When the lessee of a holiday rental is a non-resident, the taxation is different

 According to the Spanish Law, a non-resident is someone who resides in Spain less than 183 days per year, regardless of the nationality of the individual. In addition, a non-resident is someone whose centre of vital interest is in a different country. This also means that, even if someone lives abroad more than 183 days per year, if their family, their main activities and their properties are in Spain; that person will be considered a Spanish resident and must inform their income to the Spanish Tax Agency.

In case that a non-resident in Spain rents a property for a short time in Spain, we must differentiate between a non-resident in Spain that lives in a country of the European Union (EU) or in the European Economic Area (EEA) from another who lives in a country outside the EU or the EEA.

If we are talking about a non-resident in Spain that lives in a country of the EU or the EEA, the incomes obtained from the rental will be paid with a fixed rate of 19% at the Spanish Tax for Non-Residents. In addition, the incomes obtained by rentals must be included in the tax return of the country in which the non-resident lives and the taxes paid in Spain could be deducted.

For non-residents in Spain that live in a country from outside the EU, the taxes are higher. The costs incurred to improve the property cannot be deducted and the fixed rate of taxation is 24%.

In addition, the delegate of the Spanish Association of Fiscal Advisors (AEDAF) in Catalonia, Jordi Baqués, explained that, for non-residents, the tax return related to rents must be submitted quarterly.

 

B Law & Tax
International Tax & Legal Advisors

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Tags: Non-resident, IRNR, holiday rental, taxes