Guide to Different Spanish Taxes - Taxes in La Zenia: Suma, NIE and general tax advice - La Zenia forum - Costa Blanca forum in the Alicante province of Spain
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Guide to Different Spanish Taxes

John56Posted by John56 on Tue Oct 6, 2020 5:22pm in Taxes
5 replies638 views1 member subscribed

For many people taxation is a confusing minefield in Spain, this is a simple Guide to the different taxes that residents and non residents are liable to pay annually.

1. IBI (Impuesto sobre Bienes Inmuebles, similar to UK Council Tax) and often called SUMA, although that is the name of the agency which collects the tax"

This is a local tax which the Coun­cil im­poses on all prop­erty own­ers based on the cadastral value of the property. The no­ti­fic­a­tion for the IBI bill is pos­ted out dir­ectly to the property by the Suma Office , usu­ally paid by early September but delayed in 2020 to November due to the Covid-19 situation.. If on dir­ect debit, you need do noth­ing. If you have not set up a dir­ect debit, then the no­ti­fic­a­tion has a slip at the bot­tom and should then be taken to be paid at any of the par­ti­cip­at­ing banks.

2. Income Tax for Residents.

Cal­cu­la­tion and pay­ment of the In­di­vidual In­come Tax can be a com­plic­ated busi­ness. In­di­vidu­als are deemed as Res­id­ents if they meet any of these con­di­tions:-

they spend more than 183 days per cal­en­dar year in Spain

their main place of busi­ness is in­dir­ectly or dir­ectly loc­ated in Spain

Res­id­ents are taxed on world­wide in­come although UK Government Pensions while having to be declared on your Spanish Tax Return are not taxed in Spain as they are taxed in the UK. If you are renting out a property as a short term / holiday let quarterly Tax Returns must be submitted, if renting out your property as a long term let an annual Tax Return is submitted. Given the complexity of completed a Tax Return I would recommend that you employ a Abogado to complete the return for you.

3. Non Resident Tax.

Non-Res­id­ent tax is the com­monly used term for the tax on Non-res­id­ent Span­ish prop­erty own­ers. This is due to be paid individually whether or not their prop­erty in Spain is ren­ted out. As with Income Tax for residents non residents must submit Income Tax Returns in relation to income if their property is rented out at any time. Again you can complete your Tax Return yourself or employ a specialist company. When we were non resident we used Spanish Tax Forms Limited ( https://www.spanishtaxforms.co.uk/ ), payment of a modest fee and they completed all the necessary paperwork, emailed it to us and we printed it off to take to our Bank to pay the tax, the following year we had the confidence to complete it ourselves.

4. Capital Gains Tax.

When yo sell a property in Spain you have to pay Capital Gains Tax on any profit after taking into account all deductions and allowance. My opinion is that professional assistance is essential as this is such a complicated issue. 

5. Inheritance Tax.  

Inheritance Tax, also called Succession Tax ( impuesto de successions y donaciones) is one of the main taxes paid in Spain by both residents and non residents. It is a progressive tax paid by the individual who receives an inheritance from a friend or relative, being a property, money or any other kind of asset. 

6. Car Tax

Paid through the Suma Office by the registered owner of the vehicle on the 1st of January for the whole year. 

7.  IVA ( VAT

 IVA ( in Spanish: impuesto sobre el valor añadido or impuesto sobre el valor agregado), equivalent to VAT, is due on any supply of goods or services sold in Spain. The current normal rate is  21% which applies to all goods which do not qualify for a reduced rate or are exempt. There are two lower rates of 10% and 4%. The 10% rate is payable on most drinks, hotel services and cultural events. The 4% rate is payable on food, books and medicines. 

8. Plusvalia Tax. 

Plusvalia is a Local Tax, so it’s produced by the Town Hall where the property is located, the Tax is also called “Impuesto Sobre el Incremento de Valor de los  de Naturaleza Urbana”. It is a Tax generated when someone transfers a property either via sale, donation or inheritance. Once the transfer has been completed you are notified by a letter of payment. Many times, the buyer calculates the full amount and withholds this quantity (from the amount of the purchase) to pay on the sellers behalf (this usually happens when the seller is a Non-Resident). 

.In February of 2017, the Constitutional Court annulled the Plusvalia Tax and, in another May ruling, established that taxpayers should not pay such tax when the sale of the house has generated losses although many Town Halls still demand payment of the tax. Since then the Supreme Court clarified that you can only claim the return and the Plusvalia Tax in cases where it can be proved that there were losses. That proof are property deeds, both, acquisition and transfer deeds. As you can see this is an extremely complicated situation and professional advice is essential. 


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Written by

John56

John56

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Herefordjack

Posted: Tue Oct 6, 2020 9:47pm

Herefordjack

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Posted: Tue Oct 6, 2020 9:47pm

I'd have to qualify your 'Residents Income Tax' section with the comment if your income stream is fairly straightforward, you can do it yourself online on the Tax Authority website without too much trouble and save yourself a big consultant's bill.

I've done it for the past two years. My income stream consists of three small private pensions, some UK savings interest and share dividends. I'm not old enough for state pension yet.

The key things are to record religiously (on a spreadsheet for example) all your individual items of income through the calendar year, categorised into pensions, savings etc, and to get yourself a Spanish electronic certificate. This identifies you to the Tax website so they know its you. You will need the official exchange rate as well for the year in question.

For those last two items, see further information elsewhere on the web (nudge nudge wink wink) from he who cannot be named.

John56

Posted: Tue Oct 6, 2020 9:53pm

John56

Original Poster

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Posts: 3030

5589 helpful points

Location: La Zenia

Joined: 7 Jul 2016

Posted: Tue Oct 6, 2020 9:53pm

Herefordjack wrote on Tue Oct 6, 2020 9:47pm:

I'd have to qualify your 'Residents Income Tax' section with the comment if your income stream is fairly straightforward, you can do it yourself online on the Tax Authority website without too much trouble and save yourself a big consultant's bill.

I've done it for the past two years. My income stream consists of three small private pensions, some UK savings interest and share dividends. I'm not old enough for state pension yet....

...

The key things are to record religiously (on a spreadsheet for example) all your individual items of income through the calendar year, categorised into pensions, savings etc, and to get yourself a Spanish electronic certificate. This identifies you to the Tax website so they know its you. You will need the official exchange rate as well for the year in question.

For those last two items, see further information elsewhere on the web (nudge nudge wink wink) from he who cannot be named.

I acknowledge that it can be relatively straightforward for some to do it themselves, however, many people are low in confidence when attempting to tackle Spanish beauracacy so my Guide is primarily aimed to explain the basic concepts of the taxation in Spain and advising getting professional assistance. 

Herefordjack

Posted: Tue Oct 6, 2020 9:57pm

Herefordjack

Helpful member

Posts: 275

245 helpful points

Location: Pego

Joined: 18 Dec 2017

Posted: Tue Oct 6, 2020 9:57pm

John56 wrote on Tue Oct 6, 2020 9:53pm:

I acknowledge that it can be relatively straightforward for some to do it themselves, however, many people are low in confidence when attempting to tackle Spanish beauracacy so my Guide is primarily aimed to explain the basic concepts of the taxation in Spain and advising getting professional ass...

...istance. 

It was a good guide.

And my comment was 'don't spend money if you don't have to'.

Cheers!

Kimmy11

Posted: Wed Oct 7, 2020 9:00am

Kimmy11

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Posted: Wed Oct 7, 2020 9:00am

Hi Herefordjack,

That's a great suggestion!  As you're already doing your own tax returns, would you be able to write a guide on how to do it for other members please?  A simple, step-by-step set of instructions with links to the relevant website would be brilliant.

I have a digital certificate (although I think my husband's Crown pension may complicate matters), but I'm sure there are many other members in a similar situation to you, who would really benefit from your knowledge - and would be happy to save some money too 😉

Many thanks and kind regards,

Kim

Herefordjack

Posted: Wed Oct 7, 2020 11:51am

Herefordjack

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Joined: 18 Dec 2017

Posted: Wed Oct 7, 2020 11:51am

Kimmy11 wrote on Wed Oct 7, 2020 9:00am:

Hi Herefordjack,

That's a great suggestion!  As you're already doing your own tax returns, would you be able to write a guide on how to do it for other members please?  A simple, step-by-step set of instructions with links to the relevant website would be brilliant.

I have a digital certificate (although I think my husband's Crown pension may complicate matters), but I'm sure there are many other members in a similar situation to you, who would really benefit from your knowledge - and would be happy to save some money too 😉

Many thanks and kind regards,

Kim

No need, one already exists, and we all know where. However, if anyone is trying it next year and having problems, I'd be happy to take PMs to see if I could help. Don't forget, the return covers the last complete calendar year, and the tax authority website normally goes live for returns from April 1 the following year, running until the end of June. If you owe tax and have elected to pay it by DD, it will go out of your account around 25th June. 

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