Non-resident Income Taxes are to be paid by non-resident physical individuals and entities in Spanish territory, as long as these do not apply to PIT or passive Society tax payment. Hence, the only income to be taxed is the one withheld in Spain, being the rest of incomes taxed in the non-resident’s country of origin.
How can we know whether a person is a resident or not? We will consider residents those people who spend periods larger than 183 days in Spanish territory, unless a different tax residence is credited. Shall be also considered residents, individuals who receive the most of their incomes in Spain; or those whose children live in the country, when a legal separation between parents does not exist.
Amongst people residing in foreign countries for mission duties, or those who have changed their tax residence to a territory to be considered a “tax heaven”, will be considered as residents, who must therefore pay Personal Income taxes.
Nor will be considered non-residents to entities whose major incomes are in foreign countries but have presence in Spanish territory, nor individuals who live in Spain due to their occupation, such as diplomats, consulates and officials.
In certain cases, a representative person will be designated in Spain to the eyes of the Spanish Tax Agency, having the interested part a period of two months to do so. The common situations for this would: when operating in Spain through a permanent establishment; when services are rendered without a permanent establishment; in the case of entities under an imputed income from abroad constituted conducting economic activities or in the case the Tax Agency considers this to be utterly necessary.
How much is to be paid?
In the case of income due to property elements or savings, a 20% is to be taxed, amount which will be brought down to a 19% in 2016. In this case, residents get to pay the same amount.
For the rest of incomes, non-residents should pay a 24% tax, as long as no exemptions are to be applied, which can be classified into the ones imposed by Spanish legislation, and DTAs (Double taxation agreements) amongst some countries. To apply the latter, at the time of declaring, we shall present the tax residence certificate and mention the taxation agreement of our convenience. DTAs can be consulted on the Tax Agency’s website, in the “Non Residential Portal”.
So will be exempted from tax payment the economic income of non-residents which is held in the bank, though it is important to sign a declaration of tax residence, which is usually available at bank offices in various languages, and renew it in a biannual period. In the case of not doing so, the bank will be obliged to take out a 19% of the amount in a matter of tax payment, which can be latter claimed presenting the declaration of tax residence and Model 210, in a term of four years.
When shall I present it?
The presentation terms for declaration vary depending on its result and characteristics.
On the one hand, in the case the final result favors the taxpayer, which is most commonly known as “to return”, a three months term is stipulated, with the exception of property incomes, where terms increase up to a year.
Anyways, being a pretty variable topic which might sound complex in the beginning, in DAEMI ZABALZA & ASSOCIATES, our lawyers and advisors whom are specialists in the matter, can give you advice and solve any doubts you might have.