Spanish income tax on real estate rental in Ibiza
The income tax is known as Impuesto de la Renta de no residentes, declaración ordinaria, (IRNR). Owners of real estate in the Balearic Islands who aren’t residents of Spain must file an annual income tax return. If you aren’t resident in Spain, this tax only applies to income from a property. Income from a salary or self-employment is declared in the country where you’re resident for tax purposes.
The taxable income varies depending on what the property is used for: Personal use – If you’re a non-resident whose only taxable property in Spain is used exclusively for personal use, you can choose to declare both property tax and income tax on the estimated income from the use of that property. The tax base is 2% of the cadastral value of the property. If you’re a married couple or own your property jointly with other people, each person is considered a separate taxpayer and must file a separate tax return. Rental Use – Personal Income Tax (IRPF) is a national tax paid by most people living in Spain. If you’re a non-resident renting out your property in Spain, you’ll have to pay income tax on the rent instead of the imputed tax. If you rent your property to a Spanish company, the company deducts the tax at source and pays it to the tax authorities itself. The tax rate is 24% of this income.
Everyone who has their main residence in Spain and earns a regular income must file an annual tax return. The amount of tax depends on the amount of income, with a minimum rate of 24% and a maximum rate of 52%.
The Beckham rule in Spain is a special tax regime for expats that allows foreigners who have moved to Spain to pay tax as non-residents, so that their Spanish earned income up to 600,000 euros is taxed at a fixed rate of 24%, rather than the progressive tax rates that apply to residents in Spain. If taxed as a resident, the expat would be subject to a progressive tax rate of up to 43%, depending on the amount of their worldwide income. You can find out more about the Beckham rule.