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A letter from the Tax Authority

Working out what taxes you should pay in Spain is not an easy process. There are different taxes depending upon whether you are resident or non-resident and some, such as the imputed income tax, that are completely different from what you would expect to pay in the UK.


Spain propert taxThe imputed income tax is a tax on property payable by non-residents on the basis that if they wished they could receive rental income from their property. Spanish residents have to pay it too on any second property they own in Spain. For years Spanish property owners were largely unaware of the need to pay this tax. They were often not told about it at the time of purchase and without a similar tax in the UK they remained in luxurious ignorance. Until now.

The Spanish Tax system tends to work according to the assumption that everyone knows what they should pay. Whereas in the UK you would expect to get a reminder of some kind for an unpaid bill, here it can go undetected for years until you want to sell your property or someone inherits it from you.

However, we are now detecting a change in their approach. With empty purses and rising unemployment, tackling fiscal fraud has become a priority and the Spanish Tax Authority are pursuing a much more proactive strategy. They’re matching up records and sending out letters where there are gaps and anomalies.

One letter has begun to cause quite a stir. The Spanish Tax Authority have sent out letters asking why there is no record of either a resident or non-resident tax declaration being made. We’ve been approached by quite an array of people who not only haven’t made the declaration but don’t even know what one is.

The annual non-resident tax declaration must be presented before December 31st and is the way in which your imputed income tax is calculated and paid. Some of the people who have approached us for help had never heard of it until the letter arrived.

In December we were very busy trying to sort out a whole selection of confusions around who should have paid what. We expect that it will continue into the new year as non-residents arrive to holiday with the warmer weather and find the letter waiting for them. Perhaps the main message is, if you’re not sure what you should pay check it out rather than waiting for a tap on the shoulder from the taxman.

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Ábaco Asesores

Ábaco Asesores is a firm of lawyers and tax advisers established on the Costa Blanca in 1999. We have clients all over the world and provide legal and tax advice in seven different languages.

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Category: Expats, Spain Expat
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