If you’re a non-resident who owns property in Spain, you may at some point receive a notification from the Spanish Tax Authority (Agencia Tributaria) regarding the Non-Resident Income Tax (IRNR). This tax applies simply for owning a property in Spain, even if it is not rented out.
Here are the most common reasons you might receive a letter from Hacienda (the Spanish Tax Office):
1. Cadastral Value Revisions: Key to How Much You Pay
The non-resident tax is based on the cadastral value of the property. This is an official value used for taxation, which may differ significantly from the market value. A percentage is applied to this value based on whether or not it has been reviewed (or “revised”):
- 1% if the cadastral value has been revised in the past 10 years;
- 2% if it has not been revised.
On this calculated amount, a 19% tax rate is applied for EU, Norwegian, and Icelandic residents.
Problems often arise when the 1.1% rate is mistakenly applied, assuming the cadastral value is still revised when it is not. If this happens, Hacienda can request the difference plus surcharges and interest. Some councils (ayuntamientos) include revision status on the IBI property tax receipt, but this is not always the case. While Hacienda offers a list of revised municipalities online, it’s advisable to consult a tax professional, as that list may be outdated.
2. Property Ownership Split: Each Owner Must Declare
For many years, Hacienda accepted that one spouse could declare the full tax if the other co-owner was also a spouse and not resident in Spain. However, with improved data systems, the Tax Office now requires that each owner declares their respective share of the property. If only one owner files the tax return, the other may be notified later and asked to pay, plus penalties.
Currently, it’s sometimes possible to appeal by proving the tax was already paid by the spouse, but this option is becoming less acceptable. The safest solution is for each co-owner to declare and pay their portion, avoiding future disputes and refund requests, which can be slow and unreliable.
3. Direct Debit Problems: A Common Pitfall
Another frequent issue is when Hacienda cannot collect the tax due to a failed direct debit. This can happen for several reasons:
- Insufficient funds in the account when the tax is charged (usually late in the year);
- Mismatched identification, e.g. the bank has your passport number instead of your NIE (Spanish Tax ID), which Hacienda uses to identify taxpayers.
In such cases, the Tax Office will send a payment demand with surcharges. It usually starts as a provisional assessment, allowing you to respond or correct the issue, and later becomes final if not resolved.
What Can You Do to Avoid Problems?
- Check annually whether your property’s cadastral value is still considered ‘revised’;
- Ensure each owner files their own tax return for their share;
- Verify your direct debit is set up correctly, your bank account has sufficient funds, and your NIE is properly registered with the bank.
Important: Tax Notifications Have Legal Deadlines
If you receive a letter from Hacienda, be aware that you only have a limited time to respond—typically between 10 and 20 working days, depending on the type of notice.
Ignoring these deadlines can result in:
- Fines, surcharges, and interest;
- Final tax assessments without the option to appeal;
- Enforcement actions, including late payment demands or potential embargoes.
To avoid these consequences, it’s essential to act promptly and seek professional advice if you’re unsure how to proceed.
Need help managing your non-resident taxes in Spain or responding to a Hacienda notification? Our expert team is here to guide you through the process and ensure you’re fully compliant.
Lucia Guillen Molina