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New Year’s Resolution: Become a Spanish Resident!

Everybody makes New Year’s resolutions, but most of us do not keep them. However, we can help you to keep this one for sure: obtaining your Spanish residence card!

Why do I need a Spanish residence card?

Most people think that having a NIE (Foreigner’s Identity Number) allows them to live legally in Spain, but this is not true. EU citizens are not allowed to stay in another European country for more than 3 months a year. For this reason, if you like spending long stays here in Spain, or you would like to obtain your Spanish driving licence, enrol your children in a Spanish school, and enjoy a long list of other benefits, it would be advisable to become a Spanish resident.

Moreover, there are lots of English people that became Spanish residents last year because of Brexit. As we told our clients, this does not guarantee them more rights than other citizens in the event that the UK leaves the EU definitively, but it is definitely easier to lay claim to legal rights within a country in which you are already a resident!

What are the requirements to obtain the Spanish residence card?

There are different ways to obtain the Spanish residence card depending on your personal and professional circumstances, but there are some common points such as providing proof of good financial circumstances and having the right to Spanish medical assistance, either public or private. In any case, as soon as you contact us, we will find the easiest and best way for you to become a Spanish resident.

Is being a Spanish resident the same as being a Spanish tax resident?

Most people confuse the two situations. Being a Spanish resident just means that you have permission to live legally in Spain during the time your card is in force. However, being a Spanish tax resident means you are obliged to submit your tax returns to the Spanish tax authorities. Either way, here at Andalucia Lawyers we can help you both with becoming a Spanish resident and a Spanish tax resident so don’t hesitate to contact us!

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New 2016 Holiday Property Rental Law in Andalusia

Do you rent out property to tourists in Andalusia? Find out how the new 2016 holiday property rental law in Andalusia affects you and what steps to take.

On 3 February 2016 the Junta de Andalucía approved the controversial Holiday Rental Law for Andalusia (Viviendas con Fines Turísticos), which was published in the Official Bulletin of the Andalusian Government (BOJA) on 11 February 2016 (Decree 28/2016).

Landlords were given 3 months to prepare their paperwork for presentation before the decree came into force.

What does this mean?

From 12 May 2016 onwards, landlords of holiday rental accommodation are required to register their properties with the Tourism Registry of Andalusia.

What is a tourist rental property?

A property in a residential area regularly rented out to tourists, whether as a whole or by room, in exchange for money. As a landlord you can rent the property directly to tourists or lease the property to another person or entity to run the tourist rental activity on your behalf.

What properties are not considered tourist rental accommodation?

  • Those in which no financial transaction takes place between the host and the guests e.g. allowing friends or family to stay in your property for free.
  • Properties rented out for more than 2 months to the same tenant.
  • Properties on rural land. These are governed by their own set of regulations (Decree 20/2002 of 29 January).
  • A group of 3 or more properties owned by the same person or entity located in the same building or group of buildings. These are subject to the regulations governing tourist apartments (Decree 194/2010 of 20 April).

How can I rent my property out to holiday-makers?

Rental Types

Regardless of the type of rent, the maximum capacity is limited according to the property’s occupation licence and no more than 4 guests are allowed per bedroom.

Renting the Whole Property

  • Maximum capacity of 15 people.

Renting by Room

  • The landlord must also live in the property.
  • Maximum capacity of 6 guests at a time.

Requirements and Common Services

  • The property must have a first occupation licence issued by the town hall.
  • The bedrooms must have direct outside ventilation, be adequately furnished, and have fixed cooling and/or heating systems depending on the months when the property is rented out.
  • The property must be equipped with a first aid kit, useful information for tourists e.g. local shops, restaurants, health and transport services and nearby parking, official complaint forms and a visible sign saying these forms are available.
  • The accommodation must be cleaned before and after each stay.
  • The property must be equipped with sheets (and a change of sheets), adequate household goods (with instructions for appliances where appropriate) and furnishings.
  • Guests must be provided with a contact number by which any enquiries or incidents concerning the property will be attended to immediately.
  • Guests must be fully informed of the house rules.

Reservations, Payment & Cancellations

There are certain conditions that must be fulfilled when renting the property:

Holiday Rental Agreement

All guests must receive a document outlining the relevant information of their stay. It must include:

  • The landlord’s name and contact number.
  • The property’s registration number assigned by the Junta de Andalucía.
  • The number of guests and their details.
  • The arrival and departure dates.
  • The total price of the stay.

The landlord must keep a copy of the signed holiday rental agreement for 1 year in case of inspection by the authorities.

Pricing & Payment

  • The advertised price must be per night and all-inclusive.
  • The price, booking, deposit and cancellation terms can be agreed by the two parties and must be stated in detail before the booking is confirmed.
  • An advance payment as a deposit of up to a maximum of 30% of the total price of the stay may be requested.
  • Guests must be provided with invoices for every payment made.

Cancellation

  • If the guest cancels the reservation up to 10 days before the check-in date, the landlord is entitled to keep 50% of the deposit.
  • If the guest cancels less than 10 days before the check-in date, the landlord can keep 100% of the deposit.
  • If the landlord cancels the reservation up to 10 days before the check-in date, the deposit must be refunded in full.
  • If the landlord cancels less than 10 days before the check-in date, the deposit must be refunded in full plus 30% of the total price of the stay as compensation.
  • If a booking is cancelled due to events of force majeure compensation will not be due by either party.

Arrival and Departure Time

Arrival and departure times can be agreed between the landlord and the guests. Unless otherwise stated the default arrival time is set at 16:00 and departure at 12:00.

Upon Arrival

Registry Book and Traveller Registration Form

Due to security laws, it is compulsory for landlords to maintain a registry book with the names of all guests. This book must be kept for 3 years in case of inspection. Every guest over 16 must present proof of ID, e.g. passport or identity card, and complete an individual registration form upon arrival. The landlord must submit this information to the police (Guardia Civil) in person, via fax, email or online within 24 hours.

How to Register your Holiday Rental Property with the Tourism Registry of Andalusia

Self-registration

In order to register your property you must fill out a registration form called declaración responsable para inicio o ejericio de la actividad. Registration is free in Andalusia. If you have a good level of Spanish you can self-register here. If you don’t have a digital certificate then you can fill the form in on-line, print it and hand it in at your local Delegación Territorial de Turismo.

Once you have completed the form you can begin your holiday rental activity. Afterwards, you will receive a resolution stating whether you may continue with your rental activity or not. If your application has been approved you will receive an alphanumeric code like this one: VFT/HU/00000. You must make sure to include this code on all advertising of your holiday rental property.

Via Andalucía Lawyers

If you don’t know much Spanish, or you simply don’t want to deal with all the paperwork, we can register your holiday rental property on your behalf.

We’ll keep you informed about the entire procedure and all the documents required in order to submit the tourist rental property registration form.

Non-compliance Penalties

Do you only rent your place out to holiday-makers every now and again? Tempted to risk it and not go through all that rigmarole? Don’t even think about it.

1) Minor offences will be sanctioned with a warning or a fine of up to €2000.

2) Serious offences will be sanctioned with fines between €2000 and €18,000. The fine may also be accompanied by the temporary suspension of tourist services or the temporary closure of the holiday rental property for up to 6 months.

3) Very serious offences will be sanctioned with fines between €18,000 and €150,000. The fine may also be accompanied by the temporary suspension of tourist services or the temporary closure of the holiday rental property or accommodation unit for anything from 6 months to 3 years.

Anyone who is sanctioned for very serious offences twice or more within 3 years and anyone causing serious damage to the tourism interests of Andalusia through their behaviour will have their holiday rental property closed and removed from the Tourism Registry of Andalusia.

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Spanish Wealth Tax 2016

All You Need to Know about Spanish Wealth Tax

Having been abolished in Spain on 1 January 2009, the Spanish government reintroduced wealth tax (impuesto sobre el patrimonio), supposedly temporarily, from 2012 onwards as an emergency economic measure. To do this they simply removed the total exemption to the tax that had previously applied.

Does Spanish wealth tax affect me?

The established threshold for Spanish wealth tax is €700,000. If your taxable wealth exceeds this you will be subject to wealth tax on your net assets. Spanish wealth tax is payable by both residents and non-residents of Spain. Spanish wealth tax is a progressive tax – the higher the wealth, the higher the tax. How much you are charged will also depend on whether you are a Spanish resident or non-resident.

What is my taxable wealth?

Wealth tax is levied on your net assets held on 31 December of each year. Your taxable assets include:

  • Real estate: land and properties.

Real estate is valued on the basis of the highest of the following values: the cadastral value, the market value as assessed by the tax authorities, or the purchase price as listed in the title deed. The highest of these three values is the value that will be taken into consideration for valuing your assets.

  • Assets and rights owned by individuals related to professional or business activities.
  • Bank deposits and investments in all kinds of entities e.g. stocks and savings.

The value of a deposit is taken as the bank balance on 31 December, unless the balance on that day is lower than the average balance of the 4th quarter in which case the latter figure is used.

  • Life insurance, life annuities and temporary annuities.
  • Jewellery, fur coats, cars, yachts and planes.
  • Art objects and antiques.
  • Rights on assets and intellectual property rights (unless in the author´s ownership).

Assets Exempt from Spanish Wealth Tax

  • Property forming part of the Spanish Historical Heritage or the Historical Heritage of Autonomous Communities.
  • Certain art objects and antiques.
  • Domestic items (not including those in the list above).
  • Economic rights in some instruments such as pension rights.
  • Rights deriving from intellectual or industrial property in the author’s ownership.
  • Goods and rights belonging to individuals deemed necessary for their business or professional activity, which must be their main source of income.
  • Shares in entities, listed or unlisted, with the following requirements:
    • That the organisation carries out an economic activity, not just managing movable or fixed assets.
    • That the individual has a share of at least 5% alone or 20% combined with family members.
    • That the entity accounts for more than 50% of the individual’s work-related income.
    • Loans provided they were not used to purchase or invest in assets exempt from Spanish wealth tax.

Spanish Wealth Tax for Residents

Spanish Wealth Tax Allowances for Residents

If you’re a Spanish resident then you will have a tax free allowance of €700,000 plus a €300,000 allowance on your place of permanent residence. If you’re married and you and your spouse own the property jointly then you are each entitled to the €300,000 allowance on that property. So, in effect you will enjoy a total tax free allowance of €2,000,000 between the two of you (€700,000 + €700,000 + €300,000 + €300,000).

Spanish Wealth Tax Rates for Residents

As a Spanish resident you are required to pay Spanish wealth tax on your worldwide assets and are taxed by the local government of your place of residence, rather than the Spanish state. Remember, the wealth tax to pay is not calculated on your total wealth, but on the value of your assets once all allowances have been deducted.

As Andalucía Lawyers is based in Andalusia we have included the wealth tax rates for Andalusia:

Wealth Tax Rates Andalusia

Taxable Base (€) Rate Band Marginal Rate (%) Total Tax Payable at Top of Band (€)
0.00 – 167,129.44 167,129.45 0.24 0.00
167,129.45 – 334,252.87 167,123.43 0.36 401.11
334,252.88 -668,499.74 334,246.87 0.61 1,002.75
668,499.75 – 1,336.999.50 668,499.76 1.09 3,041.66
1,336.999.51 – 2,673,999.00 1,336,999.50 1.57 10,328.31
2,673,999.01 – 5,347,998.02 2,673,999.02 2.06 31,319.20
5,347,998.03 – 10,695,996.05 5,347,998.03 2.54 86,403.58
10,695,996.06 and upwards Upwards 3.03 222,242.73 upwards

Tax Limit for Spanish Residents

There is a limit on how much you can be taxed as a Spanish resident. The Spanish tax regulations state that wealth and income taxes added together cannot exceed 60% of a resident’s total “general and savings” taxable income. If it does, the wealth tax is reduced subject to paying a minimum of 20% of the full wealth tax calculation. However, this does not apply to wealth tax on non-income producing assets, which remains payable in full. This does not apply to non-residents.

Spanish Wealth Tax for Non-Residents

Spanish Wealth Tax Allowances for Non-residents

As a non-resident you’re also entitled to the individual wealth tax allowance of €700,000. If you’re married then you and your spouse will both benefit from this allowance so you’ll be able to claim a €1,400,000 allowance against your assets. However, you aren’t granted any allowance against your Spanish property. This is because as a non-resident, by definition, your Spanish property is not your main place of residence.

Spanish Wealth Tax Rates for Non-residents

As a non-resident you are required to pay Spanish wealth tax only on your Spanish assets. As you’re not resident of any autonomous community you are taxed by the Spanish state rather than local government. Remember, the following wealth tax rates apply only to the amount that exceeds the allowance thresholds.

Wealth Tax Rates Spain

Taxable Base (€) Rate Band Marginal Rate (%) Total Tax Payable at Top of Band (€)
0.00 – 167,129.44 167,129.45 0.2 0.00
167,129.45 – 334,252.87 167,123.43 0.3 334.26
334,252.88 -668,499.74 334,246.87 0.5 835.63
668,499.75 – 1,336.999.50 668,499.76 0.9 2,506.86
1,336.999.51 – 2,673,999.00 1,336,999.50 1.3 8,523.36
2,673,999.01 – 5,347,998.02 2,673,999.02 1.7 25,904.35
5,347,998.03 – 10,695,996.05 5,347,998.03 2.1 71,362.33
10,695,996.06 and upwards Upwards 2.5 183,670.29 upwards

When is wealth tax declared and paid?

Wealth tax is an annual tax, payable on the total value of your taxable assets on 31 December. If you are required to pay wealth tax on your assets you must submit the wealth tax form after the end of each year and pay the tax due between May and June.

Do I need to make a Spanish wealth tax declaration?

There is no need to present a wealth tax declaration if the total of your taxable assets falls under the minimum limit and you’re therefore not required to pay anything. The exception to this is if you possess assets valued at over €2,000,000. In this case, you must make a Spanish wealth tax declaration even if no wealth tax is due on your estate once all allowances have been deducted. Married couples are required to make separate returns declaring both joint and individual assets.

Contact Us

How do I calculate if I am required to pay Spanish wealth tax? How do I prepare my Spanish wealth tax declaration? We can help you! Contact us to arrange a consultation either in our offices or over phone or email.

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