Understanding tax on your Spanish holiday home
If you aren’t a resident of Spain, you may struggle to understand the Spanish tax you need to pay on your holiday home. Luckily, this is simple to work out and depends on whether you rent out your property or not.
Tax for landlords who lease
Making money on your holiday home while you’re not using it is a smart financial move, but can quickly become a tricky situation if you’re not up to date on how to pay your tax. Whatever income you make from the property will need to be filed as part of a quarterly tax return of the Spanish Non-Resident Tax. If you jointly own the holiday home with a partner, then you’ll need to submit a tax form each.
It’s important that you submit the form in the first 15 days of the months October, July, April and January. Tax for countries in the UE will come to 19% of profits, and at 24% for foreign countries.
Tax for landlords who don’t rent out
For those whose property isn’t let out to renters, tax only needs to be filed once a year. The form needs to be submitted before December’s end of the next year. In this case, the tax payable is the 2% of the cadastral value of the property.
Penalties for not paying tax
It’s very important that you pay your Spanish tax on time. You could incur fines of 50 to 150 percent of the amount that is undeclared. On top of this, you’ll receive interest that increases depending on the length of the delay. The tax office will demand taxes dated up to four years back, so it’s in your best interest to always pay on time because you will get caught out. A hefty bill for four years’ tax is not desirable for any landlord!
It’s especially important for those who don’t live in Spain or rarely visit their holiday home to be on top of their taxes. This is because you won’t receive any warning letters about unpaid tax, which you usually have ten days to answer, allowing the situation to quickly escalate without your knowledge.
Del Canto Chambers is a leading London Barristers Chambers specialising in Law, Tax & Legal Advice. Our dual-qualified, multilingual lawyers specialise in international law and tax and have worked on over 500 cases globally.
Claudio Rodríguez Vera
Del Canto Chambers