INCOMES FROM PROPERTY RENTALS

13 March, 2018/0 Comments/in Tax Law /by Mollmertens

INCOMES FROM PROPERTY RENTALS

Non residents, who have properties in Spain and rent them out, either long term rentals or short term rentals, are obliged to fill out and hand over a quarterly tax return for their incomes. Until now the obligation was to hand over a tax form 210 for each property and tenant. Thus if a property was used for holiday rentals and during a trimester it was rented out to 15 different tenants, 15 models 210 would have had to been handed over that trimester.

Since the Order of the 21^st of December (HFP/1271/2017) from the Spanish Tax Authorities was approved, the system has changed. The incomes from the rentals will now be informed in one only tax form 210 for the whole quarter, specifying that it is an income 35. Thus the number of tenants won’t affect the number of forms.

For the days during which the property has been at the owners’ disposal, an annual tax form will have to be handed over (one per owner). Thus the owners, who are both renting out the property and using it themselves, will have to hand over the quarterly tax declarations and an annual one.

Should the non residents, who are owners of the properties, be EU citizens, then, they will be able to deduce from the incomes the costs related with the rents and in such cases, the income will be taxed with a tax rate of 19%. Meanwhile, should the non residents be citizens of a third estate (outside the EU), then they won’t be able to deduce any costs and the tax rate will be 24% of the incomes.

Due to this complicated tax system related to the rental incomes, we offer our tax advisement services in order to help you with your tax declarations.

Should you be interested in this service, please contact with me at: nicole@mollmertens.com

Taxation changes in the Balearics for 2016

On the 30th of December 2015 the taxation changes for the Balearics included in the Budget Law were published.
We would like to mention the following ones, due to their relevance regarding property investment:

Wealth tax:

In December 2014 the Balearic authorities announced that the wealth tax would be cancelled by January 2016. This has not only not been the case, but the tax free amount has been reduced from 800.000€ to 700.000€.
The tax rates go from 0,28% up to 3,45%, depending on the wealth’s value.
We would like to remind you that this tax affects not only to residents in the Balearics, but also to non residents who have wealth here.

Tax on Property Transfers:

The previous scale is kept the same, this is, from 8% to 10%, depending on the properties’ value, but there is a new rate for the part of the property’s value which amounts more tan 1.000.000€, which is 11%.
For the transfer of cars the rate goes up to 8%, for motorbikes it is 0%.

Donation and inheritance tax:

We already informed in a previous post that the taxi s now the same for residents and non residents in the Balearics. We also informed that the rate for relationships in group I and II was 1% in case of inheritance.
The rate has been changed and there is a new scale now, which goes from 1% for values up to 700.000€ to 20% for values above 3.000.000€.
Regarding the donation tax the rate is still 7% for the groups I and II.
Observation: if someone is willing to make a donation which value is over 1.975.000€ it would be better to make a normal donation subjected to 7% than a so called in Mallorca donation as part of the legitimacy, which was previously subjected to 1% regardless the donations value.

Should you have any question or need any assistance regarding these subjects mentioned in the present post, please get in touch with us: nicole@mollmertens.com

You can now choose the applicable inheritance Law!

26 October, 2015/0 Comments/in Civil Law /by Mollmertens

On the 17th of August 2015 the new European Regulation 659/2012 came into force. So far the applicable Law on inheritance was the national Law of the deceased, as of now the inheritance is governed by the Inheritance Law in the country where the deceased had his/her last usual residence, except for foreign citizens living in Ireland, Denmark and Britain, countries which do not apply the new regulation.
If we are dealing with the case of a citizen of the European Union residing in Mallorca at the time of death, the inheritance is governed by the Spanish Inheritance Law and not as before, according to the law of their country of origin (Germany or the United Kingdom for example).
The new regulation also gives the option to choose the applicable law. The best that a citizen of the European Union who has assets in Spain, can do, is to sign a notarized will and choose the applicable Law. So if a resident in Spain is not interested in the application of the Spanish law, due to the legitimate share for example, he/she can choose to apply his/her national law as it was before.
On the other hand, this Regulation unifies certain documentation, which in case of inheritance, makes it easier to handle, when different countries are involved. A very interesting document, is the European Certificate of Succession, this is a public document certifying the inheritance rights a European citizen has, upon the determination of the law which is applicable to the deceased.

Whether you already had a will made in Spain or in another EU country or not, you may want to review the situation and the applicable law. We are at your

Don’t be left without your tax refund! The Spanish Tax Office is refunding the overpaid inheritance and gift tax.

13 September, 2015/0 Comments/in Civil Law, Tax Law /by Mollmertens

After several years warning Spain that its rules of inheritance and gift tax violated the free movement of capital within the EU, finally the Court of Justice of the EU, on September 3rd 2014, approved the Court Decision (Case C -127 / 12) which ended with such discrimination.
On January 1st 2015, the Final Provision Three of the Law 26/2014 entered into force, whereby the second additional provision of the Law 29/1987 (Spanish inheritance and gift tax Law), changes. By means of this amendment, the following special regime has been approved:

A non-resident in Spain but resident in the European Union, can apply the tax regulations of the Autonomous Communities.
2. Residents who inherit assets in other countries of the European Union can also apply the tax regulations of the autonomous communities in which they are residents, regarding the inherited assets.

Taxation on holiday rentals

10 June, 2015/0 Comments/in Civil Law, Tax Law /by Mollmertens

Taxation on holiday rentals.

Having administrative authorization to carry out vacation or holiday rentals is just as important as fulfilling the tax obligations arising therein.

In Spain, both residents and non-residents must pay tax derived from renting out properties.

You can differentiate between the following situations:

Rentals of houses or apartments without providing tourist services:

a) If it is a resident who rents out a property, the rents obtained are considered income from real estate and must be declared as part of the annual income tax declaration.

b) If the person is a non-resident, then the obtained rents should be declared quarterly using the Tax Form 210, identifying the tenant from each rental. In addition, the non-resident should submit an annual tax declaration, in which real estate is taxed on imputed rents for periods in which the property was vacant.

Holiday Rentals providing tourist services

Holiday rentals in the Balearic Islands

5 May, 2015/0 Comments/in Public Law /by Mollmertens

The Decree 20/2015 of 17 April is the first tourism Regulation of the Balearic Islands and develops the Tourism Law 8/2012 of 19 July.

In terms of holiday rentals, which we will cover in this article, the mentioned Law included a very scarce regulation, which required an impending development.

The Decree increases the typology of residential buildings, always single-family homes, which can be commercialize as tourist or holiday homes. These are the following:

1.- Detached house. One house only in the plot.

2.- Row houses. One house only in the plot.

3.- Semi-detached house. Both properties in a same plot and under the regulations of the horizontal co-ownership regime. In this case, the co-ownership statutes mustn’t forbid the holiday rentals.