DO I NEED TO APPOINT A FISCAL REPRESENTATIVE IN SPAIN?
It is not an obligation for EU non residents that own property in Spain to appoint a fiscal representative. However, non resident taxpayers must to appoint a fiscal legal representative in the following cases:
- You develop your business on a permanent basis providing professional works or services in Spain.
- When you are allowed to deduct certain expenses from your taxable income.
- You have your main residence in a country with no tax information exchange with Spain. (a double taxation agreement non exit)
- When an organisation operating under the system of attribution of earnings established abroad carries out an economic activity in Spain, and all or part of said activity is carried out, in an ongoing or regular manner, in facilities or workplaces of any kind, or it trades in Spain through an agent authorised to contract, on behalf and in representation of the organisation.
- When required by the Tax Office.
However, distressing situations could happen and a lack of notification could result in unexpected fines or even having your accounts or property have been seized. Then you will realise that the Tax Office has been after you for a while. By the time you discover this you may have had to deal with a large outstanding tax bill. It could then be too late for tax recovery.
The Spanish Tax Office sends notification of any outstanding taxes to your fiscal address in Spain. Notifications have to be delivered by hand by the postman and he only makes two attempts to delivery the notifications. If you do not act upon this notification then you will be officially notified which means your notification will be officially published in the BOE (Boletn Oficial del Estado). This is a public paper published by the Government. After this the Tax Office is free to proceed with embargoes which might be applied to your bank account or even your property.
If you are certain your fiscal address matches your home address in Spain and you are completely certain that you deal with all notifications, in a timely fashion thenÂ you should be alright. However, for your peace of mind, you should consider appointing a fiscal representative who will assume the responsibility of receiving any formal communication and acting upon them with the Tax Office on your behalf within the given timescales.
This is also applicable for fiscal residents in Spain. Even though they should easily receive notifications, sometimes we find that they dont, for example, you may have moved to a new property and forgotten to advise the Tax Office of your change of address or you receive your mail into a post box and the Tax Office ignores that, etc…
Appointing a Fiscal Representative who represents you throughout the fiscal year, will give you the benefit of knowing that all communications from the Tax Office will be sent to your solicitors address. You then avoid any inconvenience caused by non receipt or delay in receiving important correspondence.
NON RESIDENT TAX
NON RESIDENT TAX must be completed by all NON RESIDENTS as a consequence of owning property in Spain.
Many people who live abroad and own a Spanish property still ignore this responsibility to complete a Property Deemed Income Tax declaration. However, if they are caught by the Tax Authorities they will be liable to pay the last four years tax and probably a significant fine.
NON RESIDENT TAX DEADLINES
Non Resident taxpayers buying property this year will have to complete and submit a deemed income Non Resident Tax declaration before the 31 of December of the year following the purchase (2014) and thereafter on a yearly basis.
If you bought your property before the year 2013, deadlines are as follow:
- If the property has not been rented out during the year. Deadline is 31 December.
- If the property has been rented out and you are making profits: A tax return has to be submitted on a quarterly basis before 20 April, July, October and January. In compliance with Article 24.6 Non Resident Tax Law, only EU owners may deduct from incomes all the costs in directly related to the property (i.e. repairs, insurances, loan interest or other allowable property expenses)
- If the property has been rented out and you are making losses. Deadline to submit a nil declaration: between 1and 20 January 2014.
- If the property is on the name of a Non Resident Company. Deadline is 31 January 2014.
- In compliance with the Double Taxation Agreement signed among Spain and other EU countries, interests paid in Spain on non resident bank accounts, are not subject to pay taxes: Deadline to claim for a refund on tax withheld in the last four years: 20 January 2014.
The Tax Authority knows that many Non Resident property owners are not completing their annual tax returns and they are very likely to receive a letter regards outstanding taxes.
We advise you to contact a professional who can asses you regards your tax obligations and liabilities avoiding unnecessary fines and penalties or embargoes being applied to your assets.
Take professional advice for your peace of mind. Prevention is always better than cure.