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Overview of Spanish Property Tax |
If you are
considering investing in Spain, as a non-resident property owner,
you could be liable for the following taxes:
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Tax On Rental: |
Income from
property rental is subject to 25% of gross rents without any deductions.
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Wealth Tax: |
Spanish wealth
tax is levied on Spanish assets of non-residents without any exempt
amount.
Spanish residents enjoy a nil band of more than €100,000 (Euro)
Any value of Spanish property will be subject to at least .2% and
up to 2.5% wealth tax (although this latter rate applies to properties
valued at over 10 million Euro). This is added to the rental income
tax and is paid at the same time.
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Capital Gains Tax (CGT): |
This
usually comes as a surprise for most non-residents, as the rate
for Spanish residents is only 15%. For non-residents the rate is
35% and under the Spanish tax law, the purchaser must withhold 5%
of the purchase price and pay it to the tax authorities on account
of this tax.
You then have to make a repayment claim, if this is higher than
the actual gain.
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Inheritance Tax (IHT): |
This
tax is levied based on the relationship of the beneficiary to the
deceased.
For a spouse, there is an exempt amount of just €16,000 (Euro)
and then tax at progressive rates from 7.65% - 34%. For unmarried
beneficiaries such as girlfriends and friends, there is NO EXEMPT
amount and rates up to 81.6%!
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Comments: |
Spanish high
capital gains and exorbitant inheritance tax rates for surviving
spouses and unmarried partners, mean forward planning is essential.
This may involve using a UK or Spanish Company, holding the property
as joint owners, or taking out life insurance. The failure to plan
for Spanish taxes often leads to taxes so high that the property
has to be sold to pay them.
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