What Is Non Residents Tax In Spain?

What Is Non Residents Tax In Spain
How much is non resident tax in Spain? – Non-resident taxpayers in Spain are taxed at the rate of 19-24 % on income earned in Spanish territory or income that arises from Spanish sources such as property. Specific rates apply to other kinds of income.

What is a non resident in Spain?

What makes you either a resident or non-resident in Spain? – You are a non-resident in Spain if you live in the country for less than 183 days in a single year. If you are present for more than this, you are considered a resident.

How do you become non-resident in Spain?

Resident and non-resident status according to your tax situation – Here is where you will start understanding what does it really mean to be a resident in Spain or a non-resident. And it all has to do with taxes. If you spend more than 183 days per year in Spain (6 months), you will be regarded as a tax resident.

On the other hand, only living from 1 to 182 days in the country will imply you are a non-resident. *Bear in mind that the years don’t necessarily have to be consecutive. So, as you can see,  you can have the residency in Spain and still be considered a non-resident.

That will depend on the number of days per year you spend in the country out of the 365 you are allowed to due to the permit you have.

What is exempt from Spanish wealth tax?

All You Need to Know about Spanish Wealth Tax – Having been abolished in Spain on 1 January 2009, the Spanish government reintroduced wealth tax ( impuesto sobre el patrimonio ), supposedly temporarily, from 2012 onwards as an emergency economic measure.

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To do this they simply removed the total exemption to the tax that had previously applied. The established threshold for Spanish wealth tax is €700,000. If your taxable wealth exceeds this you will be subject to wealth tax on your net assets.

Spanish wealth tax is payable by both residents and non-residents of Spain. Spanish wealth tax is a progressive tax – the higher the wealth, the higher the tax. How much you are charged will also depend on whether you are a Spanish resident or non-resident. Your taxable assets include:

  • Real estate: land and properties.

Real estate is valued on the basis of the highest of the following values: the cadastral value, the market value as assessed by the tax authorities, or the purchase price as listed in the title deed. The highest of these three values is the value that will be taken into consideration for valuing your assets.

  • Assets and rights owned by individuals related to professional or business activities.
  • Bank deposits and investments in all kinds of entities e. stocks and savings.

The value of a deposit is taken as the bank balance on 31 December, unless the balance on that day is lower than the average balance of the 4th quarter in which case the latter figure is used.

  • Life insurance, life annuities and temporary annuities.
  • Jewellery, fur coats, cars, yachts and planes.
  • Art objects and antiques.
  • Rights on assets and intellectual property rights (unless in the author´s ownership).
  • Property forming part of the Spanish Historical Heritage or the Historical Heritage of Autonomous Communities.
  • Certain art objects and antiques.
  • Domestic items (not including those in the list above).
  • Economic rights in some instruments such as pension rights.
  • Rights deriving from intellectual or industrial property in the author’s ownership.
  • Goods and rights belonging to individuals deemed necessary for their business or professional activity, which must be their main source of income.
  • Shares in entities, listed or unlisted, with the following requirements:
    • That the organisation carries out an economic activity, not just managing movable or fixed assets.
    • That the individual has a share of at least 5% alone or 20% combined with family members.
    • That the entity accounts for more than 50% of the individual’s work-related income.
    • Loans provided they were not used to purchase or invest in assets exempt from Spanish wealth tax.
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What assets are exempt from wealth tax in Spain?

Assets Exempt From The Wealth Tax – Some assets are exempt from wealth tax. These include:

  • Household contents (but excluding jewels, fur coats, vehicles, boats, art, and antiques)
  • Owner managed small businesses
  • Family companies meeting certain conditions (shares in property investment companies are not exempt unless the company carries on a commercial activity – see below)
  • Pension rights
  • Intellectual property rights in the author’s ownership
  • Business assets. For the assets to qualify as business assets, the activity must be the taxpayer’s main source of income (i. the income from the business must constitute at least 50% of his taxable income) and the activity must be carried out by the taxpayer on his own account and on a habitual basis.

Where a rental/property development business is carried out, the following conditions must be fulfilled for the activity to qualify as a commercial activity. Provided these conditions are fulfilled, the properties used in a rental/development business can be exempt from wealth tax in Spain. There must be premises used exclusively for the management of the business activity. Part of a building can qualify provided the part used is separate from any other activity and is used exclusively for the management of the property business.

A shared office will not qualify. There must be at least one member of staff employed on a full-time contract. This could be your spouse but he or she would need to be registered as an employee for social security in Spain and contributions would be deducted from their salary each month.

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Shareholdings are also exempt from wealth tax provided: 1. the company is a trading company 2. you own at least 5% of the share capital (or at least 20% including shareholdings belonging to a spouse or other family members) 3. you carry out managerial duties for the company 4.