Costa Life - a short guide to taxes in Spain

As promised, we will be including some sections of our Costa Life guide on these pages until the outcome of Brexit and the requirements for British expats in Spain become clear.

This week we focus on taxes as IBI and other fees are currently being collected by town halls.

IBI - property tax

To be paid by all owners of a property in Spain.

The amount varies according to the municipality in which you live in, as the local government decides the percentage of tax to be applied to the rateable value (Valor Catastral) of the property.

Basura - rubbish collection

The local tax paid by property owners for the refuse collection service

Alcantarillado - sewage system

The local tax paid by property owners for the sewage system

Impuesto Sobre Vehículos de Tracción Motor (IVTM) vehicle tax

Each vehicle registered in Spain includes the owner’s address, the local town hall then charges vehicle tax according to the vehicle's size and engine.

IRPF - income tax

IRPF is automatically deducted from employees’ wages every month. According to each circumstance and amount of earning, an IRPF tax declaration has to be filled out in spring.

This will result in the taxpayers receiving a rebate if he or she has overpaid, or having to pay if the minimum IRPF has not been paid during the year.

Asset declaration

Spanish tax authority obliges all those with assets abroad of over €50,000 to file an asset declaration ‘Form 720’.

This affects Spanish nationals and foreign residents who have property, savings, bank accounts, bonds, shares or any other types of investment or asset in the UK or any other country - including tax havens such as Switzerland, Bermuda, the Cayman Islands, Gibraltar and Andorra - of €50,000 or more.

Property must be declared at the acquisition value, even if its current value is considerably less, and each holder of a joint asset or bank account must declare the full amount and then tick a box on Form 720 to show what percentage is legally theirs.

The form has to be completed online by someone who has a digital signature, such as a financial advisor or gestor - any submitted without this, or handwritten, will be rejected and the assetholder fined as though they had not made a declaration at all.

Costa News strongly advises expat residents to seek a gestor or a financial advisors' advice if they are required to declare their assets.