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REAL ESTATE TAXES IN SPAIN

REAL ESTATE TAXES IN SPAIN FOR UK RESIDENTS AFTER BREXIT

About Real Estate Taxes in Spain

We have to talk about real estate taxes in Spain. The taxation of the incomes of real estate properties in Spain for UK tax residents has suffered very important changes in 2021, as the UK is no longer a member of the EU.

Until 2020 tax residents in UK could apply the reduced rate of 19% instead of the general rate of 24% for taxation in relation to incomes as rentals of properties in Spain. From 2021 the tax rate has changed to 24%, but the most important point is that this 24% has to be calculated on the gross income of the rental, without deducting any expense (interests of mortgages, depreciation, local taxes as IBI, etc.)
This change can be in most of the cases a very important increase of the taxes to be paid quarterly due to the rentals.
Some of our clients are starting to study if it is convenient to set up a company in Spain in order to transfer these properties and pay Corporate Tax instead of Income tax, as the Corporate Tax allows to deduct the expenses in relation with the property.
Anyway you should check previously:

  • The cost of bringing these properties to a company in Spain;
  • If you want to keep the money of the rentals in the Spanish company or to send it to your personal bank accounts via divdends;
  • In long term, the taxation in case the property is sold.

You can contact with jose@asesoriagarcialopez.es to analyse this option.

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