Rates & Taxes

DON´T LET YOUR DREAM TURN INTO A NIGHTMARE!!!

At last, you have your dream house – and now what happens? Instead of enjoying your holiday on the beach, you spend all your spare time at the Town Hall or Electric and Water offices sorting out problems.

These problems are easily solved and Hot Property can recommend a local Abogado (lawyer) to help you!

For your information, we have prepared a list of the taxes and expenses payable by the non-resident property owner here in Spain.

There are 3 different Taxes due:

1. Municipal Taxes (Basura)
2. Local Authority Rates (IBI)
3. Non-Residents Income Tax (Renta)

In addition, there are the normal bills for electric, water, telephone, community fees, insurance etc.

MUNICIPAL TAXES (BASURA) are the expenses which must be paid to the Town Hall (Ayuntamiento) for rubbish removal. The amount due varies from one town to another and is normally paid during the months of April/May every year. The annual cost lies between 90.00 Euros – 170.00 Euros.
LOCAL AUTHORITY RATES (IBI) are based on the rateable value of your property (Valor Catastral) which is determined by the Rates Office. The amount charged usually lies between 0.6% and 1.0% of the rateable value. It is an annual tax normally payable in August/ September every year.

Please note: The onus is on you to pay the Basura and IBI each year, even if you do not receive a bill.

NON-RESIDENTS INCOME TAX (RENTA) is a tax which must be paid whether or not your property is let out. It is based on the rateable value of the property. As it is a tax on the OWN USE or RENTAL of the property, it is only applicable is you have a HOUSE or DWELLING. You do not pay any Renta Tax on a plot of land alone.

1. For the OWN USE of your villa, the calculation is as follows:
   • 1.1% of the rateable value x 19%
   • Furthermore, this Tax is only payable for the period you have owned the villa.
   • This Tax is payable on the 31st December and always in arrears, i.e. in 2016 you will pay the Renta Tax for 2015.
2. When the villa is LET OUT for part of the year, the calculation is as follows:
   • a) RENTAL INCOME
     • 19% of NET Rental Income
     • This tax is payable quarterly, after each receipt of rental income.
   • b) OWN USE FOR REMAINING MONTHS
     • 1.1% of rateable value
     • x Number of months not let out
       12 x 19%

This tax is payable by the 31st December, always in arrears.

METHODS OF PAYMENT

Electric, water and telephone are debited directly from your bank account. The electric and telephone invoices showing details of consumption, telephone calls made, etc. are sent separately by post to your SPANISH home address.

If you have had difficulties in receiving these invoices, you can arrange to have them sent to your accountant/abogado for your later collection from their office. In order to arrange this, you must supply a previous electric/telephone invoice showing the relevant reference number.

DON´T FORGET TO COLLECT YOUR MAIL EVERY TIME YOU ARE IN SPAIN!!

Please remember that each of these services have a standing charge of 30.00 – 40.00 Euros every two/ three months, even though the house may be uninhabited.

Municipal taxes and Local Authority Rates can also be debited directly from your bank account.

In some towns, you now have the option to pay the Basura and IBI Taxes in monthly instalments throughout the year. You must go PERSONALLY to the local SUMA office to present the NIE’s of EVERY OWNER, the previous year’s tax receipt and a certificate from your bank to confirm your account number.

Tax declarations must be submitted for the payment of the Own Use Tax. The tax forms must be downloaded and paid on the Internet.

NIE/NIF NUMBER

In order to pay these taxes, it is also necessary to apply for a Foreigner´s Identification Number, known either as an NIE (Numero de Identificación Extranjero) or NIF (Numero de Identificación Fiscal). This must be requested by the applicant personally at the appropriate “Comisaria” in the Province, and will replace the passport number previously used.

Your lawyer can arrange this for you. By handling all these tax affairs, collecting your NIE/NIF number, applying for Etiquetas (tickets) and drawing up all the necessary authorisations, you can ensure trouble-free settlement of all your taxes.

As you can see, the headache of dealing with tax obligations will gradually disappear – all you have to worry about is whether you have sufficient funds in your bank account!!

All fiscal matters can be settled for you, automatically, via your Abogado and your bank.

Hot Property can recommend a lawyer, accountant, bank, currency exchange broker, etc. upon request.