UK Buy to let tax in Spain?

UK Buy to let tax in Spain?

9:58 AM, 7th March 2022, About 3 months ago 14

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Hi there, I was wondering if anyone has any insight into the Spanish taxation on UK rental income. I am very close to becoming a Spanish resident, but I am worried about the overall taxes concerned. I am aware of wealth tax obligations and income tax obligations but have seen on some tax sites the mention of a 60% reduction of net rental income available in Spain but only for long term rentals.

As you can imagine, this would be an absolute game-changer in relation to how much tax I would have to pay.

If anyone is a Spanish resident who has UK buy to let properties and does or does not receive this allowance, I would be extremely grateful to know your thoughts.

Many thanks

Chris



Comments

by Shakeel Ahmad

13:56 PM, 7th March 2022, About 3 months ago

The global rule is that you pay tax on rental income where ever the property is situated.
So you have to pay the income tax on rental income in UK.
The 60 % that you refer to relates to properties in Spain. You have an option to offset actual expenses incurred or offset 60% of your rental income and pay tax on the residue of 40%.
As you property is in UK. I will not load you with that.
I hope you realise that you need to pay wealth tax on your global assets plus income tax any other income, such as dividends, interest state/private pension.

I know its late for you know as it seems that you have already acquired a property for other who are contemplating a move to the Iberian Peninsula.
I recommend them to buy in Algarve near the Spanish border if you need Spanish fix and like me cannot even dream of living anywhere else.
good luck.
NB: The accounting for rental income on a Spanish property is to be done every quarter irrespective of the fact if the property is rented or not. Further you cannot offset/claim expenses for the quarter where your property is not rented.

by CazT

14:09 PM, 7th March 2022, About 3 months ago

Hi Chris. I have been a resident in Spain since 2017. I pay UK tax on my rental properties then I declare everything again in my Spanish tax. You do not pay twice, in fact the Spanish tax authorities allow far more dispensations against costs, mortgage payments etc than the UK do. The most important thing is to get a good tax advisor in Spain. I used a Spanish advisor and it cost me a fortune (unfortunately a lot of these people just don't know what they are doing!). I now use an English lady who is a Spanish resident, who is fully informed re UK and Spanish tax laws. I can refer you to her if you would like to email me on caztspain@gmail.com, she does the majority of her work online and will do both UK and Spanish tax returns. Hope this helps....
BTW Spain does require you to declare your global assets but these are not taxed - Modelo 720.

by Luke P

14:14 PM, 7th March 2022, About 3 months ago

You could perhaps consider becoming a Portuguese tax resident under NHR but live/spend a large amount of your time in Spain as a Schengen area visa holder (D2 or D7, I think for Portugal). It will require maintaining a residency in Portugal, but the tax-savings will offset any potential costs of lining the Spanish tax man's pockets. The fact that it's a neighbouring country shouldn't make it all that difficult, logistically.

by Bernadette Hughes

18:52 PM, 7th March 2022, About 3 months ago

Reply to the comment left by Luke P at 07/03/2022 - 14:14
Interesting, when you say maintain a residence, does this means buying and not renting?

by Shakeel Ahmad

19:15 PM, 7th March 2022, About 3 months ago

You do not need to buy a property. A rental property will suffice.
The rents are around €1000 p.c.m for a half decent properties. (The housing stock is generally very poor)
Most landlords do not entertain long term rental as they wish to cash in on the short term summer rentals. The tenants are expected to vacate the property during this period.
Further if you sign a contract. (This you you have to in order to support your application for residency ) the landlord will be looking for additional rent of €200 + as they will be taxed on the income and the tenant is expected to pay for it.
The towns of Castro Marim, villa real de St Antonio are two to five kilometers from the Spanish border. Prices are taking off. There are hardly any new builds

by Luke P

19:34 PM, 7th March 2022, About 3 months ago

Reply to the comment left by Bernadette Hughes at 07/03/2022 - 18:52
As Shakeel says, renting is fine but tricky all year round in any of the areas you might actually want to be.

by Bernadette Hughes

20:27 PM, 7th March 2022, About 3 months ago

Reply to the comment left by Shakeel Ahmad at 07/03/2022 - 19:15
Thank you, very helpful 👍

by Sjp

8:50 AM, 12th March 2022, About 3 months ago

Reply to the comment left by CazT at 07/03/2022 - 14:09
I there. Do you know roughly what the tax situation would be if you had BTL in England (sole income) and U resident, and bought a holiday home in Spain and occasionally rented it out? Thank you

by Shakeel Ahmad

9:05 AM, 12th March 2022, About 3 months ago

CazT.
It all depends on your fiscal residency.
If you are a UK fiscal resident. You have to declare the Income in UK.
Occasional letting or not.
You have to declare the income in Spain and pay taxes due.
You will have a benefit of double taxation.

by CazT

9:21 AM, 12th March 2022, About 3 months ago

Reply to the comment left by Shakeel Ahmad at 12/03/2022 - 09:05
As I live in Spain and have been here more than 183 days, I am most definitely a fiscal resident. Regardless of that, I still have to declare my income to HMRC and pay UK tax on that income - that is the UK law. I am aware of double taxation but I must still declare my income, wherever it comes from - that is the Spanish law, so I'm not sure what 'it depends on....'

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