Tag Archive for: Non-Resident

In this blog post, we will look at some of the key things you need to know about inheritance law in Spain for deceased non-residents in Spain. Read on for more information.

Spanish inheritance law for non-residents

When the deceased person is a non-resident in Spain, there is only taxation on the Spanish assets, whereas as the person was a resident, you will be taxed on your worldwide assets.

In order words, if you are inheriting Spanish property or money from a deceased person who was a non-resident in Spain, you will be liable to pay Inheritance Tax on their assets held in Spain. It does not matter if a person lives outside of Spain; you will still need to pay Spanish inheritance tax.

In addition, the Spanish inheritance law states there you will be able to get allowances and deductions. For example, there is a special allowance for spouses, parents and children who inherit the primary family home.

Differences between residents and non-residents

So when are you a tax resident or not? In Spain, generally, an individual is considered a tax resident if they have lived in Spain for more than 183 days in a calendar year. However, other factors may be taken into account for tax residency, such as whether the person has their economic centre of interest in Spain or if their spouse or children live in Spain.

Spanish inheritance tax rate for non-residents

Tax residents and tax non-residents, whether they are EU nationals or not, are subject to the same Inheritance Tax Rate in Spain. Therefore each calculation will be different. The Spanish inheritance tax is a progressive tax. This means that the tax rate depends on the value of the:

  • Assets being inherited
  • Relationship between the person inheriting and the deceased
  • The amount of wealth the person inheriting already has

Every Autonomous Community has reductions, with the type and amount of tax rates varying considerably from one to another. In some regions, the Spanish law states that certain relatives may be exempt from paying succession tax.

Calculating the inheritance tax

Below, we have set out some key points on how Spain’s inheritance tax in Spain is calculated for non-residents. To understand the inheritance process we have outlined three steps below:

  • The first step in calculating the inheritance tax is to calculate the estate’s value. For non-residents, this includes all assets located in Spain, such as property, savings, investments and other possessions.
  • Make the proper deductions based on the tax allowances which depend on the degree of connection with the deceased or the sort of property received, as appropriate. The taxable base of the tax is adjusted according to kinship status.
  • Once you have calculated the estate’s value, you will need to apply the relevant inheritance tax rates to find out how much tax is payable. These are between 7.65% and 34%, with a multiplier of pre-existing assets ranging from 1 to 2.4.

Get help with your Inheritance in Spain from a professional

Allowances and deductions that can be applied

There are some allowances and deductions you can take into account when working out how much Spanish Inheritance Tax you will need to pay. These include:

  • The amount of any debts owed by the deceased
  • If the inherited property is the primary residence of the deceased
  • The value of any assets which are inherited by a person with disabilities
  • Certain professional inheritances, such as businesses or farms
  • and additional tax allowance for specific situations

When you have to pay tax, you need to take all of the relevant allowances and deductions into account. Therefore it is advised to do your due diligence or contact a law firm in order to make sure you don’t overpay any tax.

Foreign assets and the Spanish tax administration

It is important to note that non-residents who inherit assets in Spain are also subject to taxation in their home country. Therefore the double taxation treaties need to be taken into account to ensure no double inheritance taxes on assets in Spain and abroad are paid.

The Spanish Tax Authorities will not automatically exchange information about Inheritance Tax with foreign tax authorities. Still, they may do so if there is a request from a foreign authority or indications of fraud or tax evasion.

Who collects Spanish inheritance tax for non-residents?

The Spanish Tax Authorities on an Autonomous Communities level are responsible for collecting Inheritance Tax in Spain. In other words, when you need to pay Inheritance Taxes as a non-resident, you will pay taxes to the Spanish Tax Authorities in the Autonomous Community where the last habitual residency of the deceased was located.

If the deceased did not have regular residency in Spain, the Spanish inheritance law states that the place of taxation of the Spanish estate will be the tax office of Madrid or where the heirs have a habitual residence.

What can a Will do for the inheritance of non-residents

The Spanish Inheritance Law is different from other countries in the world. This means that if you are a non-resident in Spain and you die without having made a Spanish Will, your assets may not be distributed how you wanted or expected.

As a non-resident in Spain you can put the following in your Will that will override the Spanish Inheritance Law:

  • You can choose which country’s laws you want to apply to your estate, which will override Spanish law.
  • You can also choose which currency you want your estate to be valued in for Inheritance Tax purposes.
  • You can appoint executors who live outside of Spain to administer your estate.

The Will needs to be translated by an official translator and broad into the public domain through a public notary that can provide an Apostille Stamp.

The Spanish Will allows you to specifically designate who will inherit your property, and how it will be divided. In addition, the Will can help to avoid potential conflicts between heirs that expected a different distribution and can provide peace of mind knowing that your final wishes will be carried out.

We strongly advise that all non-residents in Spain make a Spanish Will to ensure that their assets in Spain are distributed according to their wishes.

If you have any questions about Spanish Inheritance Tax or Wills, please get in touch with us and we will be happy to assist you.

Paying inheritance tax as a non-resident

As previously stated, when you inherit assets located in Spain as a non-resident or resident, you will be liable to pay Inheritance Tax

If you are inheriting property located in Spain, you will need to obtain a Spanish NIE number. The NIE number is needed to complete the sale or transfer of the property into your name.

The Spanish NIE number is also needed to deal with the Spanish tax authorities and open a bank account in Spain.

Deadlines for filing the tax

Over the inherited assets, the beneficiaries have six months since the death occurred to file the tax return and make the relevant payment.

In case of issues, the government may grant a six-month extension if requested within five months of death.

The surcharges for late payment must be included in the settlement if you obtain an extension. The request must be accompanied by a detailed value of the assets to be taxed.

If it is denied, the period is extended by several days equal to the amount of time that has passed since the filing of the application until notification. A provisional agreement can be reached through a formal request if the deadline is not made. If this is necessary, we recommend contacting a professional.

Receiving an inheritance as a resident

Similar to when you are a non-resident, if you are a resident of Spain and you inherit assets located in Spain, you will need to file a tax return with the Spanish Tax Authorities.

However, as a resident, you will be liable for Inheritance Tax on the worldwide assets, not just those held in Spain. This means that you will need to declare all assets located outside of Spain that you have inherited.

However, you don’t have to pay double taxes, so if you have already paid Inheritance Tax in another country on those assets, you can deduct that amount from what you owe in Spain.

Is the inheritance tax and gift tax the same for non-residents?

If your receive an inheritance, you will be liable to pay Inheritance Tax. If you give someone a gift, you may be liable to pay Gift Tax. Inheritance and gift tax rates are the same. The tax base, on the other hand, is the real worth of goods bought with fewer deductible costs and obligations. With certain exclusions provided by state laws.

A Word from SpainDesk

We hope that this article has clarified some of the questions that you may have had about Spanish Inheritance Tax and Wills for non-residents.

If you have any further questions, please don’t hesitate to get in touch with us and we will be happy to assist you. You can also find more information about Spanish Inheritance tax rates and the Spanish inheritance tax law in our dedicated posts.

Get help with your Inheritance in Spain from a professional

If you are planning on relocating or buying a property in Spain, you may be faced with the decision of whether or not you want to be a non-resident in Spain. If so, there are several things that will need to be taken care of in advance.

This article explores what it means if a person is considered a non-resident taxpayer in Spain and how this affects their taxes. It also provides information about the various types of income that will have different tax rates applied.

What is a non-resident in Spain?

You are a non-resident if you live in the country for less than 182 days. For example, a tourist first will be a non-resident because they have a non-permanent aim in mind.

Even if you have a residency permit, such as a short-stay visa. You will still be considered as a non-resident when you are staying less than 182 days.

It is possible for a non-resident to own property, open a bank account, and get income from Spain. This does not make them a resident in Spain.

People visiting in Spain will automatically be deemed non-resident taxpayers the day they arrive in the country. This is important to note, as it can have a direct bearing on how much you will be taxed for certain instances such as real estate purchases and inheritance.

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Tax in Spain for non-resident ex-pats

There are two types of taxes in Spain that will need to be paid by those who are staying in Spain as non-resident. These are income earned from work or from passive income, such as income from a rental property for example.

In terms of the first category, the rates may vary depending on how much you earn and whether you have Spanish residency.

Some of the advantages of living in Spain as a non-resident:

  • There is no inheritance tax in Spain for non-residents. This also applies to properties that were purchased before moving abroad.
  • You do not have to pay social security contributions to the state, though this does not apply if you are self-employed and just want to buy private health care.
  • The only tax that you will need to pay will be on any property that is owned in Spain. If you do not reside in the country, this can be quite low and means that there is no increase in property taxes each year.
  • If you leave your primary residence empty for two years or more, you will not be charged any taxes on it. However, you must keep the property up to date in terms of maintenance and renovations.
  • If an individual is under 65 years old and has resided abroad for more than 10 years (or is over 65), they are able to claim Spanish residency, which will provide them with a number of benefits.

Non-resident tax in Spain

In general, non-resident taxpayers pay a rate of 24 per cent on income earned in Spanish territory or obtained from Spanish sources and a rate of 19% on capital gains and financial investment earnings derived from Spanish sources. Various other sorts of income are subject to different rates.

Non-resident individuals who are tax residents in a country/jurisdiction of the EU or of the EEA and have an effective exchange of tax information with that nation/territory are taxed at a rate of 19%.

Capital gains tax for non-residents in Spain

Non-residents from outside the European Union (EU) are required to pay a 24% fixed capital gains tax rate. However, if the nonresidents are from a European country, their capital gains tax is lowered to just 19%.

Compared to the capital gains for residents which is 19 per cent for the first €6,000 profit, 21 per cent for profit between €6,000 and €50,000, and 23 per cent for any profit above €50,000.

Jewellery, stocks, collectables, bonds, property, precious metals, lands are subject to capital gains tax.

Non-resident tax rates for income that is earned in Spain

Certain rules apply to those who are living outside of the country and earning an income through employment or other means. This includes dividends, rental property, etc.

Those who do not live in Spain but own properties within the country will be taxed under non-resident taxation

Spanish Wealth tax for non-residents

Non-residents who own properties in Spain will have to pay wealth tax. This holds true even if the property is not being used as a primary residence.

The wealth tax rate in Spain is between 0% and 3.5% depending on the region you are registerd in.

Frequently Asked questions on non tax residency

Below you can find some of the commonly asked questions on non-tax residency and their answers.

Who can help me file my tax return?

It is recommended that you work with a tax advisor if you are filing taxes in Spain for the first time or have any concerns about the process. As every country has its own rules and regulations regarding personal income, it can be quite confusing for non-residents to get an understanding of the process.

What are the tax consequences when choosing between being a resident and a non-resident taxpayer in Spain?

The main difference between these two types of taxpayers is that one will be taxed more heavily than the other. It usually depends on your status as a resident or a non-resident, though there are some exceptions to this rule.

What is the tax year in Spain?

Residents of Spain pay taxes on a calendar-year basis, with January 1 to December 31 as the tax year. Between April 6 and June 30 of the following year, eligible residents must submit tax forms to the Agencia Tributaria. In Spain, there are no further extensions to filing income tax returns.

What do I need to pay taxes in Spain?

To pay taxes in Spain you will need a NIE number and a fiscal number. You must also have a Spanish bank account to pay taxes in.

What happens if I don’t pay my taxes on time?

The Agencia Tributaria will charge late payment interest to those who do not file their income tax returns by the given deadline. There is also a penalty of up to 10% for those who fail to make any payment within two months after the due date for filing your return.

How much is the capital gains tax for non-residents in Spain?

Non residents pay 19% on capital gains and financial investment earnings derived from Spanish sources.

When do i have to pay income tax in Spain?

The deadline for submitting the Spanish income tax returns to the Agencia Tributaria is between April 6 and June 30 of the following year. There are no further extensions.

Do I have to pay wealth tax in Spain as a non-resident?

No, wealth tax is only applicable to those who are residents of Spain.

Do I have to pay tax on my rental income as a non-resident?

Non-residents are required to pay a tax of 24.75% on rental income. You cannot reduce 50% as in the case of resident owners. If you are a resident, you must include your rental income with your other income when making your annual Spanish tax return.

Do I have to pay Spanish social security while living abroad?

Only if you live in Spain for 183 days or more then you will be subject to Spanish social security laws.

Are pensions paid by Spanish social security to non-Spanish residents who do not have an agreement with the country taxable?

Non-resident individuals that retire in Spain and who receive retirement pensions or other types of pensions are subject to non-resident income tax.

Do I need to pay taxes on my worldwide income as a non-resident in Spain

No, you are only required to pay taxes on income earned in Spain.

Which income tax form do I need to declare as a non-resident?

It is necessary to submit Form 210.

A word from SpainDesk

In this article, we have discussed the non-resident tax in Spain. If you would like to have professional tax advice, contact us at contact@spaindesk.com and get more information on how we can help you.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

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