Warning: The information set out below is a general guideline provided by DOMENECH ABOGADOS.
Specific advice should be sought before any action in reliance on it is taken, as explained more
fully in this website's
legal
notice.
Non-resident taxation: income obtained from Spanish rentals by non-resident
individuals without a permanent establishment in Spain will be generally taxed at a 24% rate on the gross
amount received. However, residents in the EU, Iceland and Norway are entitled to apply a 19% rate and can also (as is the case with Spanish residents) deduce certain expenses, such as insurance coverage for the property and local taxes. Tax must be paid in relation to each
rental payment as it falls due. Alternatively, the taxpayer can choose to group together rental
payments received quarterly and pay tax on that basis.
Resident taxation: rental income obtained by individuals resident in Spain will be
added to other items of general income and the resulting total taxable base will be subject to
applicable Spanish Income Tax rates (for calendar year 2021, the maximum rates may exceed 50% in certain regions, depending on which Spanish regional tax legislation is relevant). Such
income must be declared annually by inclusion in the resident individual’s Spanish Income Tax
return. In contrast to non-residents (excluding EU, Iceland and Norway residents), rental income of Spanish property is calculated after deducting the following:
- interest paid on loans obtained for purchasing the property, as well as repair
and conservation expenses;
- local taxes;
- payment to third parties for personal services (eg, administrators, porters,
etc);
- legal expenses arising from the formalisation of the rental arrangements;
- the amount of bad debts, as long as the debtor is legally insolvent and six
months have passed from the debt being first claimed;
- insurance premia covering the property and liabilities which may arise in
respect of it;
- utilities and other supplies;
- and amortisation.
Further, residents may enjoy tax relief for “income from property” used as
dwellings as opposed to commercial premises.
Lastly, but importantly, tax rules differ when the owner obtaining rent is a
company or rent is obtained through an organisation undertaking a “qualifying” business
activity.
If you have a property in Spain and would like to rent it out, contact
Christopher Lee or Margarita Domènech at DOMENECH ABOGADOS. We can draft the appropriate
contract and sort out the resulting tax implications.