Thread: Non-Resident Taxes

Sorry for bringing up such a dour subject but many people seem to be under the mistaken impression that the annual tax obligations of non-residents are being abolished.

It is true that one of the government's election promises was the abolition of wealth tax (patrimonio) from the 1st January this year and, in fact, this is one of a number of measures published subsequent to the election designed to boost the economy.

Whilst some of these measures have already been put into effect it would appear that the abolition of wealth tax has not yet been passed by parliament and enquiries of AEAT elicit nothing more than a bland reply to the effect that they have 'received no instructions regarding this matter'.

Even if wealth tax is subsequently abolished there is still the question of non-resident income tax known as 'renta' which will have to be paid for the foreseeable future and also bear in mind that declarations currently being made are for the financial year of 2007 so both taxes need to be paid this year anyway.

With the drastic decrease in revenue for AEAT both regionally and nationally as a result of the slump in property sales they are going to be far more vigilant in ensuring that the taxes due are actually paid and it is also a fact that non-payment of taxes may prejudice the reclamation of any or all of the 3% retention made on the sale of a property by a non-resident.

Non-resident tax returns, both renta and patrimonio, for 2007 have to be submitted before the 31st December this year.

If you are non-resident you can declare on Modulo 214 , a simplified cut down version for Non-Residents. The main declaration is based on the catastral value of your property. This can usually found on your IBI receipt. Your local taxes or 'rates? Many houses ahve not been rerated for many years an because of this the Hacienda can challenge the declaration but in reality they tend to be happy that the tax has been paid as many still think that living in Spain if free! Taxes that are unpaid can be charged against property.
If you are unsure, employ a gestor to declare your tax and ask for copies of the declaration. In future years you can go to the tax office, buy the 214 form, about a euro and then fill it in yourself, following the model of the previous year. You then take the form and its envelope to your bank , pay the tax due and the bank will send it on to the Tax office ( Hacienda) after giving you a copy.

The wealth tax (patrimonio) is calculated at 0,2%, up to €167.129,45 and on a sliding scale thereafter, of the highest of the three following values

Valor Catastral (rateable value)
Any revised value imposed by the tax authorities
Escritura value

The income tax (renta) is calculated at 24% of 2% of the valor catastral (1,1% if it has been revised since 1st January 1994).

The simplified 214 form can only be used if just one property is owned and a separate declaration has to be made in respect of each person named in the title deed with the base upon which the taxes are calculated divided by the number of owners. The taxes can be paid at any time during the year following that in which they become due at any bank.

If more than one property with a different referencia catastral is owned (even if it is just a lock-up or a garage) the declarations have to be done on form 714 for the patrimonio and for 210 for the renta and the declaration has to be made from the 1st May to 30th June in the year following that for which the taxes are due. It is still individual declarations for each owner. All of the properties may be listed on one form 714 for the patrimonio but a separate form has to be submitted for each property in respect of the renta.

If you rent out your property you should pay separate taxes on these rentals pro rata according to the number of days that it is rented.

If you use the figures as instructed AEAT cannot challenge your declaration just because the valores catastrales have not been revised. This is taken care of by the fact that you use a multiplier of 2% if there has been no revision since 1994 and 1,1% if there has.

The cost of the form 214 is currently €0,50

How glad I am that I lead a lovely uncomplicated life with no taxable income at the moment. Mind I still use an expert to fill in the annual return. I think it is safest that way; both here and in the UK.