If you are a tax resident in Spain and own property abroad, you may wonder about your tax obligations regarding that asset. Spanish tax legislation has specific rules for the taxation of foreign properties, and understanding these rules is crucial to avoid issues with the tax authorities. Here’s an overview of the key considerations.
Tax Resident in Spain and Foreign Property
In Spain, tax residency is primarily determined by the amount of time you spend in the country. If you stay in Spain for more than 183 days a year or if your center of economic and personal interests is in Spain, you are considered a Spanish tax resident. As a tax resident, you are required to declare all your global income and assets, including those located outside of Spain.
Reporting Foreign Property
- Declaration of Foreign Assets
As a tax resident in Spain, you are required to report all your assets and rights located abroad through the Modelo 720, an informative declaration of foreign assets and rights. The Modelo 720 must be filed annually, typically between January and March, and includes information about properties, bank accounts, shares, and other assets located outside Spain.
- Income Tax
In addition to the informative declaration, you may need to pay tax on income related to your foreign property. This is because Spain taxes the global income of its tax residents. If the property generates income, such as rent, you must include this income in your Spanish income tax return using Modelo 100.
Double Taxation Treaties
The good news is that Spain has double taxation treaties with various countries designed to prevent you from paying tax on the same income in both countries. These treaties set out rules to determine which country has the right to tax certain types of income and may allow you to receive a tax credit in Spain for taxes paid in the country where the property is located.
Conclusion
As a tax resident in Spain, you are obligated to declare all your global assets and income, including property abroad. While there is no specific tax on foreign property itself, any income generated and information about these assets must be included in your tax returns.
At Sterna Abogados, we are ready to help clarify any questions you may have and ensure that you comply with tax regulations. Contact us for personalized advice and support in managing your tax obligations related to foreign property.