Property in Spain While Living Abroad: What the Spanish Tax Agency Expects from You

Many people believe that, once they move abroad, their tax obligations in Spain simply disappear. That is not always the case. If you keep a property in Spain, you may still have tax obligations to the Spanish Tax Agency even if you live abroad.

Your specific obligations depend on whether the property is rented out, left vacant, or sold. In many cases, the Non-Resident Income Tax (IRNR)** comes into play.

01. Who Is Considered a Non-Resident for Tax Purposes

Before discussing taxes, it is important to clarify who is considered a non-resident for tax purposes in Spain. In general, a person is regarded as a tax resident in Spain if they spend more than 183 days per year in Spanish territory or if the main centre of their economic activities or interests is located here. Simply being registered at a particular address is not enough; what matters is your actual tax situation.

Being a non-resident does not mean you have no tax obligations in Spain. It means that you are taxed differently on income or assets located in Spanish territory.

02. Non-Resident Income Tax (IRNR): The Tax Many People Are Unaware Of

The Non-Resident Income Tax (IRNR) applies to income earned in Spain by individuals who are not tax residents here. If you own a property in Spain, you may be liable for this tax even if you do not live in the country.

In these cases, the form most commonly used is Form 210. The way you file depends on how the property is used.

02.1 If the Property Is Rented Out

If you receive rental income, you are earning income subject to IRNR. The applicable tax rate depends on your country of tax residence.

Residents of the EU, the EEA, or Switzerland are taxed at 19% and may deduct certain expenses related to the rental, such as mortgage interest, repairs, insurance, property tax (IBI), or depreciation, provided they meet the legal requirements.

Residents of third countries are generally taxed at 24% on their gross income, without the possibility of deducting expenses. However, recent case law from the Spanish National Court (Audiencia Nacional) has recognised, by extension of the principle of the free movement of capital, the right of non-EU residents to deduct expenses under the same conditions (in a case involving the United States), provided that a direct and inseparable connection with the activity carried out in Spain can be demonstrated. This distinction is important and may have a significant impact on the final tax liability.

As a general rule, rental income is declared for the periods corresponding to the income received, usually on a quarterly basis.

02.2 If the Property Is Vacant or Used for Personal Purposes

Even if the property does not generate any income, the Spanish Tax Agency may require you to declare imputed property income. The principle is that simply owning an urban residential property that is not rented out may give rise to deemed taxable income.

As a general rule, the calculation is based on 1.1% of the cadastral value if it has been revised within the last ten years, or 2% if it has not. The applicable tax rate is then applied according to the taxpayer’s country of residence: 19% for residents of the EU, the EEA, or Switzerland, and 24% for all others.

For example, a property with a cadastral value of €100,000 that is not rented out may generate imputed income of €1,100. A tax resident of Germany would then pay tax on that amount at 19%, resulting in an annual tax liability of €209.

This return is filed annually, during the tax year following the year to which the imputed income relates.

03. Other Taxes You Should Not Forget

Non-Resident Income Tax (IRNR) is not the only tax that may affect a non-resident owner of property in Spain.

IBI (Property Tax) is a municipal tax payable by all property owners, whether resident or non-resident. It should not be confused with IRNR, as they are different taxes and both may apply at the same time.

Wealth Tax may also apply if the value of your assets in Spain exceeds the applicable thresholds. In the Community of Madrid, a broad general tax relief is currently available, but your specific situation may be affected by the state legislation in force at the time, so it should be reviewed on a case-by-case basis.

If you sell the property, the purchaser must pay the 3% withholding tax on the purchase price using Form 211 within one month of the acquisition. The seller must then file Form 210 within a maximum of four months from the date of the transfer, offsetting the withholding tax already paid. This withholding is an advance payment and does not remove the obligation to file the final tax return. In addition, if the value of the land has increased, Municipal Capital Gains Tax (Plusvalía Municipal) may also become payable.

04. What Many People Don’t Understand

One of the most common mistakes is assuming that you only have to file a tax return if the property is rented out. In reality, imputed income on vacant properties or properties used for your own purposes may also give rise to a tax obligation.

Another common misconception is believing that double taxation treaties completely eliminate the obligation to pay tax in Spain. In reality, these treaties are intended to allocate taxing rights between countries and, as far as possible, prevent the same income from being taxed twice. They do not, by themselves, usually eliminate the obligation to file a tax return in Spain.

It is also important to bear in mind that, in certain cases, non-resident taxpayers from outside the EU, the EEA, or Switzerland may be required to appoint a tax representative in Spain.

05. Limitations and Practical Complexity

Although the regulations follow a relatively clear logic, their practical application can be complex. Managing Form 210, dealing with the different types of taxable income, correctly determining tax residence, and, in some cases, the requirement to appoint a tax representative, all mean that many property owners make mistakes simply through lack of knowledge.

In addition, the increasing exchange of information between public registers, the Cadastral Register (Catastro), and other sources of information makes it progressively more difficult to overlook these obligations.

06. What You Should Keep in Mind

Owning a property in Spain while living abroad is not tax-neutral. Depending on how the property is used, you may be required to declare rental income, report imputed income on a vacant property, pay IBI (Property Tax), and comply with additional tax obligations if you sell the property.

The best way to avoid problems is to review your specific circumstances with professional advice rather than assuming that, because you live outside Spain, you no longer have tax obligations in the country.

07. Conclusion

If you live abroad and own a property in Spain, it is important to understand that the Spanish Tax Agency may still require you to file tax returns and pay taxes. Non-Resident Income Tax (IRNR), imputed income, IBI (Property Tax), and the tax obligations arising from the sale of a property are all part of the usual tax landscape in these situations.

The key is not to ignore these obligations, but to understand what you are required to declare and when. Proper planning can help you avoid surcharges, interest, and unnecessary complications.