As every year, the non tax resident in Spain should proceed to present the tax return IRNR (Tax on Nonresident Income) for the supposed incomes generated by the possession of their properties which were situated in Spanish territory during the year 2014.
As tax residents, the non tax residents must declare the supposed incomes through the called imputation of property income.
We basically refer to all those non-residents who have a holiday home in Spain or those non-residents who were once residents and keep their home in Spain.
The tax cost of this tax liability is minimal, even if it is mandatory, while its calculation, as the same for the spanish residents. It is based in cadastral value of the property which is applied a rate of 1.1 % in general terms for obtaining the tax base. To this taxable base amount is applied the general tax rate for non-residents of 24.75% applicable for the year 2014.
Before proceeding with the annual tax return, it is always recommended to verify the 6th article of the “Convenio de Doble Imposición” signed between Spain and the residence country, as long as it could happen that such supposed income does not pay tax in Spain. Although the general rule is that they will pay tax in Spain, it may happen that, as in the case of Poland, there have been introduced taxation clauses in country of residence.
The annual tax return related to those supposed incomes could be made during all the tax year of 2015 by the Tax Form 210 that should be presented electronically and its payment will be managed through the NRC (Bank especial number)
To sum up, just mention that for the tax year of 2015 it is expected that the Tax Administration can send drafts of the annual tax return so that the non-resident can simply accept them, without need to prepare the corresponding Form. Moreover, recall that the tax rate in the next tax year will be 24% instead of the 24.75% applicable in the current annual tax return.
Jordi Vilardell Casas
Tax Department Director Partner
UHY Fay & Co Barcelona Offices