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over 50% increase in non-residents tax (Torrevieja)

Posted: Sat Jan 9, 2021 2:30pm
22 replies1540 views7 members subscribed
Leafy211

Leafy211

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I was surprised to find out that my non-residents tax (no change in circumstances except Brexit) has increased by over 50% to that i paid last year.  Does that sound right I wonder?  (Not sure if affected by Brexit?)
Any guidance would be much appreciated.

Anne1939

Posted: Sat Jan 9, 2021 3:09pm

Anne1939

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Posted: Sat Jan 9, 2021 3:09pm

Hi it all depends on the the rate used. In 2015 my rate changed from 1.1% to 2% due to the fact  my property’s Catastral Value hadn’t been revised in the previous 10 years. 

I’d have a word with whoever prepared your Non Resident Tax return to clarify the % rate used. If you have your Suma Bill to hand for your property it will tell you the last time your Catastral Value was revised. 

Kimmy11

Posted: Sat Jan 9, 2021 3:30pm

Kimmy11

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Posted: Sat Jan 9, 2021 3:30pm

Hi Leafy,

I assume you're talking about the imputed property tax on second homes, rather than IBI (Council Tax)?  It wouldn't account for a 50% increase, but now that UK citizens are TCNs (Third Country Nationals), the tax rate for non-residents has increased from 19% to 24%. If you rent out your property, that could make a more significant difference in your tax bill.

Kind regards, 

Kim

Leafy211

Posted: Sat Jan 9, 2021 3:45pm

Leafy211

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Posted: Sat Jan 9, 2021 3:45pm

Anne1939 wrote on Sat Jan 9, 2021 3:09pm:

Hi it all depends on the the rate used. In 2015 my rate changed from 1.1% to 2% due to the fact  my property’s Catastral Value hadn’t been revised in the previous 10 years. 

I’d have a word with whoever prepared your Non Resident Tax return to clarify the % rate used. If you have your Suma Bill to hand for your property it will tell you the last time your Catastral Value was revised. 
...

...

Hi Anne - everything is the same as last year (which was my first year of paying non-resident tax) and nothing has changed except the %! :-)

Leafy211

Posted: Sat Jan 9, 2021 3:49pm

Leafy211

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Posted: Sat Jan 9, 2021 3:49pm

Kimmy11 wrote on Sat Jan 9, 2021 3:30pm:

Hi Leafy,

I assume you're talking about the imputed property tax on second homes, rather than IBI (Council Tax)?  It wouldn't account for a 50% increase, but now that UK citizens are TCNs (Third Country Nationals), the tax rate for non-residents has increased from 19% to 24%. If you rent out your prop...

...erty, that could make a more significant difference in your tax bill.

Kind regards, 

Kim

Hi Kimmy i think its called the non-residents tax (annual) .. not sure about the second home reference, but could be the same thing (not IBI or rubbish).  As mentioned i dont rent out property.  But thank you for confirming the rate should be 24%, thats exactly what i needed to know.  Muchas gracias! :-)

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Kimmy11

Posted: Sat Jan 9, 2021 4:02pm

Kimmy11

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Posted: Sat Jan 9, 2021 4:02pm

Hi Leafy,

I just wanted to be sure, as Anne is referring to IBI. 

Non-resident tax is payable quarterly, if an owner rents out their property, or annually if they don't.  The latter is called an "imputed" tax because the Spanish authorities assume that, even when you don't rent out your property, you've derived a non-monetary benefit from owning it!  Damned if you do, damned if you don't..... 🙄

Kind regards, 

Kim

Leafy211

Posted: Sat Jan 9, 2021 4:18pm

Leafy211

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Posts: 228

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Posted: Sat Jan 9, 2021 4:18pm

Kimmy11 wrote on Sat Jan 9, 2021 4:02pm:

Hi Leafy,

I just wanted to be sure, as Anne is referring to IBI. 

Non-resident tax is payable quarterly, if an owner rents out their property, or annually if they don't.  The latter is called an "imputed" tax because the Spanish authorities assume that, even when you don't rent out your property, you've derived a non-monetary benefit from owning it!  Damned if you do, damned if you don't..... 🙄

Kind regards, 

Kim

Ha indeed!  Ah so it then is imputed tax for sure.  Thanks so much again Kimmy, the more i learn the more comfortable Ill be about my property costs. Just hoping that it wont be too much longer before i can start enjoying my teeny Spanish apartment again.  Fingers crossed! :-)

Anne1939

Posted: Sat Jan 9, 2021 5:54pm

Anne1939

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Posted: Sat Jan 9, 2021 5:54pm

Kimmy11 wrote on Sat Jan 9, 2021 3:30pm:

Hi Leafy,

I assume you're talking about the imputed property tax on second homes, rather than IBI (Council Tax)?  It wouldn't account for a 50% increase, but now that UK citizens are TCNs (Third Country Nationals), the tax rate for non-residents has increased from 19% to 24%. If you rent out your prop...

...erty, that could make a more significant difference in your tax bill.

Kind regards, 

Kim

Hi Kimmy11 Yes I was referring to the IBI document as the multiplier is different depending on when the last revision of Catastral value has been done. Up until 2015 I was using 1.1% but then it increased to 2% as my last revision was over 10 years ago and this obviously increased the  amount of tax I paid. It’s my understanding that the Non Resident Tax rate for 2019 payable by 31st December 2020 is still calculated at 19% as is the rate for 2020 increasing to 24% in tax year 2021

This is an excerpt from CAB Spain

Update1.3.2020 As the UK has remained part of the EU for the entire tax year 2019 and the EU regulations will remain valid during the transition period, so till the end of 2020, the rate will remain 19% for the declarations to be filed in 2020 and 2021. As of taxyear 2021, the tax rate for British non-resident property owners will be 24%.
Regards Anne

Kimmy11

Posted: Sat Jan 9, 2021 7:59pm

Kimmy11

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Posted: Sat Jan 9, 2021 7:59pm

Good point, Anne, Non-resident tax paid in December 2020 should have been at 19%, with the higher rate of 24% not due until December this year.  Something for Leafy to raise with the tax office or her advisor......🤔

Delilah

Posted: Sat Jan 9, 2021 9:10pm

Posts: 32

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Joined: 16 Jul 2020

Posted: Sat Jan 9, 2021 9:10pm

Hi Leafy,

you've mentioned that this is your second tax year so to say. About what time in the year did you buy the property? If you purchased, lets say about the middle of the year, that could also be a reason why the amount is different in regards to the previous year, since you pay tax for the number of days you have owned the property in the year before.

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