GrapeEater

Did you know... that if you rent out your home in Spain the goverment want a smacking 24% of your income and incredibly the TENANT has to pay it to the tax office each month, not the landlord (unless hte tennant defaults)?

True or False? Anyone experienced this ?

missile

Similar to the UK, where a tenant should deduct tax when he rents from overseas LL.

Fred James

Yes, you certainly have to pay the tax at 24% on the rental income. The good news is that the "Imputed Income Tax" that you have to pay even if you don't rent it is not chargeable for the period that you actually rent it out.

I don't know about the tenant paying it but in theory you have to declare the income every month but you can apply to pay it every 3 months.

The allowances you can claim are pretty small as opposed to resident landlords who only pay tax on 50% of the rental income and they can claim much larger allowances.

I am not for a minute suggesting that you are trying to avoid the tax but, for the benefit of other forum members, I would point out that many foreign owners think that just because they arrange to have the rental payments paid in the UK in Sterling that this avoids the tax - it doesn't.

The Spanish tax offices are really cracking down on all forms of tax evasion now. Last year their tax income increased by 25% over the previous year - in a recession the increase can only have come from tightening up on the "Black Economy".

All Spanish taxpayers who rent property have to declare the Catastral reference of the property that they are renting. The tax office links that back to the owner and Bingo - another one bites the dust!

They are also scanning all the private rental sites on the Internet and linking those back to tax returns.

steviedeluxe

Ok, I'll bite. If the website (and payment) is organised by a third party in the UK, how can the Hacienda ascertain the income (and thus tax to be paid)?

JLFS

I think the method would be, that the Hacienda demand a whacking great amount, and then it is up to the owner to show that it was not as much as they are claiming

Fred James

That's about right. In these matters you are guilty until proved innocent.

HMRC in the UK have been doing this sort of thing for years. Adverts for the sale of expensive overseas property, boats and cars are all entered into a huge database. One day it all comes together and then it gets nasty.

John and Elaine

What about the license/perimsio from the Junta which authorises the property to be let, and the IVA which I believe must also be added ?

I also believe that the property must be registered as rental property, thus some apartments cannot be legally let.

avocados

Totally incorrect about the tenant paying the tax for the landlord.

It never happens with residencial contracts, but for commercial contracts it is not unusual for it to be included in the agreement.

The very important point being that it has to be explicitly declared in the rental agreement, with no room for ambiguity.

I really do despair at the amount of complete rubbish posted on Spanish foro, these days!!

GrapeEater

Maybe right! But we come here for many reasons: the craic, gossip, arguments and to be educated... share knowledge ... just like in the real world community.

At least here you don't have to buy a cana or café con leché to talk to bar-stool jonnies !!

If you have the answers to current rental laws / rules please be good enough to share them. perhaps the Admins will let you write an article for the "FREE BEER" section?

JLFS

Nice one Grapeater sonme K for that.

jdr

That is correct, but I don`t think many do it.

frigilianafreddy

I have asked several lawyers about this and none know anything about it.

But on the subject of tax non payment...

One of my neighbours was nabbed by the hacienda for tax.

Unkown to them the Spanish tax guys have the capability to cross reference tax records with electricity bills. They noticed fairly high consumption in the winter months (when it was on a long winter let).

When they made contact with the owner they asked for evidence of occupation (air flight bookings etc) or details of lets. They had to pay the tax plus a surcharge, but are now being investigated over possible lettings over the last 4 years. Needless to say they have not kept records so Gawd knows how it's going to be settled. To be honest I'm not even sure they've paid the imputed tax, either!!

Neighbour reckons they didn't use the electricity bills but was grassed up by a miserable old Spanish guy who lives full time in the complex. Hacienda are adamant it was the 'leccy bills wot got him.

John and Elaine

The utility companies have been obliged to pass on details of consumption to the 'Hacienda' certainly since January this year, if not from last year too. This is the first case I have heard of them taking action.

Also, I guess everyone knows that there is free flow of information between the Hacienda, and the tax agencies of UK and other EU members.

Fred James

I'm sure it was the electricity bills.

As I said in an earlier post, Hacienda are managing to raise a lot of tax by homing in on tax evasion.

They aren't stupid and in many respects have better computer systems than HMRC in the UK. Add to that the easy interchange of data between government agencies, the banks and the utility companies to name but a few (which is probably more restricted in the UK) and you have a recipe for getting caught if you try to evade the taxes that are due.

I also know of cases where registration details of cars parked on suspect properties have been used to track down offenders.

jojojojojo

My house is owned by "a company" in France. I pay a letting agent in Spain cash every month and the money is passed on to them - My agent tells me that as the company who owns the house is in France and I am not Spanish, the Spanish rental contract and tax laws dont apply. Is that right?

Jo x