Spanish tax year in Spain generally goes from January to December.
The year is divided in 4 quarters. First quarter is Jan., Feb., and March. Second quarter is April, May, and June. Third quarter is July, August and Sept., and Forth quarter is October, November and December.
Every non-resident renting their house in Spain is liable to submitt tax declarations before the 20th to the following month from the the end of every quarter.
So that, First quarter declarations must be submitted before April 20th. Second quarter declarations are complied to be presented before July 20th. Third quarter declarations are due by the house owners before October 20th, and Forth Quarter declarations are due before 20th Jan to the following year.
It is very important to understand that Spanish Tax Office forces every single one to submit an informative tax declaration right at the time the property is offered for rent in the market. It is very common that a non-resident submits their rental earnings tax return once the house is rented, and/or just in the quarter periods that the house was rented, and it meant a rental earning to the owner. This is something that it usually means tax penalties as the Spanish Tax Office was not being informed in advance that the house was going to be rented out.
Therefore, it is essential that Spanish Tax Office gets informed in advance, and quarter tax returns are submitted from that time onwards either nul, or not depending if the owner had a house rent earning or did not in every quarter. Upon the event that the owner knew the house IS NOT GOING TO BE RENTED during one particular quarter or longer than that, should it always be possible to inform the Inland Revenue and get temporarely deregistered their obligation to submitt a tax declaration that although it would be in any case nul to pay, it might be causing a fine if it were not presented in time.
In accordance to most international double taxation agreements between Spain, and most countries, earnings coming from one particular property should be declared in the Country where property is located, and separated to the fact that the owner is resident tax registered in a different country where the property is. In other words, most of these international agreements stablish that property income tax coming from being rented out should be paid in Spain by the property owner if the property is located in Spanish territory, even though the actual house owner is registered in Denmark, Norway, Sweeden or Belgium for instance. However, this does not mean that these earnings individuals are taxed in accordance to this country tax, and rules of law from Spain, and he/she is not liable to declare such earnings in the country where he/she is resident tax registered.
Income tax is usually in every country within the EU area a personal and progressive tax. This means that personal allowance or income under threshold is higher or lower depending to everyone’s personal circumstances in terms of living relatives, supported children, single members families, etc…, and income tax percentages is also higher or lower depending the level of earnings. So that, two individuals with same level of earnings, but different family circumstances will not pay the same amount of income tax every year because their allowance before their income is taxed is different, and two individuals with two different level of earnings would pay different percentages; higher as income goes up in value.
Every year, individuals will be liable to declare the same amount of net rental earnings in their country of living, and pay income tax in accordace to their family circumstances, personal allowance, and rest of other sources of earnings affecting their final percentage of tax to pay. Tax paid in Spain as non-resident property owners earning a rental income from such property during a particular period of time will be fully deductible in their countries of residence at the time to submit their annual tax declarations.
It is very common that an individual declare such property earning in the country where he / she is resident as this is what rule of tax laws stablish, but do not do it in Spain as do not being aware to do it. This is again something that causes a lot of trouble as the tax office from the country of residence will normally communicate the Spanish Tax Office that no tax was paid at source, and the Spanish Tax Office will then fine the property owner to every single period of time that a tax return should have been submitted, and it was not.
In accordance to Spanish Tax Laws, expenses associated to the house during the period the property was rented are always fully deductible. Earnings will always be taxed in net, and house expenses i.e. insurance, rates, supplying services, community fees, … will always be deductible
AS LONG AS the property owner is able to come up with a Certificate of Residence from their own country of living, and Spanish authorities have a valid international double taxation agreement with such country, income tax percentage on net earnings will be 19%. In case that such certificate were not obtained, tax percentage would be 24% (Artículo 25 de la LIRNR (Real Decreto Legislativo 5/2004, de 5 de marzo, por el que se aprueba el texto refundido de la Ley del Impuesto sobre la Renta de no Residentes.)
Artículo 25. Cuota tributaria.
- La cuota tributaria se obtendrá aplicando a la base imponible determinada conforme al artículo anterior, los siguientes tipos de gravamen:
- Con carácter general el 24 por 100. No obstante, el tipo de gravamen será el 19 por ciento cuando se trate de contribuyentes residentes en otro Estado miembro de la Unión Europea o del Espacio Económico Europeo con el que exista un efectivo intercambio de información tributaria, en los términos previstos en el apartado 4 de la disposición adicional primera de la Ley 36/2006, de 29 de noviembre, de medidas para la prevención del fraude fiscal.