Tax is as inevitable in Las Palmas as it is everywhere else, even if you are a non-resident property owner.
The good news is that the tax burden of owning a Las Palmas property is low. The city doesn’t charge for rubbish removal and there is no equivalent of monthly council tax.
Annual Las Palmas property taxes
Everyone knows about the annual IBI tax that you pay to the local Las Palmas town hall.
It’s a tax on the cadastral value of your property (the estimated value of the land it occupies) and is currently set at 0.67% in Las Palmas de Gran Canaria. You pay IBI annually and it’s easy to set it up as a direct debit.
However, there is another tax that all non-resident property owners in Las Palmas (and everywhere in Spain) have to pay. Many don’t even know about it.
It’s a specific non-resident income tax called IRNR. It’s set at 19% for EU, Norway and Iceland citizens, and 24% for everyone else. It is unclear what rate UK citizens will pay after Britain leaves the EU.
To pay this tax, you need a tax identification number called a NIF.
A NIF For Foreigners? Never heard of it!
Most non-residents don’t bother getting a NIF number when they buy a property because nobody tells them that they need to. And lots don’t do an annual tax filing or pay their IRNR.
They only discover that they needed a NIF when they come to sell and find that they have unpaid income tax bills.
Plus interest and late payment charges.
But I don’t have any income in Spain?
The Spanish taxman says you do.
For example, you have to pay income tax on any interest generated by the money in your Spanish bank account.
Even if it’s just tenths of a cent.
And you have to pay income tax even if your property doesn’t generate income!
IRNR tax on intangible income
If you don’t rent out your property, the Spanish tax authorities argue that you benefit from it in other ways and therefore still have to pay tax.
Consider it a levy on the suntan you get every time you visit your holiday home.
This tax is paid annually and is charged on 2% of the cadastral value of your property, (1.1% if the cadastral value has been revised since 1st January 1994).
You pay 24% tax on 2% of the cadastral value (also used to calculate IBI and found on your annual IBI receipt).
EXAMPLE: For a property with a cadastral value of 100,000 euros, you’d pay 24% income tax on 2% of the value: That’s 480 euros per year.
Income tax on rental earnings
If you rent out your Las Palmas property, you don’t have to pay the suntan tax, but you do have to pay 24% IRNR income tax on any earnings (minus any costs such as maintenance, etc).
If you rent out your property as a Vivienda Vacacional (tourist rental), you also have to register for IGIC (Canarian VAT) and pay 7% of your income to the Canarian tax office. This must be paid quarterly.
If you rent your property residentially (for periods of longer than 90 days and to people with Spanish residency), you don’t need to pay IGIC.
Some non-residents rent their property to a local for a fixed amount, then let them sublet it touristically. This way, they don’t have to register for IGIC and only have to do an annual income tax declaration.
Is this legal? That depends on who you ask. It’s a grey area, and you lose out on a lot of rental income if you accept a low fixed fee for your property.
What if I haven’t paid non-resident income tax?
There’s a good chance that you’ll have to pay up when you want to sell the property (plus interest and late payment penalties). There’s also a chance that the tax authorities will freeze your Spanish bank account and seize the money.
This causes huge problems as it disrupts direct debits for utility bills, etc, and can get your light or water cut off.
Use a gestoria or accountant
Using an accountant or financial advisor to pay all your Spanish and Canarian taxes on time costs a few hundred euros per year and saves you all kinds of bother.
As well as filing your taxes, they act as your fiscal representative in Spain and receive any official letters from the tax authorities on your behalf. That means no surprises.
EXAMPLE: A typical asesor or contable (accountant) charges a one-off fee of around 35 euros to register you for IGIC payments. IGIC filings cost 35 euros per quarter and the annual summary a further 40 euros. That’s 180 euros per year. Paying your annual IRNR costs around 100 euros.
Getting A NIF Number in Las Palmas
Take your NIE, passport and property deeds to the Agencia Tributaria building at Luis Doreste Silva 6.
You’ll need a cita previa (appointment) booked on the Agencia Tributaria website.
Here, you fill in Form 030.
Alternatively, get your financial advisor or gestoria to do it for you.
Or, if you’re buying a property, ask your friendly local estate agent for help.
Las Palmas Property
I’m Laura Leyshon and I’m Las Palmas’ resident property expert.
Here’s why you should choose me if you’re planning to buy or sell a Las Palmas property.
To get in touch, just fill in this quick form and I’ll be in touch within 24 hours to discuss your Las Palmas property needs. Or just call me on 0034 608169845.