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FISCAL REPRESENTATION:

Tax Service

Accountancy

Financial Services:Registration of a New Business

 TAX SERVICE

It is highly advisable for any person who own a property in Spain but does not live in Spain all the time, to nominate a fiscal representative. This is a person  to whom the tax authorities can send all correspondence relating to your affairs in Spain. We want to explain to you the obligation and the importance of this matter.

 If you are the owner of a property in Spain, you are legally obliged to pay taxes on your property. This legal procedure comes from  C.D.I (Convenio de doble imposición). This is an agreement between the  two countries involved, which ensures that the purchaser only pays one set of tax and solely in the country where they have purchased their property (in this case, Spain).  All tax must be paid annually.

 Your obligations are two local tax and two general taxes:

1. Property Tax (I.B.I.) (Local tax)

This is a local tax (equivalent to COUNCIL TAX) levied on your Spanish property (whether of urban or rustic nature) and charged annually by the municipality, where the property is registered.  All property owners in Spain (residents and non-residents) are obliged to pay the Real Estate Tax (Impuesto de Bienes Inmuebles - IBI) annually to the Town Hall, directly in the cashdesk or through direct debit, using a Spanish bank.

 Note that many town halls do not send out bills and it is your responsibility to find out how much you have to pay and when.

 The deadline for providing this information after the signature of the deed in the Notary is of two months. You may find your real estate tax amount surcharged if you do not pay it on time and your name will be listed in your province´s “offcial bulletin”. The fines are ranging from 6 € to 1,000 € for non-registration. It will be also attached to the property; if you sell it  without having paid this tax, the new owner will become liable for back taxes as well as for fines for late payment.  In the past, many people have been able to avoid paying property taxes. However, in recent years local municipal tax authorities are making big efforts to collect unpaid taxes.  If you owe back taxes and refuse to pay them, your property can be seized and sold at action. Local authorities also have the power to seize vehicles and place garnishment orders on bank accounts.

2.  Local mains drainage and refuse collection tax (basura y alcantirallado) (Local Tax)

This local tax payable by property owner and a related to rubbish collection and drainage. The amount to pay varies from area to area, and should be paid to the local Town Hall every 3 or 6 months. If your property is in a un-urbanised or rural  area you will not pay for the drainage tax although you may pay the refuse collection tax (depending on the community).

3. Wealth tax (General tax)

Spanish residents and non-residents property owners are also liable to Wealth Tax (Impuesto sobre el Patrimonio). Your wealth is calculated by totalling your assets and deducting your liabilities. You will pay wealth tax at a percentage that depends on the value of your wealth (i.e. property, vehicles, business ownership, money in the bank, etc.). The wealth value associated to a property is based on what the declared value of the property was when you purchased it in the Notary (the value of the house to be declared is the official catastral value which can be found on any I.B.I receipt). However, if you are a non-resident and your country of residence has a double taxation treaty with Spain, bank balances and interest are taxable only in your country of residence, not in Spain. If you fail to declare your total assets, you can be fined.

 For residents, there is a general allowance against wealth tax of  € 108,182.18 per person for all assets except a principal residence, for which there is an additional allowance of € 150,253 per person.

 There is no allowance for non-residents, who must pay wealth tax on all their assets in Spain, which for most non-resident property owners consist only of their home.

 Tax Rates are progressive depending on the type of property, ranging from 0.2% (of catastral value or declared value).

 4. Personal Income Tax (General tax)

The Personal Income Tax is a direct tax levied on the income of individuals. The taxable income is determined as the difference between the income earned and the expenses that are deductible according with the Spanish Law.

- Spanish residents are taxed on their  worldwide income.

- Non-residents are liable for this tax on any income arising in Spain, which is exempt from tax in their home country (double taxation treat).

 Income tax is payable on both earned and unearned income. Taxable income includes salaries, pensions, capital gains, income from professional activities and property and investment income.

 All non-resident property owners or residents owning more than one property in Spain, are deemed to receive an income of 2% of the fiscal value (catastral value) of their property. Therefore you will be liable for the "deemed rental income tax" even if you do not let out your Spanish property. The local town hall will charge you assuming you are making 2% of this value each year from letting your Spanish property and charge you 25% of that "income", which equates to a total of 0.5% of the catastral value of the your property ( which can be found on a I.B.I receipt) . Mortgages or other debts registered against the property can be deducted from their value, whether resident or non-resident.
 

You will not yet get a bill for the income taxes in Spain, but must present the annual income tax declaration yourself, or use a tax representative. For the non-resident, tax representative is obligatory if it is not accepted to have communications directed to the property in Spain. Should you fail to pay this tax, you will be extra charged by the Spanish Tax Agency.

ACCOUNTANCY

Luz Atlantic Services provides a full range of tax/accountancy services. We understand from our own experience the hurdles that confront newcomers to Spain. If you already have a business or you are planning to purchase or sell a property in Spain, to invest in Spain or to set up a business here, we will ensure that you comply with Spanish tax and accounting regulations.

• Monthly/ quarterly tax and accounting services
• Year end company accounts and tax returns

• Bookkeeping and accounts preparation
• Employee payroll, contracts, training, and risk prevention

 Charges will be depending on type of company and service provided.

  REGISTRATION OF A NEW BUSINESS

 Setting up a company for you or registering you to work on a self-employed basis. We deal with all the documents needed in each case as  Spanish Corporate Law and tax regulations are complex.