First of all, you need to be advised whether there is an international agreement with the country of your nationality to avoid double taxation.

The general principle in the double taxation agreements signed by Spain is that the country where the asset is located is able to tax the incomes from real estate renting and capital gains.

In the case of an individual non resident who is living in Spain without a permanent establishment, these are the taxes to be paid:

Income tax

If the asset is rented, tax will be charged at the rate of 24 % of the rents paid.

If the owner is a resident of a EU member State, Norway or Iceland the rate is 19%

If the asset is not rented and is an urban asset, an assumed rent is attributed to the property of 1.1% or 2% of the cadastral value (depending on whether there has been a recent cadastral review or not) over which 24% will be charged (or 19% if a the tax payer is a resident of a EU or EEA member State)

I.B.I

There is another tax charged by the councils, the I.B.I., an annual tax based on the cadastral value of the property.

The receipt for the I.B.I. paid for the asset in the previous year is one of the most common documents that is asked for from the very first moment, and is useful, not just to know how much has been paid, but also because it contains the “referencia catastral” which is important for the accurate identification of the asset.

If the land to be purchased is rustic or rural, it is possible that the owner won’t have a receipt for this tax payment because, for reasons of efficiency, the council may, at its own discretion, waive the payment of this tax when it is so small that it is not economic to issue the bill. In this way only big owners are charged, but even in this case the property should be identified on the cadastral map, because the “referencia catastral” must be entered on your property deed for the accurate identification of the asset.

The I.B.I. is charged by the councils within a range of 0,4 to 1,10% of the cadastral value for urban assets and 0,3 to 0.9% for rustic or rural assets.

It is important to know about Holiday Lettings Taxes