Differences between taxes for non-resident and fiscal residents in Marbella and how to know if you are a tax resident or not. And more importantly, can you become a fiscal resident of Spain without knowing it? Can it be automatic?
Any person buying real estate in Marbella, no matter if it’s a first or second home, is subject to different taxes on a yearly basis, depending on if they are a fiscal resident of Spain or not a fiscal resident of Spain. Some factors have a decisive role to identify you as a resident or nonresident, and therefore establish what you must pay. Unfortunately, some clients fail to get proper information, especially in advance, and this can transform into unfortunate last-minute tax news.
Probably most of our clients who buy second homes in Marbella consider themselves non-residents, or non-fiscal residents of Spain, but do you know exactly which taxes you have to pay as such? And moreover, can you be considered a fiscal resident of Spain, and not even know about it? And what this can suppose for you? Let’s dig in!
First, as a non-fiscal resident, owning a property in Marbella, you still have obligations in front of the tax office, every year which are:
Spanish tax for non-residents
No matter if you rent your property or don’t, you still must pay this tax. If you don’t rent it even though you are not receiving income from your property, in the eyes of the tax authorities you are still receiving a benefit from owning a property in Spain and for that reason have to pay an imputed income tax. If you do rent your property, you have to pay income tax on the rent instead. The rate is 24% with the exception of Residents of the EU, Iceland, and Norway of 19%.
Spanish wealth tax
The tax is based on the net value of your property (less mortgage, if any) with a tax-free allowance of €700,000 per person.
Municipal Spanish property tax
The tax is based on the cadastral value of the property and the rate varies depending on the region.
But what happens if you suddenly become a fiscal resident of Spain, and how can it happen?
If you have been living in Spain for six months (183 days) or more of the calendar year (not necessarily consecutively) or have your main vital interests in Spain (for example, your family lives permanently in Spain or your main business and source of income is in Spain), then you can be classed as a Spanish resident for tax purposes. By meeting only one of the above, for instance, simply spending 184 days in Spain could be enough.
Even though if you simply exceeded the 183 days, but your country of the main source of income or country where your spouse and underage children live and go to school, is not in Spain, you can then prove that you are not a fiscal resident. So it’s not 100% black and white.
And what effect can it have, becoming a fiscal resident of Spain?
You no longer must pay the Spanish tax for non-residents. You still must pay the wealth tax and municipal property tax. As a Spanish resident, you must pay Spanish income tax on your worldwide income (minus what you paid in the other country) and in addition, you must declare all your assets abroad worth more than €50,000. And the main inconvenience comes from that the Spanish income tax starts at 19% and grows progressively up to 47% on a yearly income above 300.000 euros.
Therefore, it’s good to be careful about this, If you’re planning to buy a property in Marbella and spend a lot of time here. Of course, this is just general information, there are more things to study and consider, it’s a bit of a grey area, there are exceptions like the Beckham law, but to be on the safe side it is best to always enquire with a professional financial advisor and preferably always in advance!
Questions and answers:
How much is the non-resident property tax in Marbella?
The way to calculate how much you must pay for the non-resident property tax is to get the property value according to the cadastre, which can be found on your IBI receipt (green document, IBI stands for Impuesto de Bienes Inmuebles). Only 2% of the total cadastre value will be subject to a tax of 24.75% on a yearly basis. So, the calculation must be =total cadastre value*0.02*0.2475.
How much time do I have to pay the property taxes in Marbella?
If you are a non-resident, the wealth tax and non-resident tax declaration must be submitted at any stage between 1st January and 31st December for the current year and paid in the following year. Whilst the Municipal property tax is paid in August-September for the current year and if you fail to pay It on time you will get a sanction which then grows as the time passes.
How much tax do you pay in Marbella? How much is the income tax in Marbella?
Depending on if you are a non-resident or a resident in Spain (fiscal) the income tax is different. For non-residents, it’s a fixed percentage of 24%, excluding residents of EU, Iceland, and Norway for which it’s 19%. For residents, the percentage of income tax starts at 19% and grows progressively up to 47% for income above 300.000 euros.