Difference between IBI (property tax) and IRNR (non-resident income tax)
 

21 / Feb

We often get questions like: Why do I have to pay IRNR when I already pay tax on my property in Spain?

This article explains the difference between the two taxes.

First of all, it is important to know that a property/real estate is always subject to an IBI tax. This is a direct tax and is a local tax, the collection of which is reserved to the municipal authorities of each municipality. It has to be paid once a year and can be paid by direct debit, so it is automatically debited from the bank every year and we can “forget” about the payment. It is advisable to always pay by direct debit, as the deadline for each IBI assessment varies from one municipality to another and the payment period is short, so forgetting to pay often happens and then surcharges follow.

The IBI receipt contains the characteristics of the property in terms of cadastral reference, cadastral value ( divided into land value and building value), address, ownership of the property, municipality issuing it, etc. This information is part of the information required to file the IRNR.

The IRNR, is a state tax accruing to the Treasury, which is imposed because of owning a second home or property in Spain. If the property is your permanent residence, then this tax does not apply to you. In that case, this tax is levied through Form 100 (IRPF). However, if you own property in Spain but are not a resident in this country, then this tax has to be paid via Form 210, known as IRNR.

The IRNR must be submitted periodically through an online form. It is not possible to arrange it once via direct debit and have it done automatically all subsequent years. When filing, you can choose to pay via direct debit or direct payment.

The periods of filing vary depending on the use of the property, namely whether it is on rent or not. If the property is rented out, tax is paid based on income and expenses and the form is filed quarterly. If it is not rented out, an imputed rent is calculated based on the cadastral value of the property, as shown on the IBI declaration. The deadline for non-rental returns is from January to December of the year following the year in question, i.e. non-rental submissions for 2023 are processed in 2024.

Another frequently asked question is whether companies have to pay this tax. The answer is yes and no. If the company rents out the property, it has to file a quarterly tax declaration on the income earned after deducting expenses. If the property is not rented out, the company does not have to file an IRNR return.

Lucia Guillen Molina