER FOR DETAIL. I WILL NOT LET THIS MATTER REST AS THIS MONEY, AT THE END OF THE DAY, IS PART OF THE SALE PRICE AND I HAVE LOST ENOUGH AS IT IS AND SPENT ENOUGH IN EXORBITANT BILLS AND TAXES. AGAIN ANDREW MANY THANKS, YOU ARE A TRUE GENT. I WILL KEEP BLOGGING.

Fred

July 27th, 2014 12:50 am

“Most importantly, do not allow yourself to be fobbed off either by your lawyer or AEAT. If you have a legitimate claim for the return of the retention and you are sufficiently persistent you will get the money back.”

Why does Spain fob you off, why does it make people have to persist and stress them out so much? That’s enough of a reason in itself not to invest here. Be warned.

tricia

July 27th, 2014 8:57 am

As a morale boost (I hope!) I finally sold my property in Spain — for less than I paid for it, which threatened to complicate matters at one point — in 2011 and moved back to UK (Hurrah!). Eventually (I think it was 7 or 8 months!), I DID get the full amount of retention back (but yes, they demanded a non-res tax return, which I duly completed. All handled by my Spanish abogado who persisted……so they’re not all bad!

Fred

July 27th, 2014 2:11 pm

8 months! Spain’s performance at its best lol. Well done Tricia but as always, only the lawyers benefit at the end of the day. Why should you even need a lawyer for what is rightfully yours? Spain sucks money out of people like a hoover.

Bob

July 27th, 2014 3:47 pm

I here all these comments about Spain and yes, the system does need updating however, you can’t beat the climate and the Spanish are generally kind patient and friendly.
I am currently going through having to re-register my property as the Catastro have messed things up but my solicitor has been brilliant. I can turn up when I like and don’t have to pay every time I speak to her as you do in England.
I like Spain and at some point all of you who are moaning about Spain liked it.
Had you done your homework you probably would have known all these difficulties before you purchased.
Just my thoughts.

Fred

July 27th, 2014 6:38 pm

Hey @Bob, I can see my UK solicitor anytime about a case without extra cost, so perhaps you need a new UK solicitor? Also, it’s a bit strange to tell people to “do your homework properly” when your own catastral records are “messed up”. Why didn’t you do your homework properly on that one Bob?

As for the climate, it’s certainly a scorcher currently. I was speaking to my neighbour (a doctor on the coast with his own practices) and he said that in these summer months older people, especially the retired and OAPs etc, should not be out at all between the hours of 11am and 5pm. This was also the same advice sent to residents of a certain age by our town hall, so whilst the nights can be lovely in Spain, and I enjoy them a lot, the daytime can be anything but enjoyable unless you are in the sea or the pool, and medical advice is to stay inside during the day, so the summer can actually be a bit limiting in reality. Also, of course, every coastal town is heaving with people during summer – best to go away until the Autumn is my advice lol.

Good luck with the house, make sure it’s legal!

Bob

July 27th, 2014 10:29 pm

Fred, I hear what you are saying but I am not complaining about the mess I am in. It was my fault that maybe I did not carry out all the checks however 15 years ago it was slightly different.
I love the weather and the Spanish culture. Isn’t that why we bought in the first place?
I get frustrated when I hear people complaining about the system when we know the problems in Spain and that their favourite word is mañana
My place is legal, just a clerical error. No Problema!

Doug

July 28th, 2014 1:37 am

Many thanks to all who responded to my request for help on Non Res Tax and return of retained funds, I will certainly take the advice of visiting the tax office in Malaga, I sent an email to my lawyer about six weeks ago asking if he could give me some idea of how long I might have to wait, and have had no reply.

Thanks again




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