The rental income statement and the rental tax are an obligation for both Spanish and non-Spanish citizens. In this article, you can find 6 points you need to know about the rental tax declaration.
The tax in Spain for residents in EU countries has the same rate, if you are or not Spanish Resident. If you are non-resident this is so important for you as the Spanish tax rate is different for EU countries (including Norway, Iceland, and temporarily the UK) or Non- EU countries.
Before explaining the main things about the Spanish tax on rental income, you need to know that if you want to rent out your property short terms rental, you need a tourist licence. If you don’t have it, please read how to get a Tourist Licence in Spain.
1. Who must pay Spanish tax on rental income?
The first thing you need to know is that everybody has to pay the Spanish tax on rental income. The rental income statement and the rental tax are an obligation for both Spanish and non-Spanish citizens. The only differences between residents and non-residents are the Spanish tax rates, rental property tax deductions and The frequency of declaring your rental. But, Resident and Non-Residents must do the tax declaration in Spain of all the income from rent.
2. Spain tax rate
What are the income tax rates in Spain?
The rental income tax rate is the same for all the Spanish Residents, but is different for non-residents, as it depends on your nationality.
- Spanish residents and Non-residents that reside in EU countries (including Norway, Iceland, and temporarily the UK) such income is rated at 19% up to €12,450.
- Residents in non-EU countries pay 24%.
3. Rental property tax deductions
If you want to have the highest profitability when renting your house, you should pay the minimum tax allowed. Therefore, when paying tax on rental income, you should know which expenses can be deducted and therefore pay as little tax as possible.
List of things that can be included in the rental income tax Eu members
Citizens of EU members, plus Norway and Iceland, can deduct the following expenses and will not be questioned by the Tax office:
- Council Taxes
- Mortgage interests
- Real estate agent fee or Key Holder
- Cleaning & laundry
- Primary maintenance and reparation costs.
The deduction is subject to the number of days the flat is rented.
It is also important to take into account that the purchasing of furniture and appliances are considered as a Fixed asset, therefore, the deductions of such items can be deducted proportionately per year, for instance, if you have paid for a new item of furniture, you need to provide the amount paid so we can help you calculate the amount to be deducted based on the requirements of the local Tax Authority.
IMPORTANT: Deduction of expenses from the above mentioned, are valid only if you have the invoice. Quotations or ‘Albaran’ are not valid documents.
Deductions in the rental income tax residents in NON-Eu members
Expenses for residents in NON-ES countries are not deductible in the Spanish tax on rental income.
4. Tax on rental income for companies
Properties in a company’s name and frequency of your rental tax. If you are a resident in another country, you need to pay income tax on the rental income even if the property is a company’s name.
Incomes from the rent of a property located in Spain must be taxed in Spain, as it is stated in Spanish law, which includes agreements that avoid double taxation between Spain and most European countries. (payments done in Spain will be deductible off any payment you have to do for the same income in your country).
5. How to declare rental income?
The frequency of declaring your rental depends on your status as a resident or Non-resident. For residents as we know, the Spanish tax on rental income declaration takes place on annual basis, nevertheless, for non-residents, the declaration has to be submitted every three months based on a set calendar, as follows:
April 20th: Declaration for incomes obtained in January, February and March.
July 20th: Declaration for incomes obtained in April, May and June.
October 20th: Declaration for incomes obtained in July, August and September.
January 20th: Declaration for incomes obtained in October, November and December.
THE PAYMENT OF THE TAX AT THE MOMENT OF PRESENTING THE DECLARATION IS A MUST.
You should always hang onto your tax records. Each year you need to declare your information from sales from the previous year (by the end of 2019 you need to declare your tax-related information of 2018, by the end of 2020, the tax-related information form 2019, etc. If you got cero income from the rent of your flat, still, you need to include this in your annual tax declaration.
6. If you don’t pay the Spanish property rental income tax
Please be aware that overdue payments, involve a fine you must pay according to the Tax office.
The percentage of the fine you will pay for overdue payments will depend on the time that has passed between the closing date of the window and the date you file and pay, so that, we strongly recommend you check the fixed windows for voluntary payment.
Details of the fine based on current legislation:
Until 3 months: 5%
Until 6 months 10%
Until 12 months 15%
Over 12 months 20% plus interest
If you pay every year income Tax for Non-residents (form or Modelo 210, this, does not cover the tax due for the rental income. It means, that you have paid a fixed amount on the deemed income, but not declaring the rental income, which needs to be declared quarterly (if there have been incomes in that specific quarter) and this amount will be a percentage of the profit (19%).
In your annual Income tax declaration, you will only pay for the days that the flat was not rented, as you have already paid for the rental incomes in the quarterly declaration.