TAXATION OF REAL ESTATES LOCATED IN SPAIN HELD BY PERSONS WITH TAX RESIDENCE IN GERMANY

Whenever a natural person owns one or more real estates for private purposes in Spain, the following yearly taxes (apart from the property tax “IBI“) apply according to Spanish Law:

a) Non-resident Income Tax (“IRNR”): its calculation is based on the cadastral value of the real-estate and then multiplied by the corresponding coefficient (1.1% / 2.0%), with a tax rate of 19% to be applied.

b) Wealth tax, provided the purchase value (or the cadastral value, if this is higher) exceeds 700,000 Euros. In this case, a graduated tax rate starting with 0.2% would be applied.

These two taxes are paid by submitting the form “210“ (during the following year) and the form “714“ (until latest the 30th of June of the following year), respectively.

There are plenty of non-residents who are not aware of this obligation or even of the fact that Spanish Tax Authorities are entitled to claim for the subsequent payment (applying considerable surcharges, interests and administrative costs) of the last four years.

Our Compliance-Team has vast experience on this matter and would be glad to prepare the respective tax returns for all those clients of yours who may find themselves in a similar situation.

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