TIME AND VARIOUS TAXES TO PAY INTO THE SPANISH SYSTEM
First important thing to know and understand is the tax year in Spain which goes from January to December. There are certain countries in Western Europe where the tax year is not the calendar year.
Second thing to understand is the various different existing tax authorities in Spain. There are taxes to be paid to local council authorities either where the property, the car, .. are domiciled, taxes to be paid to the County Government (i.e. TPO, stamp duties, ..), or income, and property income taxes to be paid to the IRS (Inland Revenue Service = AEAT).
Non-resident property taxes are calculated as an attributed income (self-consumption) no matter the property is rented or is not, and they are calculated on the basis of the value of the house being declared on the house deeds, or the value of the house to the local tax authorities depending when such value was brought up, and price-up reviewed. In case that property had been rented during the year, new recent legal changes stablish that a tax return will have to be presented, and paid within the following 20 days to the end of the last quarter of the year; so that, before the 20th of January to the following year being declared. Non-resident tax payers had the obligation to do it before the end of every natural quarter in the year, but not any more which save a lot of worries, and trouble to all those who rent their house out during the year.
Resident tax payers have the obligation to submit their world-wide income tax declarations within the time frame that goes from April to the end of June of the following year to the year being declared. Income tax is personal, and it is on progressive rate. In other words, everyone’s personal circumstances influence on the minimum allowance of non-taxable earnings, and everyone’s tax percentage increases high up as the income goes up in value.
We always recommend from our Firm to calculate, and submit the tax declarations even though our clients’ earnings are sometimes way under the allowance. Doing so, and because of how the system is designed, there are two results; first of all, tax payers will always be able to obtain whatever kind of tax residency certificate they will require from the Spanish IRS (AEAT) if they kept themselves in the system, allowing them access to tax benefits in death duties, capital gains, .., and the second reason is that tax payers might be able to have a payback because of taxes paid at source by their employer.
IN SUMMARY it is important that you keep your tax liabilities up-dated at all times.
Our Firm will assist you through the process to get settled as tax resident or non-resident in Spain depending your personal, and family circumstances, and how you used the house that you are the owner of in Spanish territories within the natural year.
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