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Non-Resident Taxation Manual (February 2024)

Return on real estate property

Internal regulations

Regulations: article 13.1.g) Law IRNR

In accordance with internal regulations, income derived, directly or indirectly, from real estate located in Spanish territory or from rights relating to them is considered income obtained in Spanish territory.

Agreement

The Agreements signed by Spain attribute the power to tax income from real estate to the State where the property is located. In accordance with the Agreements, earnings from property may be subject to tax in the Statement of Financial Condition of the same, regardless of whether the earnings arise from the use or enjoyment of the real property or any other type of exploitation of the same. Therefore, earnings from property situated in Spain may be taxed in accordance with Spanish law.

Taxation

Regulations: articles 24, 25 and 26 IRNR Law

Income obtained without the mediation of EP must be taxed separately for each total or partial accrual of the income subject to tax.

In general, the tax base will consist of the full amount, that is, without deduction of any expenses.

In the case of leased properties, the full amount received from the lessee for all concepts must be computed as income, including, where applicable, the amount corresponding to all those assets transferred with the property and excluding the Value Added Tax.

If the property is only leased for part of the year, you must determine the yield as in the previous paragraph, for the months that the lease has lasted, and, for the remaining months, you will find the proportional part of the imputed income (1.1% or , if applicable, 2% of the cadastral value).

However, in the case of taxpayers residing in another Member State of the European Union or in a State of the European Economic Area in which there is an effective exchange of information (with effect from July 11, 2021, the regulatory references made to States with which there is an effective exchange of tax information are understood to be carried out to States with which there are regulations on mutual assistance regarding the exchange of tax information in the terms provided for in Law 58/2003, of December 17, General Tax, that is applicable. See Annex V ), to determine the tax base, the following expenses may be deducted:

  1. In the case of natural persons, the expenses provided for in the Personal Income Tax Law, provided that the taxpayer proves that they are directly related to the income obtained in Spain and that they have a direct and inseparable economic link with the activity carried out. in Spain.

  2. In the case of entities, the deductible expenses in accordance with the provisions of the Corporate Tax Law, provided that the taxpayer proves that they are directly related to the income obtained in Spain and that they have a direct and inseparable economic link with the activity carried out in Spain. Spain.

The applicable tax rate is the current general one:

  • Residents EU , Iceland, Norway and, since 07-11-2021, Liechtenstein: 19%
  • Rest of taxpayers: 24%

Deductions: Only the following may be deducted from the tax rate:

  • Deductions for donations, in the terms provided in the Personal Income Tax Law and in the Law on the tax regime of non-profit entities and tax incentives for patronage.

  • The withholdings that would have been made on the income.

In the event that real estate is rented and there is provision in Spain for the organization of the activity of at least one person employed with a full-time employment contract, the activity carried out may be understood to be of a business nature through an establishment. permanent establishment and must pay taxes in accordance with the rules set forth in the section “Income from economic activities obtained through a permanent establishment.”