The IRNR: Non-Resident Income Tax
The most significant and most overlooked tax for non-resident property owners in Spain is the IRNR (Impuesto sobre la Renta de No Residentes). Even if you don't rent out your property, you must declare it annually to the Spanish tax authorities.
If You Don't Rent the Property
Spain operates a system of deemed rental income (imputación de rentas). The tax authority assumes you have received a benefit from owning the property and taxes you accordingly. The calculation:
- 1.1% of the cadastral value (valor catastral) if it has been updated in the last 10 years
- 2% of the cadastral value if it hasn't been updated recently
- Tax rate: 19% for EU/EEA residents; 24% for non-EU residents
The cadastral value is typically well below the market value of the property. The resulting annual tax bill is usually modest — but it is still compulsory. Failure to file means penalties, plus interest from the date the return was due.
If You Rent the Property
If you rent your Spanish property — whether long-term or as a holiday let — you must declare the rental income quarterly on Form 210. EU residents can deduct qualifying expenses (repairs, management fees, mortgage interest, insurance, utilities). Non-EU residents cannot deduct expenses and pay 24% on gross rental income.
Important: If you rent your property without a tourist licence or without declaring rental income, you're exposed to inspections, significant fines, and potential loss of the property. Spain has significantly increased enforcement in recent years.
IBI: The Annual Council Tax
The IBI (Impuesto sobre Bienes Inmuebles) is the Spanish equivalent of council tax — an annual charge levied by the local municipality based on the cadastral value of your property. It is typically between €200–1,500 per year for a standard residential property on the Costa Blanca, depending on location and size.
IBI is due annually, usually between September and November. It can be paid by direct debit from a Spanish bank account or in person at the town hall (ayuntamiento). Unpaid IBI accumulates as a charge on the property and must be cleared on any future sale.
Modelo 720: Foreign Asset Declaration
If you are Spanish tax resident, you must file Modelo 720 to declare foreign assets (bank accounts, investments, property) with a total value exceeding €50,000. The filing deadline is 31 March each year.
The penalties for failing to file or filing incorrectly were historically severe — though some were reduced following an EU ruling. Even so, Modelo 720 compliance is taken seriously, and the costs of getting it wrong are significant.
Plusvalía Municipal: The Capital Gains Tax on Land Value
When you sell a property in Spain, the municipality charges plusvalía municipal — a tax on the increase in land value during your period of ownership. This is calculated by the local authority using a formula based on the cadastral value and years of ownership.
Following a Supreme Court ruling in 2021, plusvalía is now only due when the land value has actually increased. If you sell at a loss, you can challenge the charge. Your lawyer handles this as part of the sale process.
Withholding on Property Sale (Retención)
When a non-resident sells a property in Spain, the buyer is legally required to withhold 3% of the purchase price and pay it directly to the Spanish tax authority. This is not the final tax — it is a withholding on account of any capital gains tax liability. You can reclaim any overpayment once your annual capital gains return is filed.
How CNG Lawyers Helps
We manage IRNR filings, IBI payments, Modelo 720 declarations, and sale-related retención claims for our clients. Most of this can be handled via power of attorney — you authorise us to file on your behalf, and we keep you informed and compliant without requiring your physical presence in Spain every year.