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IRNR: Quick guide to non-resident tax in Spain

Canarias Noticias - 23/01/2024

No matter which country you live, work, or own property in, it’s almost certain that you’ll have to pay taxes. This applies if you earn income or own assets in Spain – even if you don’t live there.

Those who stay in Spain without residing there full-time are still subject to Spanish tax rules if they own property, earn money, or inherit assets within the country.

This non-resident tax in Spain is known as IRNR (Impuesto sobre la Renta de no Residentes) – but who is liable for this, and when does it apply?

Here’s a quick guide to IRNR to help you understand how non-resident tax works in Spain. 

Why do you have to pay tax in Spain if you aren’t a resident?

In Spain, you must apply for and receive the correct permit to be legally considered a Spanish resident. However, you can be considered a resident for tax purposes under certain conditions, which would make you liable for the same taxes as a Spanish resident.

If you spend more than half of the year – 183 days – in Spain, then you automatically become a tax resident. The Spanish authorities will also consider you a tax resident if your dependent family lives in Spain or your primary economic interests are in Spain, even if you spend less than 183 days of the year in the country yourself.

If you stay in Spain for less than half the year, you’ll be classed as a non-tax resident. However, this doesn’t mean you don’t have to pay any tax at all – you’ll still be liable for any applicable taxes, depending on your financial interests and assets located within Spain, but these will be charged at a different rate than tax residents.

The most common reason for paying Spanish non-resident tax is owning property in Spain, such as a holiday home or rental properties. 

How much tax do you have to pay in Spain as a non-resident?

The distinction between being a tax resident and a non-tax resident is important when it comes to determining how much tax you’ll have to pay.

This is because Spanish residents are taxed at higher progressive rates on global income and assets, while non-tax residents are only taxed on income and assets within Spain, typically at a fixed rate. Non-residents also aren’t eligible for the tax allowances that Spanish residents may be entitled to.

Many countries have double taxation agreements with Spain, so if you pay taxes on income and assets in Spain, you shouldn’t be taxed on them again in your home country. Similarly, the Spanish authorities won’t tax income and assets outside of Spain.

The standard IRNR rate is 19% for EU citizens and 24% for non-EU nationals. This applies to personal income, capital gains, investment returns, and royalties. However, certain forms of passive income, like pensions, are taxed progressively at 8–40%. 

Do non-residents have to pay property tax in Spain?

If you own a property in Spain, then you will be taxed according to its value. Firstly, every property owner must pay IBI (Impuesto Sobre Bienes Inmuebles) to the town hall in the municipality where the property is located.

This is an annual property tax that is charged on the cadastral value of a property, not its market value. Each municipality can set its own IBI rate, but it generally varies between 0.4–1.1%.

Similarly, any property that you own in Spain is considered a taxable benefit, even if you don’t live there full-time or earn income from renting it out – so you’ll also be expected to pay IRNR on around 2% of the cadastral value once a year.

Meanwhile, if you do rent out a property in Spain, you’ll have to file tax returns every quarter to pay IRNR on this rental income. EU residents can deduct maintenance expenses to reduce their tax bill, but non-EU citizens can’t.

If you sell your property or other assets in Spain, you’ll be liable for capital gains tax on the profits you make at the same rates as IRNR. 

Are non-residents taxed on wealth in Spain?

While controversial, Spain has not just one, but two wealth taxes. IP (Impuesto sobre el Patrimonio) is the standard annual wealth tax that applies to asset values exceeding 700,000€. The additional ISGF (Impuesto Solidario a las Grandes Fortunas) applies to net values exceeding 3,000,000€.

Again, these taxes can be charged on eligible assets within Spain only for non-tax residents, but will be charged on all global assets for Spanish residents.

Each autonomous region in Spain can set their own wealth tax rate, typically varying between 0.2–3.5%. Some regions decided to charge 0% and effectively remove IP, like Andalucia and Madrid.

However, this is why the Spanish government introduced the national ISGF, which applies progressively in all regions at a rate of 1.7%, 2.1%, or 3.5%, depending on the total asset value. 

How do non-residents pay tax in Spain?

If you’re liable for taxes in Spain as a non-resident, you must register with the Spanish tax authorities and receive a foreigner ID number (NIE). You’ll then be expected to file annual or quarterly tax returns as required, and pay any outstanding tax by the relevant deadline.

Filing and paying taxes in Spain can be stressful for anyone who isn’t fluent in Spanish. While it’s possible to file tax returns online, or get help over the phone or in person at a tax office in Spain, everything will be conducted in Spanish.

That’s why it’s a better idea to get help with non-resident tax in Spain from local experts, such as English-speaking lawyers in Spain, who can handle everything for you with power of attorney.

This would be especially useful for non-residents who don’t visit Spain frequently, as you can comply with your Spanish tax obligations without having to come to Spain to sort your paperwork!

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