Financial Matters
NIE - Fiscal Identification Number
All resident and non-resident foreigners with who own, or seek to own, property or vehicles in Spain must have this document. It is obtained from the relevant government department in your nearest major Spanish city or from the british consulate in the UK.
Taxation – a general overview
In Spain a gestor is a person who helps with all aspects of officialdom and bureaucracy. They can help you file your annual tax return, pay your taxes and generally act as a friendly interface between you and the tax-man!
You are liable for income tax in Spain if you are resident in Spain for 183 days in the year. However there is a dual taxation agreement between the UK and Spain so independent advice should be obtained to establish the best option for you if you are not in employment within Spain. Spain has a rate of income tax below the average for the European Union, and your "gestor" or accountant will be able to advise you on tax liabilities and allowances. There is a standard tax free allowance (calculated after the full value of annual social security contributions has been paid) for workers or the self employed with a higher band providing more tax free income for pensioners and people with disabilities along with allowances for dependants. Income tax is calculated in different bands according to the income level starting at 24% (2007) and rising to 43% for annual income over 52360€. Each individual has a tax free allowance and there is tax relief on mortgage interest.
When you sell a property, it will be liable for capital gains tax, payable on the increase in value of the property, less allowances. CGT for both resident and EU nationals changed on January 1st 2007 and it is now a standard 18% (although a different level may apply for property purchased before this date).
Wealth Tax
Wealth tax is an annual tax payable on your material assets over a certain figure less deductions. If assets are jointly owned (e.g. by a husband and wife, or by a group) then each partner should make separate declarations and claim the allowance. Specialist advice is required and recommended as many residents can legally avoid paying this.
IVA is charged at 3 different rates and should always be itemised separately on official invoices:
This is a local tax levied on property and is most similar to UK council tax (rates). The rate is set by the ayuntamiento (town hall) who is responsible for the municipal zone in which your property is located. The amount of the charge is assessed according to the official valuation of the property (the valor catastral), and it is paid annually (normally November). IBI is significantly lower in comparison to the UK council tax and can start at just 50 euros per year.
This is a community charge payable for the upkeep of all community facilities from which you or your property benefits, such a communal entrances, lighting, building insurance, security, lifts, swimming pools, gardens etc. There has to a community committee established (run by elected volunteers of homeowners who ideally live on site). The committee is required to hold at least one meeting per year to agree and set the budget for the following years maintenance. All property owners have the right to, and are advised, to attend these meetings as all decisions affecting the community are mandated here. Éach property owner then has to pay their community fees according to the proportionate division mentioned in their title deeds (known as the “cuota”) and this is based on each individual property size.
Rubbish rates - BASURA
Your local Town Hall will also make a charge for the Rubbish Collection (Basura) from either your property, complex or the nearest communal bin to your house. Rubbish is normally collected every day except Sunday and fees can be as low as 26 euros per quarter! Basura charges are set by the ayuntamiento and can be charged annually or quarterly depending on the Municipality in which you are purchasing the property. In some complexes or communities these may be included in your Community fees.
Electricity and water
Most properties have independent electricity and water meters and you will be charged according to the tariff you have selected and your level of consumption. Some Communities may only have one meter for the whole development and therefore include the water in the Community Fees.
You need to present a copia simple of the escritura (title deed) to the relevant utility company showing the transfer of the property in to your name to transfer the service across and to set up a direct debit facility at the same time.
LEGAL DISCLAIMER
Although accurate at the time of writing the information contained in this document does not constitute a legal contract or legal advice. Please note that we cannot be held responsible for the contents and private legal advice should be taken. No claims against Andalucia and Murcia Select CB, or its employees, in respect of the information above will be accepted.