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IBI: the annual council tax you pay regardless
Impuesto sobre Bienes Inmuebles (IBI) is Spain’s equivalent of council tax, charged annually by the local municipality on every property. It is calculated as a percentage of the valor catastral (catastral value), which is a government-assessed value typically 30–50% of the market value. In Marbella municipality, the IBI rate is approximately 0.55–0.67% of the catastral value for residential properties. In Benahavís, which includes La Zagaleta and much of the surrounding mountain area, rates have historically been lower at approximately 0.4–0.55%, though they have been converging with Marbella in recent years.
For a luxury villa with a catastral value of €600,000 (market value approximately €1.5–2M), the annual IBI is approximately €3,300–4,000. For a €3M villa with a catastral value of €1.2M, expect €6,600–8,000. IBI is due annually and can be paid by direct debit from your Spanish bank account. If you do not pay, the municipality can place an embargo on the property, and IBI debts attach to the property, not the person, which is why your lawyer must check for outstanding IBI debts during due diligence.
Deemed rental income tax: the tax you pay even when the property is empty
This is the tax that surprises most international buyers. If you own Spanish property and do not rent it out, Spain’s tax office (Hacienda) imputes a deemed rental income based on the catastral value and taxes you on it. The imputed income is 1.1% of the catastral value for properties whose catastral value was revised in the last 10 years, or 2% for properties with older catastral valuations. The tax rate is 19% for EU/EEA nationals or 24% for non-EU nationals.
Worked example: a €1.5M villa with a catastral value of €600,000 (revised recently). Imputed income: €600,000 × 1.1% = €6,600. Tax for an EU national: €6,600 × 19% = €1,254 per year. Tax for a non-EU national (e.g. UK post-Brexit): €6,600 × 24% = €1,584 per year. This is filed annually via Modelo 210 and is due by 31 December of the year following the tax year. Your gestoría or tax advisor should handle this filing automatically.
Tax on actual rental income: when you do rent out
If you rent your property out, the rental income replaces the deemed income for the periods when the property is occupied. For EU/EEA nationals, the tax rate is 19% on net rental income, meaning you can deduct expenses such as property management fees, cleaning, maintenance, mortgage interest, depreciation (3% of the construction value per year), and IBI. For non-EU nationals, the rate is 24% on gross rental income with no deductions permitted. This is a significant disadvantage for post-Brexit UK buyers and non-EU investors.
For periods when the property is not rented, the deemed rental income tax still applies pro-rata. So if you rent for 6 months and leave the property empty for 6 months, you pay rental income tax on the actual rent for the first 6 months and deemed income tax for the second 6 months. Both are filed via quarterly or annual Modelo 210 returns. A typical rental filing schedule is quarterly (within 20 days of the end of each quarter), while deemed income is filed annually.
Wealth tax and the Solidarity Tax on Large Fortunes
Spain’s wealth tax (Impuesto sobre el Patrimonio) applies to the net value of assets located in Spain for non-residents. In Andalucía, the tax-free allowance is €700,000 per person. Above this threshold, rates range from 0.2% to 2.5% on a progressive scale. For a couple owning a €3M property jointly, each partner has a €1.5M share, minus the €700,000 allowance, leaving €800,000 taxable per person. At the applicable rates, the wealth tax would be approximately €2,400–3,600 per person per year.
In addition, Spain introduced the Solidarity Tax on Large Fortunes (Impuesto Temporal de Solidaridad de las Grandes Fortunas) which applies to net assets above €3M worldwide for tax residents, or above €3M in Spain for non-residents. Rates are 1.7% on €3–5M, 2.1% on €5–10M, and 3.5% above €10M. This tax was introduced in 2023 and has been extended annually. For non-residents with a single property under €3M, the Solidarity Tax does not apply. For those with larger holdings, it is a significant additional cost that should be factored into the acquisition decision.
Capital gains tax when you sell
When you sell Spanish property, the capital gain (sale price minus purchase price and allowable costs) is taxed at a progressive rate: 19% on the first €6,000, 21% on €6,000–50,000, 23% on €50,000–200,000, 27% on €200,000–300,000, and 28% above €300,000. These rates apply equally to residents and non-residents.
For non-residents, the buyer is legally required to withhold 3% of the sale price (not the gain) and pay it directly to Hacienda on your behalf. This is a deposit against your capital gains tax liability. If your actual tax is less than the 3% retention, you claim the difference back via a Modelo 210 filing within 4 months of the sale. If your tax is more, you pay the difference. The 3% retention often exceeds the actual tax liability on properties held for many years where the gain is modest relative to the sale price.
Allowable deductions from the capital gain include: the original purchase costs (ITP/IVA, notary, registro, legal fees), capital improvements documented with invoices, and selling costs (agent commission, legal fees, energy certificate). Keeping receipts for every renovation and improvement during your ownership period can reduce your tax bill by tens of thousands of euros.
Annual filing obligations: Modelo 210 and the compliance calendar
As a non-resident property owner in Spain, your minimum annual filing obligations are: one Modelo 210 return for deemed rental income (filed by 31 December of the following year), and a wealth tax return (Modelo 714) if your Spanish assets exceed €700,000. If you rent the property out, you must file quarterly Modelo 210 returns within 20 days of the end of each quarter (April, July, October, January).
Failure to file carries penalties of €100–400 per missed return plus interest on any tax owed. Persistent non-compliance can result in the Spanish tax authorities placing an embargo on your property, which blocks any future sale or transfer. We strongly recommend engaging a Spanish gestoría or fiscal advisor (€300–600 per year for a standard non-resident filing service) to handle all returns automatically. The cost is modest relative to the penalties for non-compliance and the peace of mind of knowing your Spanish tax affairs are in order.
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What taxes do non-residents pay on Spanish property?
Non-residents pay five main taxes: IBI (council tax, 0.4–0.67% of catastral value annually), deemed rental income tax (19% EU or 24% non-EU on 1.1–2% of catastral value annually), wealth tax (0.2–2.5% above €700,000 per person), basura (rubbish tax, €100–300/year), and capital gains tax on sale (19–28% sliding scale). Additionally, if your Spanish assets exceed €3M, the Solidarity Tax applies at 1.7–3.5%.
Do I pay tax in Spain if I don’t rent out my property?
Yes. Spain imputes a deemed rental income on vacant properties and taxes non-residents on it. The imputed income is 1.1% of the catastral value (for recently revised catastral values) or 2% (for older valuations), taxed at 19% for EU/EEA nationals or 24% for non-EU nationals. This is filed annually via Modelo 210. Additionally, you pay IBI and potentially wealth tax regardless of whether the property is rented.
How does double taxation work for Spanish property?
Spain has double taxation treaties with most European countries, the US, Canada, and many others. The general principle is that Spain has primary taxing rights on income from Spanish property (rental income, capital gains), and your home country gives you a credit for the Spanish tax paid. In practice, this means you pay Spanish tax first, then deduct it from your home country liability on the same income. You rarely pay tax twice on the same money, but you must declare the income in both countries.
What happens if I don’t file my Spanish tax returns?
Penalties for non-filing range from €100–400 per missed return plus interest on unpaid tax. If non-compliance persists, the Spanish tax authorities (Agencia Tributaria) can place an embargo on your property, which prevents sale or transfer until the debt is cleared. In extreme cases, they can initiate asset seizure proceedings. Engaging a gestoría at €300–600/year to handle all filings automatically is the simplest way to avoid these risks.
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