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Andalusia to abolish inheritance tax in 2019

Raymundo Larraín Nesbitt, February, 18. 2019

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
18th of February 2019

Well, I’ll eat my hat. Politicians doing their job, whatever next?

Andalusia’s centre left wing party was ousted from power last December after 37 years in control. With the turn of tide, the new centre-right wing ruling coalition (including a far right-wing party) have agreed in Seville this week to abolish inheritance tax in Andalusia. It won’t actually be abolished – excuse the catchy title – it will be suppressed by 99% on all estates over €1 mn. This translates into only HNWI’s paying a paltry amount on inheriting; the rest of us get to walk away scot-free.

This landmark tax reform is without a shadow of a doubt one of the most important tax milestones in the autonomous region of Andalusia over the last 4 decades (since its inception in 1982). It is the result of a long-winded campaign led by political activists, such as the group ‘Stop Sucesiones’ and other right-wing political groups.

The change translates into 99.99% of inheritors in Andalusia will no longer need to pay inheritance tax on inheriting assets from their parents or spouse, which is a welcome respite. Despite what you may hear, IHT never taxed the ‘rich’ but the hard-working middle class. These fiscal changes are in addition to those approved in 2016 and in 2017 which I had already profusely covered in previous articles and blog posts (see below for related taxation articles).

This bold move allows Andalusia to jump onto the front of the band wagon of other autonomous regions in Spain which are applying reductions on IHT to such an extent which in practice translates to almost suppressing it i.e. Madrid, Basque Country, La Rioja, Navarre, Catalonia, Valencia, Balearic, Canary Islands and now Andalusia too, leading the pack.

Andalusia will officially become in 2019 a tier 1 tax-friendly region for inheritance tax, even surpassing Madrid in some respects. As I had previously pointed out in other tax articles of mine relating to Spanish Inheritance Tax, there was an ongoing movement throughout Spain over the last decade to suppress or greatly reduce inheritance tax to the point of negating it. This trend has finally coalesced into this new regulation.

In a nutshell, inheritance tax will be as follows in Andalusia:

Requirements to benefit from this tax allowance

  • Inheritor/estate beneficiary/taxpayer needs to be EEA/EU-resident.

 Inheritance Tax in Andalusia

  • Pre-existing wealth nil-rate band raised to €1,000,000 (per inheritor).
  • Estates equal to or below €1,000,000 will go untaxed (per inheritor).
  • Estates over €1,000,000 will benefit from a 99% exemption (per inheritor). Meaning you only pay 1% over what exceeds the 1mn threshold.

Who benefits?

  • Group I: natural and adopted children under 21.
  • Group II: natural and adopted children over 21, spouse, registered civil partnerships, parents, adoptive parents, grandparents and great-grandparents.

 

Conclusion

This is as positive as news get. Inheritance taxation had traditionally been Andalusia’s Achille’s heel. It turns out it will now become one of its main selling points! Go figure.

I really do not need to explain how positive this tax news is for Andalusia and the broader market. I never thought I would live to see the day Andalusia led the abolition of IHT in Spain, even surpassing liberal Madrid, but there you go. Times change and the world moves on.

Holding structures incorporated with the sole purpose to mitigate or negate IHT liability will now become redundant in Andalusia following the approval of this change in regulation. This law is expected to be approved over the course of 2019.

For once, I’m happy to commend politicians on adopting a sensible tax measure that benefits legions and contributes towards dynamising the Andalusian economy. Kudos to them!

I don’t want to push my luck, but now that politicians are on a warm fuzzy mood, can we ask them to show some love and adopt a similar programme to Portugal’s Non-Habitual Resident tax scheme (NHR) to attract non-resident investments, particularly British? Pretty please with cherries on top?

“It’s the economy, stupid.” – James Carville

James Carville (1944). He coined this political slogan as campaign strategist of Bill Clinton’s successful 1992 presidential bid against sitting president George H. W. Bush.

Blog originally published at Spanish Property Insight: Andalusia to abolish inheritance tax in 2019

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Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No delusional politician was harmed on writing this article. VOV.

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Holiday lettings: VAT invoice dissected

Raymundo Larraín Nesbitt, February, 11. 2019

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer – Abogado
11th of February 2019

 

In order to claim lenient landlord tax relief from the Spanish Tax Office that leads to a 70% tax mitigation from your tax bill on renting out, your VAT invoice must meet a series of requirements. In Spanish a VAT invoice is called a factura. Many suppliers will be highly reluctant to issue you with one (because they work off the books and do not submit any taxes). Others will hand you a factura just to keep you happy, but it will be missing key elements which make them void i.e. VAT is missing (true case, see examples below). A VAT invoice that misses out on key elements cannot be claimed for tax relief purposes.

By law, you must store all VAT invoices on which you are claiming landlord tax relief over the next 5 years. This is in case you are landed with a tax inspection, where you will be required to produce copies of all VAT invoices you have claimed tax relief on.

Today's tax blog is going to briefly go over the key elements which constitute a proper VAT invoice (factura).

The Spanish Tax Office lists these requirements in much detail on its web page. In this blog, we are going to simplify and only outline the main points that are required (see the blog’s inset photo, right, as graphical support):

Invoice examples, spot the differences!

Sample of a good VAT invoice

Sample of a non-acceptable VAT invoice

Anatomy of a VAT invoice (factura)

 

  1. Personal details of the invoice provider
  • Full name and surname.
  • Company name.
  • NIF number of trader/service provider; if a company, it’s CIF number.
  • Address.
  1. VAT invoice number. i.e. 37/2019
  2. Personal details of the invoice receiver
  • Full name and surname.
  • Company name.
  • NIF number.
  • Address.
  1. Service date.
  2. Service provided, brief description.
  3. Breakdown of Value Added Tax i.e. 21%
  4. Total amount to pay, including VAT on top.
  5. Company’s rubber-stamp seal (optional)

 

The Spanish Tax Office only accepts you claim tax relief against proper VAT invoices. If the VAT invoice you have been handed does not meet all the above requirements, it will not be accepted, and we will not be able to claim tax relief on your behalf.

We gently remind you that till tickets from supermarkets, commercial centres and petrol stations are not accepted by the tax office as tax-deductible. Only proper VAT invoices such as the one featured above.

 

We lower by 70% our client’s tax bills, on average, on renting out. What are you waiting for? Call or email us.

 

We offer the most competitive fees in the market.

Non-Resident Imputed Income Tax (Fiscal Representation Service) €90/year

Holiday Rental Accounting Service (HRAS) 100/tax quarter

We are specialized in taxation

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal & tax services available from Larraín Nesbitt Lawyers:

 

Holiday lettings-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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How to apply for Spanish residency

Raymundo Larraín Nesbitt, February, 1. 2019

Lawyer Raymundo Larraín explains how to attain Spanish residency.

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

 

By Raymundo Larraín Nesbitt
Lawyer - Abogado
1st of February 2019

 

The following procedure we explain below is only for registration of fellow EU nationals i.e. British national. Any national of a country outwith the EU, cannot follow what we explain below.

British nationals may enter Spanish territory without a visa as we are within the Schengen Area. However, should you remain in Spain for more than 3 months, by law, you must apply for Spanish residency (residencia, in Spanish). As a EU national, this requires you attain a Certificado de Registro de Ciudadano de la Unión (Registry for citizens members of the Union). The procedure is extremely easy and straightforward.

You must make an appointment at your local the Oficina de Extranjeros and bring the following with you:

  1. Passport in force.
  2. Two copies of the official form (EX-18) completed in Spanish and signed by the EU-national.
  3. Depending on your situation:
  • Employed: signed job contract & other proof.
  • Self-employed: proof of registration in the register of economic activities (Registro de Actividades Económicas), enrolled in Social Security.
  • Unemployed: prove of hiring private healthcare cover and having sufficient financial means to support yourself and your family.
  • Students: prove of being enrolled in an academic course, proof of health cover (public or private), proof you have sufficient financial means to support yourself.
  • Pensioners: proof of health cover.

 

If you meet all the above requirements, you will be issued shortly after with a certificate member of the Union.

So why is all this relevant you may ask? Because post-Brexit, if you did not register yourself as a member of the Union, you will be stripped of a series of rights and entitlements to which you would otherwise be entitled. You may also be regarded as an illegal alien in EU territory by the Authorities, which may even lead to your deportation to your country of origin.

After five years of continued and legal residence, you may apply for permanent residency or residencia permanente. This allows you unconditional residency in Spain.

After ten years of continued and legal residence, you may opt for Spanish nationality (optional).

 

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on 952 19 22 88 or by completing our contact form.

 

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Brexit-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

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Holiday lettings: “Con factura, por favor.”

Raymundo Larraín Nesbitt, January, 21. 2019

Blog post copyrighted © 2017 and 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer – Abogado
21st of January 2019

These four simple words in Spanish ('with a VAT invoice, please') can save you a massive amount of money when you pay non-resident taxes in Spain.

Following new EU regulation, all non-resident EU/EEA property owners who lease property, are entitled to deduct from their quarterly tax bill all property-related expenses (Iceland, Liechtenstein and Norway tax residents may also benefit from these generous tax deductions). That is quite a lot of money you can offset, greatly mitigating your tax bill. If you are not EU-resident, you cannot benefit from this.

This is understood as expenses that contribute towards the upkeep of your Spanish property.

Anyone handing you an invoice without VAT, is not tax-deductible. Make no mistake, as you cannot offset this expense you are in fact paying for the tax of this other person. I don't know about you, but I've never fancied paying for other people's taxes out of my own pocket...

You may claim as tax relief all the following expenses, providing you have been issued with a proper VAT invoice (till receipts from supermarkets or petrol stations are not acceptable).

  • Interests arising from a loan to buy the property (i.e. mortgage loan).
  • Local taxes and administrative charges and surcharges that impact on the rental income or else on the property itself (i.e. IBI tax, SUMA tax, rubbish collection tax).
  • Expenses arising from formalising rental contracts such as lets or sublets (i.e. Notary and/or Land Registry fees); legal defence (i.e. hiring a lawyer for tenant eviction purposes).
  • Maintenance costs may be offset; refurbishment expenses (improvements) are excluded.
  • Community of owners’ fees: these receipts have no VAT, by Law.
  • Home insurance premiums: fire, theft, civil liability etc.
  • Property repairs: plumbing, roof retiling, painting, pool pump etc.
  • Utility invoices: electricity, water, gas, internet, and landline.
  • Cleaning
  • Concierge, gardening & security services (i.e. gated communities).
  • Lawyer’s fees: to calculate you quarterly tax returns.
  • Property management fees: to manage your rentals.
  • Advertising expenses: online/offline.
  • Marketing expenses.
  • Home depreciation and amortization. The calculation is 3% on the highest value of the following two: home buying costs or cadastral value; the value of the land is excluded.

 

We lower by 70% our client’s tax bills, on average. What are you waiting for? Call or email us.

 

We offer the most competitive fees in the market.

Non-Resident Imputed Income Tax (Fiscal Representation Service) €90/year

Holiday Rental Accounting Service (HRAS) 100/tax quarter

We are specialized in taxation

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal & tax services available from Larraín Nesbitt Lawyers:

 

Holiday lettings-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.017 and 2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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Property portals and rental platforms to pass on landlord details to the Spanish tax Authorities. Are you prepared?

Raymundo Larraín Nesbitt, January, 7. 2019

HomeAway, AirBnb and other property portals and estate agencies have been busy informing their clients they will disclose all their tax details over to the Spanish Tax Office in 2019. Are you up to date with your Spanish taxes? Have you been declaring and paying tax in Spain on your rental income? We file taxes all over Spain.

Blog post copyrighted © 2018 and 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer – Abogado
7th of January 2019

You may have received last December 2018 an email from your property portal or estate agency similar to this one.

Property portals have been scrambling to send frantic emails over the last month to expat clients (‘hosts’, in their terminology) informing them that going forward they will be passing on all their tax details over to the Spanish Tax Authorities as from the 1st of January 2019. They will request you complete a tax form that will be relayed over to the tax office. If you fail to comply, you will no longer be allowed to do business with them.

So what does all this even mean? It means that estate agents and property portals have been forced to turn into whistleblowers reporting all your rental income under threat of heavy fines.

The reason is because new tax laws now force estate agents and property portals to pass on all your (rental) tax details over to the Spanish Tax Office under threat of humongous fines up to €600,000. Property portals and agents must submit a new quarterly tax form (number 179) to the tax Authorities with very detailed information on all their client’s rentals. If you have been renting out in Spain your property over the last year, and have not declared and paid tax on your income, chances are the tax office already knows about it and you are going to be fined.

The details passed on to the tax Authorities will be retroactive as from the 1st of January 2018. However, this does not preclude the fact that the Spanish Tax Office is entitled to collect taxes going back four years (statute of limitations).

In Spain, when you rent out a property you are taxed at source.

In other words, you need to declare and pay taxes on your rental income in Spain, not elsewhere i.e. in your home country. Depending on whether there is a double taxation treaty in force with your home country (i.e. such as with the UK and the RoI), your national tax office will give you tax breaks on the tax you have already paid in Spain.

On being non-resident and owning property in Spain, you are liable for the following two taxes:

  • As a non-resident, when you own property in Spain you should be paying an annual end-of-year tax called Non-Resident Imputed Income Tax (even if you do not rent out your property). More information on this tax here: Non-Resident Imputed Income Tax (Fiscal Representation Service) – 8th October 2018
  • If you do rent out your Spanish property, either long-term or as a holiday letting, you must file in addition to the above, a quarterly income tax declaration. Generous landlord tax relief is available for all EU-residents. More information on this quarterly income tax here: Holiday Rental Taxation in Spain – 8th July 2018.

 

The most interesting part of our taxation service is that if you are EU-resident we can bring down your tax bill by an average of 70%. Ask us.

We offer two different taxation services which are very competitively priced. The service is provided always by native English-speaking lawyers and economists.

Fines for non-payment of tax on rental income range from 50 to 150% of the undeclared amounts, plus delay interests.

Any unpaid tax can be placed as a charge against your Spanish property.

If you are not up to date with your Spanish taxation, don’t procrastinate any longer; contact us ASAP and see how we can help you out. Be pro-active, do not allow the Spanish taxman slap you a huge fine in 2019!

 

We offer the most competitive fees in the market. We file taxes all over Spain.

Non-Resident Imputed Income Tax (Fiscal Representation Service) €90/year

Holiday Rental Accounting Service (HRAS) 100/tax quarter

We are specialized in taxation

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Tax & legal services available from Larraín Nesbitt Lawyers:

 

Holiday lettings-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

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Seasons Greetings

Raymundo Larraín Nesbitt, December, 28. 2018

From Larrain Nesbitt Lawyers we wish all our friends and clients a Merry Christmas and a Happy New Year.

The law firm will now remain closed for the holiday season and will reopen its doors on Monday the 7th of January 2019.

Online service will remain open for urgent queries only.

 

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Did you get an email from AirBnb or HomeAway over your Spanish tax details?

Raymundo Larraín Nesbitt, December, 20. 2018

AirBnb and other property portals have been busy informing their clients that they will disclose all their tax details over to the Spanish Tax Office. Are you up-to-date with your Spanish taxes? Have you been declaring and paying tax in Spain on your rental income? We file taxes all over Spain.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
21st of December 2018

 

Property portals have been busy sending emails over the last week to expat clients (‘hosts’, in their terminology) informing them that going forward they will be passing on all their tax details over to the Spanish Tax Authorities as from the 1st of January 2019. The details passed on to the tax Authorities will be retroactive as from the 1st of January 2018. However, this does not preclude the fact that the Spanish Tax Office is entitled to collect taxes going back four years (statute of limitations).

In Spain, when you rent out a property you are taxed at source. In other words, you need to declare and pay taxes on your rental income in Spain, not elsewhere i.e. in your home country. On being non-resident and owning property in Spain, you are liable for the following two taxes:

  • As a non-resident, when you own property in Spain you should be paying an annual end-of-year tax called Non-Resident Imputed Income Tax (even if you do not rent out your property). More information on this tax here: Non-Resident Imputed Income Tax (Fiscal Representation Service) – 8th October 2018
  • If you do rent out your Spanish property, either long-term or as a holiday letting, you must file in addition to the above, a quarterly income tax declaration. Generous landlord tax relief is available for all EU-residents. More information on this quarterly income tax here: Holiday Rental Taxation in Spain – 8th July 2018.

 

The most interesting part of our taxation service, is that if you are EU-resident we can bring down your tax bill by an average of 70%. Ask us.

We offer two different taxation services which are very competitively priced. The service is provided always by native English-speaking lawyers and economists.

Fines for non-payment of tax on rental income range from 50 to 150% of the undeclared amounts, plus delay interests. Any unpaid tax can be placed as a charge against your Spanish property.

If you are not up to date with your Spanish taxation, don’t procrastinate any longer; contact us ASAP and see how we can help you out.

Be pro-active, do not allow the Spanish taxman to slap you a huge fine in 2019!

 

We offer the most competitive fees in the market.

Non-Resident Imputed Income Tax (Fiscal Representation Service) €90/year

Holiday Rental Accounting Service (HRAS) 100/tax quarter

We are specialized in taxation

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal & tax services available from Larraín Nesbitt Lawyers:

 

Holiday lettings taxation-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Non-Resident Imputed Income Tax end-of-year reminder (NRIIT)

Raymundo Larraín Nesbitt, December, 4. 2018

The clock is ticking. This is your last chance to file your Non-Resident Imputed Income Tax for year 2018. If you are non-resident and own property in Spain - even if you do not rent it out - you need to file this end-of-year tax. We file taxes all over Spain.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
7th of December 2018

 

The end of 2018 fast approaches.

One of our last blog posts for this year, is a gentle tax reminder.

All non-residents, who own property in Spain, need to file by the end of this year a tax called Non-Resident Imputed Income Tax (NRIIT, for short), even if you do not rent out your Spanish property.

We offer the following taxation service for a flat fee of 90 euros plus VAT/year.

We file your tax online within 24 hours.

Our last day to file this tax in 2018 is Thursday the 20th of December.

 

We offer the most competitive fees in the market.

Non-Resident Imputed Income Tax (Fiscal Representation Service) €90/year

We are specialized in taxation

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal & tax services available from Larraín Nesbitt Lawyers:

 

Holiday lettings taxation-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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You are taxed at source on renting out in Spain

Raymundo Larraín Nesbitt, November, 29. 2018

Marbella-based lawyer Raymond Nesbitt explains that non-resident property owners are taxed in Spain on letting out their Spanish properties.

Blog post copyrighted © 2018.Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
30th of November 2018

 

It never ceases to surprise me when I need to clarify this point to clients.

There is a false widespread misconception that on renting out property in Spain, it’s fine to only pay taxes in your home country and not pay any income tax whatsoever in Spain. This is a mistake, of course.

This error is further compounded by the advent of the Common Reporting Standard (CRS, for short), a treaty signed by over 100 countries to combat tax evasion which came into force in 2018. Your home country will inform the Spanish Tax Office you have been deriving income from your Spanish properties but not declaring nor paying any tax in Spain. This may put you at odds with the tax office.

Take the case of British nationals, for example. There is a Double Taxation Treaty between Spain and the United Kingdom which clearly states that any income derived from letting a property is taxed at source. In other words, you need to declare and pay taxes on your rental income in the country where the real estate is located i.e. Spain. This is black on white, no grey areas to be gleaned.

This is better understood with an example. If you are a British national, and own and rent out property in Spain, you should be disclosing this rental income to the Spanish Tax Authorities and paying tax in Spain on a quarterly basis following this schedule for year 2018:

  • 1Q 2018 January – March. Filed on the first 15 days of April.
  • 2Q 2018 April – June. Filed on the first 15 days of July.
  • 3Q 2018 July – September. Filed on the first 15 days of October.
  • 4Q 2018 October – December. Filed on the first 15 days of January 2019.

 

On being UK-tax domiciled, you must also disclose any overseas earnings to the HRMC, which will give you tax breaks on any income tax paid to the Spanish Tax Office so you do not pay tax twice on the same earnings.

In my experience most property owners are not paying tax in Spain, whether out of ignorance or neglect, and are in fact paying tax only in their home country, if at all. The fact that you are not paying taxes in Spain will come to bite you when you sell on your Spanish property as a non-resident, as you will likely forfeit 3% of the sales proceeds.

Your gross earnings are taxed at 19% if you are EU/EEA resident and 24% for the rest of the world. If you are EU-resident, we offer a taxation service (Holiday Rental Accounting Service) which brings down on average your tax bill by 70%, or more, on applying for lenient landlord tax relief. Just ask our friendly staff on this tax service. Why risk dodging taxes when you could simply play it legal and hardly pay any tax?

 

We will save you more money in taxes than what you spend on hiring us.

 

We offer the most competitive fees in the market. We file taxes all over Spain.

Holiday Rental Accounting Service (HRAS): €100/tax quarter

We are specialized in taxation

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

Legal & tax services available from Larraín Nesbitt Lawyers:

 

Holiday rental taxation-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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New Mortgage Law to be passed

Raymundo Larraín Nesbitt, November, 21. 2018

Larraín Nesbitt Lawyers has over 16 year’s conveyancing & taxation experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats acquiring property all over Spain, including Madrid and Barcelona.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of November 2018

 

Over the course of the next weeks a new Mortgage Act will be enacted by Congress. In the wake of the property bubble collapse, which has resulted in hundreds of thousands of bank repossessions and a deluge of litigation against lenders due to the widespread inclusion of abusive clauses in mortgage loans, a new bill is going to be passed that is going to alter significantly how mortgages work in Spain going forward.

The urgency on ratifying this new law comes about because Spain is already two years behind passing it, and the European Commission is threatening to levy fines of up to €100,000 per day if Spain does not pass the bill before the end of this year.

The draft bill is in its last stages, so few changes are to be expected. I have collated below the major highlights worth noting:

  • Floor clauses (collar clauses) will be completely removed in all mortgage loans.
  • Repossession procedures will now only take place when a borrower falls in arrears 12 quotas or 3% of the capital. In other words, as these quotas are normally repaid on a monthly basis, lenders will have to wait a full year before they are able to instigate a repossession procedure against a borrower. Up until recently lenders had to wait 3 months before they could repossess. Moreover, this 3-month rule was a recent change in itself, as lenders post-crash could execute a repossession with only one quota in arrears, which was simply lopsided.

 

This new bill is indeed very welcome for a number of reasons.

The new law will protect families, bolstering consumer rights, should they fall into arrears allowing them more time to get up on their feet and service their mortgage repayments. Over the last decade in Spain we have gone from lenders having the enormous power of instigating a repossession procedure on a borrower missing a single quota to lenders having to wait a full year before filing a repossession. In the aftermath of the property bubble collapse, hundreds of thousands of families lost their homes.

It will also bolster credit. Lenders, beset by hundreds of thousands of litigation procedures under way, are reluctant to lend, which severely impacts the credit supply. This new law will clear the path and hopefully alleviate the problem contributing to open up the credit supply which is fundamental, as credit underpins any major property recovery. Without credit, there can be no market recovery.

All in all, a good law.

I would like to end this post on a positive note, thinking that we have all learnt a collective lesson from the property bubble. Unfortunately, history is a stubborn mistress and teaches us that we always trip over the same stone, more than once.

 

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