NON RESIDENT TAX IN SPAIN

Taxation on Urban Buildings Owned by Non-resident Individuals

1.- GENERAL CONSIDERATIONS

If you are classified as a non-resident in Spain for tax purposes but you own urban real estate in this country then you are obliged to pay non-resident income tax and a local property tax.

Furthermore, Wealth Tax has been temporarily re-established for the 2011 and 2012 financial years.

1.1. REPRESENTATIVE

Except in cases of residents in countries or territories with which an effective exchange of tax information does not exist, there is no obligation to appoint an agent to act before the Tax Authorities. Nevertheless, should you choose to do so, you may appoint whoever you wish, and should communicate this appointment to the Branch or Administration of the Tax Agency corresponding to the location of the property.

1.2. TAX IDENTIFICATION NUMBER (NUMERO DE IDENTIFICACIÓN FISCAL - NIF  or NIE for Foreigners )

In Spain everybody is assigned a Tax Identification Number, which must appear on all tax returns and in all communications with the Tax Authorities.

In general, for people with Spanish nationality, the NIF is the number of their National Identity Card (DNI) and, in the case of foreign nationals, the NIF is the Foreign Nationals' Identification Number (NIE). This identification is processed by the Police General Directorate. However, those foreign citizens who do not have a NIE, either temporarily or permanently, since they are not required to have one, should request a NIF be assigned to them by the tax authorities in order to complete tax operations.

2.- NON-RESIDENT INCOME TAX

When the property belongs to a married couple, or to more than one person, each person is an independent taxpayer, and must file an individual tax return.

Depending on the use of the property, the taxes to which it is liable are:

2.1. INCOME CALCULATED ON URBAN PROPERTY FOR PERSONAL USE.

The amount to declare will be that resulting from applying the following percentages to the assessed value of the property as shown on the Property Tax bill (IBI):

• In general, 2%.
• In the case of properties where the assessed value has been revised or modified since 1 January 1994, the percentage will be 1.1%.

This yield is calculated once per year, on 31 December.

If you have not been the owner of the property during the whole year, or if it has been rented for any period, only the proportional part of this amount is declared.

Tax rate:

Year income accrued	2011	2012-2013
Tax rate	24%	24,75%

Form: form 210, recording income type 02.

• Means of filing:

- on paper, generated by printing a form completed on the Tax Agency website.

- Electronically, via the Internet.

Filing deadline: during the whole calendar year following the accrual date.

Direct debit payment of the tax debt: In the case of electronic filing, payment can be made by direct debit until 23 December.

2.2. INCOME FROM RENTED PROPERTIES.

The amount to declare is the entire amount received from the tenant, without deducting any costs.

Nevertheless, as we are dealing with taxpayers resident in another European Union member state, the expenses described in the Law on Personal Income Tax (IRPF) can be deducted when calculating the taxable base, as long as proof is provided that these expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.

This amount is understood to have become liable for taxation at the moment that it is demandable by the lessor or on the date that it is collected, if this is earlier.

Tax rate: :

Year income accrued	2011	2012-2013
Tax rate	24%	24,75%

Form: form 210, recording income type 01.

This shall be used to declare each income sum separately as well as to declare several different incomes obtained in a specific period as a group.

Several different incomes earned by the same taxpayer may be grouped together so long as they correspond to the same income type code, come from the same payer, the same tax rate is applicable to them and if they derive from an asset or entitlement, that they come from the same asset or entitlement.

The grouping period will be quarterly in the case of self-assessment with taxes owing, or annual in the case of self-assessment resulting in zero charge or refunds due.

Means of filing:

- on paper, generated by printing a form completed on the Tax Agency website.

- electronically, via the internet.

Filing deadline: depends on the self-assessment result:

• With taxes owing: within the first twenty calendar days of the months of April, July, October and January in relation to the income whose accrual date falls within the previous calendar quarter.
  Direct debit payment of the tax debt: in the case of electronic filing, the payment can be paid by direct debit between the 1 and 15 of the months of April, July, October and January.
• With zero charge: from 1 to 20 January of the year following the accrual year for the declared income.
• With a refund due: as of 1 February of the year following the accrual of the income declared and within a period of four years from the end of the period for filing the return and depositing the withholding. The deadline for filing the self-assessment will be understood to conclude on the date it is filed.

2.3. NET GAINS DERIVED FROM THE SALE OF BUILDINGS.

Capital gains obtained as the result of the sale of a building constitutes taxable income. This income shall be deemed accrued when the property is transferred.

In general, net gains shall be calculated based on the difference between the cost price and transfer value of the property.

The cost price consists of the real cost price of the property involved, plus all costs and taxes arising, excluding interest, paid by the transferor. Depending on the year of purchase, this value is corrected by the application of an updating coefficient which is established annually, in accordance with the General State Budget Act.

For assets sold in 2011, the coefficients are as follows:

Year of acquisition Coefficient

1994 and before 1.2908

1995 1,3637

1996 1,3170

1997 1,2908

1998 1,2657

1999 1,2430

2000 1,2191

2001 1,1951

2002 1,1717

2003 1,1488

2004 1,1262

2005 1,1041

2006 1,0825

2007 1,0613

2008 1,0405

2009 1,0201

2010 1,0100

2011 1,0000

However, if the investment was made on 31 December 1994, a coefficient of 1.3637 is to be applied.

The application of a coefficient other than the unit requires the investment to have been made at least one year in advance of the date of transfer of the real estate asset.

If the building being transferred had been rented, the value determined should be reduced by the amount of the depreciation corresponding to the rental period. This depreciation will also be updated in accordance with the year to which it corresponds.

The transfer value is the real amount for which the disposal was made, reduced by the amount of any costs or taxes related to the transfer paid by the seller.

As a result, the capital gain which will be taxed consists of the difference between the transfer value and the cost price, determined as described above.

Nevertheless, if the property is transferred by an individual who purchased it prior to 31 December 1994, net gains will be subject to a transitory scheme and the previously calculated figure will be reduced.

If the transferor acquired the property on two separate dates or the property has been renovated, calculations must be made as if there were two net gains.

Partial exemption:

An exemption applies to 50 percent of the capital gains resulting from the sale of urban real estate in Spain which has been purchased between 12 May 2012 and 31 December 2012. This partial exemption is not applicable:

• In the case of natural persons, when the real estate has been purchased by or transferred to their spouse, to any person related to the taxpayer either via the direct line or collateral lines, by blood or by affinity, up to and including the second degree, to an entity which falls under any of the conditions set forth in article 42 of the Code of Commerce, either in relation to the taxpayer or any of the other persons mentioned above, regardless of their place of residence and the obligation to formulate consolidated annual accounts.
• In the case of entities, when the real estate has been purchased by or transferred to a person or entity that falls under any of the conditions set forth in article 42 of the Code of Commerce, regardless of their place of residence and the obligation to formulate consolidated annual accounts, or to the spouse of the above mentioned person or any other person related to said person via the direct line or collateral lines, by blood or by affinity, up to and including the second degree .

Tax rate: :

Year income accrued	2011	2012-2013
Tax rate	19%	21%

The person acquiring the building, whether resident or non-resident, shall be obliged to withhold 3% of the agreed payment and deposit it with the Public Treasury. For the seller, this withholding acts as a payment on account of capital gains tax arising from the transaction. Therefore, the purchaser will give a copy of form 211 (used to deposit the withholding) to the non-resident seller, so that the seller can deduct this withholding from the tax to be paid as a result of the tax arising from the capital gain. Should the amount retained be greater than the tax liability, it is possible to obtain a refund of the difference.

If the withholding is not paid, the real estate will be liable for payment of the lowest amount between the withholding and the corresponding tax.

Tax Return Form:

• Form 210, approved by Order HAC/3316/2010, of 17 December, recording income type 28.

Means of filing:

- on paper, generated by printing the form completed in on Tax Agency website.

- Electronically, via the Internet.

When the building being transferred is jointly owned by a married couple where both partners are non-resident, exceptionally it will be possible to file a single tax return.

Time period: three months from the end of the period that the person acquiring the building has to deposit the withholding (this time period, in turn, is one month from the date of the sale).

Refund of excess withholdings In the event of capital gains loss, or in the event of a withholding greater than the amount that should have been deposited, there is a right to a refund of the excess amount retained. The refund procedure is initiated by filing the tax return form.

The Administration may make a provisional settlement within a period of six months from the end of the period established for filing the tax return. When the tax return is filed outside the period, the six months will be calculated from the filing date. If the provisional settlement is not made in said time period, the Tax Administration will proceed to refund the excess on the amount self-assessed, without prejudice to any later settlements that may be relevant. If the refund has not been ordered once six months have elapsed and for reasons not attributable to the taxpayer, the amount pending refund shall accrue late payment interest.

3.- WEALTH TAX

This tax has been temporarily re-established for the 2011 and 2012 financial years and is due on 31 December of each of these years.

Net tax base: The net tax base will be reduced, in concept of exemption, in €700,000.

Obligation to file: All taxpayers with a tax charge to pay are obliged to file a return. Also, those with assets and rights valued at over €2,000,000 are obliged to file a return, even if they have no tax charge to pay.

4.- PROPERTY TAX

This is a tax charged by local Councils and paid by property owners.

All property within the Council's area is included on a tax register and is assigned a value (Rateable Value). The amount of tax to be paid is calculated by applying the tax rate set by the Council to this Rateable Value.

A bill is sent out for payment of this tax every year for every property on the tax register. Usually, Councils accept payment of the tax by direct debit from a bank account, which facilitates payment within the time period set and thus avoids any possible surcharges.

The payment deadline depends on the Council, although it is normally around the months of September, October or November each year.

Fuente: Agencia Tributaria Española 

Contact us by email info@virginiaramos.com or by phone 0034  616243990

BREXIT: 14 11 2018 PREAGREEMENT MOBILITY POINTS

 BREXIT:14 11 2018 PREAGREEMENT  MOBILITY POINTS

50. Noting that the United Kingdom has decided that the principle of free movement of persons between the Union and the United Kingdom will no longer apply, the Parties should establish mobility arrangements, as set out below. 

51. The mobility arrangements will be based on non-discrimination between the Union's Member States and full reciprocity. 

52. In this context, the Parties aim to provide, through their domestic laws, for visa-free travel for short-term visits.

53. The Parties agree to consider conditions for entry and stay for purposes such as research, study, training and youth exchanges.

54. The Parties also agree to consider addressing social security coordination in the light of future movement of persons.

55. In line with their applicable laws, the Parties will explore the possibility to facilitate the crossing of their respective borders for legitimate travel.

56. Any provisions will be without prejudice to the Common Travel Area (CTA) arrangements as they apply between the United Kingdom and Ireland.

57. To support mobility, the Parties confirm their commitment to the effective application of the existing international family law instruments to which they are parties. The Union notes the United Kingdom's intention to accede to the 2007 Hague Maintenance Convention to which it is currently bound through its Union membership. 

58. The Parties will explore options for judicial cooperation in matrimonial, parental responsibility and other related matters.

59. These arrangements would be in addition to commitments on temporary entry and stay of natural persons for business purposes in defined areas as referred to in Section III of this Part. Those commitments should not be nullified by the right of either Party to apply their respective laws, regulations and requirements regarding entry, stay and work.

For further information contact us on info@virginiaramos.com

5 MISTAKES TO AVOID BEFORE SIGNING AN INTERNATIONAL TRADE CONTRACT

5 MISTAKES TO AVOID BEFORE SIGNING AN INTERNATIONAL TRADE CONTRACT

Each time the commercial relations expand more, in many occasions outside the borders of Spain. At that time, it is an international sale, in which we have to pay special attention to the contract signed to guarantee the expected result of our commercial agreement.

For this we must avoid the following errors:

       1. NOT HIRING AN EXPERT LAWYER IN THE LAW OF INTERNATIONAL TRADE

Many entrepreneurs see an expense and not an investment to hire a lawyer to draft the international sales contract. Others take an internet template or they ask a friend to pass them a model. Others simply ask for help from a general counsel who draws up a standard contract for their commercial agreement. All these practices entail a huge economic loss. Nowadays, the international sales contract is the fundamental basis by which the expected result of the business can be guaranteed. The good lawyer, the expert lawyer, honest and in good faith, is not a cost. It is an investment, an investment in your peace of mind. It will avoid you and solve problems. Before thinking about the price, think about the benefits of the service. Think: how much is my peace? You choose.

        2. DO NOT TAKE INTO ACCOUNT THE LEGAL FRAMEWORK APPLICABLE TO THE CONTRACT

Hence the importance of having an expert lawyer in International Trade Law who will review the exact situation of the case and with his express knowledge of the legal regulations that regulate the object of the contract he advises that clauses must be incorporated taking into account the legal regulations of the contracting parts. It should be assessed to what extent these regulations respond to the expectations of those who intend to conclude the contract and whether they should proceed to modify or integrate that regulation at the bargaining level.

The non-derogable rules by the legal systems linked to the contract must be taken into account as well as the consequences of the impact of such provisions on the contract they intend to conclude.

      3. DO NOT NEGOTIATE THE INCOTERMS CORRECTLY

 Likewise many entrepreneurs either do not know the meaning of the incoterms or they copy it directly from another friend, but they do not know that all incoterms can and must be negotiated expressly for each type of agreement expressly. Well, each one has a different cost or benefit for you. That, if you have not negotiated well, always with the help of your expert lawyer in International Trade Law may end up fulfilling a contract that will give you more losses than benefits or you will have signed a contract that will be impossible for you to comply.

      4. DO NOT NEGOTIATE THE FORM OF PAYMENT CORRECTLY

Likewise, many entrepreneurs, due to their lack of knowledge, accept forms of payments that will cause them great losses or damages in the business. It will bring  more loss than benefits. Sometimes the guarantees that the Banks demand make the money stay blocked longer than the entrepreneur can support for the good end of the business. Likewise, the banking agent is not an expert legal advisor in international trade who knows the legal consequences of each clause of the contract in their benefit or detriment.

        5. DO NOT NEGOTIATE CORRECTLY GUARANTEES AND GUARANTEES

With the illusion of signing a contract, many entrepreneurs forget the well-written clause that correctly collects the guarantees offered or those that will be received. Also, many times they are not enough to guarantee the fulfillment of the contract or they have offered guarantees whose price is too high for the business to be profitable.

   

      6. DO NOT WRITE THE CONTRACT IN THE CORRECT LANGUAGE

The language used constitutes an important risk that must be assessed, since it may happen that one of the parties does not know in depth the language used to draft the contract. This can be very serious when using a particularly technical-legal language that the parties are unable to understand or that the meaning of the legal term in their country is different from the one intended. For all these reasons, an expert lawyer in international contracting is always necessary.

INVESTING IN SPAIN, YOUR LAWYER

INVEST IN SPAIN

www.virginiaramos.com

Spain is the world ´s 14th largest economy and the 5th largest economy in the EU: GDP worth 1.2 trillion USD.
Spain recieved more tan 68 million tourist in 2015
Spain is the 2nd country worldwide in receipts and the 1st in Europe of Tourists.
70th of  Forbes Top 100 companies have branches in Spain

New fast track regime fro International Investor ( Golden Visa)  on residence and Working Visa.
We  work hard to make very easy for you to get your residence in Spain. We take care of all the steps requested. Ask us by email for your residence information  at  contacto@virginiaramos.com. We have successfully completed many residences  and working visa in Spain.

 ( Most of our clients are nationals from China, Rusia and EEUU)

Favourable fiscal system for foreign investor and R+ D activities.  We provide full Tax advise from the begining and take care of all your needs.  Spain has agreements to avoid double taxation with many  countries. Ask us for information and we will be happy to provide our service.

There are more tan 201 international schools in Spain.

The following are the best business opportunities in Spain:

 - Automative

- ICT

- Biotechnology, Pharmacy and Life Sciences

- Aerospace

- Logistics and Transport

- Enviroment and Water Treatment

- Chemical Industry

- Nanotechnology

- Agro-food

- Real Estate

- Tourism and Leisure

- Natural resources

- Textile& Retail
You will have your company set up, your residence, your bank, all your permissions on place and your family set up as well.

 
If you are interested to invest in Spain, we will be more tan happy to cover all your needs to avoid any problem,  making it  very easy for you. You could contact us at contacto@virginiaramos.com

DO I NEED AN SPANISH WILL?

1.     If you have assets in Spain the answer is yes. You need an spanish will.

2.     I have done my will in England or my country  is that valid in Spain. The answer is not.

It is true that it  could be done  part of your inheritance in your country of residence but do not forget that the part relating to your property in Spain will be done in Spain. For that part you will need to provide a valid spanish will. If you do not have it, your inherentance will have to go to an spanish Notary and sign a Declaración de Herederos, Declaration of Heirs wich will cost them more than 3 times the cost of an spanish will.

3.     My solicitor says that with my will here I can cover my assest in Spain. It is that true? Not, the answer is appointed before.

4.     If  I sign an spanish will do I have to use the spanish law for my inheretance? Not, the European Law allow you to decide which law you want that applies to your inheretance either your asset´s law or your resident law.

5.     My solicitor here told me that he could assit me to draft my will which could be applied in Spain. Is that true? Not, in Spain we have an oficial registration of last will. All the wills that are not registered there are considered not valid here.

6.     My friend did her will with a friend of her who is bilingual in Spanish, and she  advised her how to do it.Is that enough? If you do not use an spanish registered lawyer you are taking a big risk of not being rightly advised and you could not ask for responsability to anyone.  Your lawyer in Spain will provide  the best legal advice for you taken into account all her previous experience and the knowledge of the inheretance regulations in full.  

7.     How much should I pay for my spanish will? It will depends of differents circunstances but usually the lawyer will charge you around 200€ included the Notary  Legal fee and the Lawyer legal fee. If you need extra translation you may have to pay that extra  service as well.  As you can see the cost  is so low compared with all the advantages that you get for your future heirs.

8.     My  mother died without spanish will, what do I do?  You will have to hire the service of  an inheretance lawyer in Spain and initiate the inheretance procedure  without will which could cost you more than if you had an spanish will.

9.     How much should I have to pay in taxes for the inheritance? Each case is different as it  will depends of many personal circunstances of the family. The best is to choose a qualified tax inheritance law registered at Spanish Bar Association. The lawyer will study your case and will provide the best solution for your case. But only  trust in a registered lawyer in Spain. Do not trust anyone who promise to save you money by rare system from outsides countries of Spain. You could end up paying so expensive the risk  for it and even loosing all your assets for it.

Remember to hire the service of a registered lawyer in Spain. Always request the registration number. Do not trust aynone who could not provide his or her number who may not be a lawyer. Do not take risk in so serious matter of your life.

RENTING YOUR PROPERTY IN SPAIN TAXES

Do you have a property in Spain and you are renting some months per year or the all year?

If the answer is yes, you are oblied to declare your incomes for the rentals payments each month.

You need to contact your tax lawyer who will be able to inform you either you should declare the incomes each month, each 3 moths or once per year depending of your case.

Your lawyer will ask you as well for recipt of IBI payments, Community of owners, Home Insurance or mortgage payment in case it applies as you could deduct all these cost from your incomes.

Make sure you hire a registered in a Bar Association Tax Lawyer. Requesting his or her registration number provides you a guarentee in case something happens.


All lawyers in Spain are oblied to be registered at a Bar Association where is working.

SPANISH TAXES FOR NON RESIDENTS PROPERTY OWNERS IN SPAIN

non resident taxes lawyer spain

NON RESIDENTS TAX

1. If you are tax resident out of Spain but you own a property in Spain, you are non residents  tax payer in Spain.

2. You should hire the service of a  tax lawyer to submitt your annual non residents taxes.

3. In Spain the tax year starts in January and end in December.

4. Most of the Lawyers starts the  non resident tax submissions around June of each year.

5. The amount to  be paid is not much  but it is compulsory to present each year. In case you do not submitt it on time you will be charge with  a late submission charge which will increase per each day of late payment.


6. Your taxes will depend on the value of your property and it will be apply to differents amounts depending if you are EU resident or not.

7. These  amounts change every year, therefore is very important to hire the service of an expert in non resident taxes.

8.As well  it is important to know that each owner needs to present a tax declaration. Therefore  if you own 50% of the property you will present your tax for your 50% of the property and the other owner needs to present his taxes for his shares in the property.

9.The cost of this service depends of the service  provided. 

The good service should be :

 
1) Informing of your duties, request the documents and help you to get them in case you do not have with you all by emails or telephone or meeting in your language.

2) Prepare all the calculations and provide to you all the  information and resolve all your doubts. 

3) Ask you for your taxes and his legal fee. Once is received, he will pay them for you and send you or give you  the original confirmation of payment.  This is very important to keep, in case the Tax office tries to request it again you could have the probe that it was paid.

 
4) The following year your lawyer will contact you to remain you the duty of tax payment.


10. We are expert in non residents  tax law  with large experience in non resident in Spain. We provide the best service in your languages and  offer a good  price for our quality service.


Other questions? Contact us at info@virginiaramos.com