New tax form introduced to control holiday rental income

Hacienda, the Spanish tax authority, has recently published new legislation that will oblige all intermediaries in the rental of tourist accommodation, such us companies like Prestige Villas or holiday portals, to produce periodic statements identifying the owners of the properties being advertised and the amounts for which the rentals are offered to bring into the open all the undeclared tourist rentals by submitting the new Form 179.

Owners who rent their houses in Spain are required to declare rental income through Form 100 or Form 210 depending if the owner is a tax resident in Spain or not.

Form 179 will enter into force in July 2018, and those required to file this return will be required to provide information for the entire 2018 period, including the first two quarters of the year.

This new form must be filed on a quarterly basis during the month following the end of each quarter, as is the case with the quarterly IVA (VAT) declaration. I.e.: the first quarter will be presented in April and the second quarter in July.

In summary, every owner who has rented their property in Spain and do not declare the income, according to the new law from 2018, Hacienda, with the information received through Form 179, will know all the necessary details to claim the taxes for rental incomes to prepare and file the corresponding fine.

The information provided in this article is not intended to be legal advice but merely conveys general information related to tax and legal issues. If you are a property owner concerned about any of the information in this blog post, it is advisable that you speak with your Spanish tax advisor or accountant.

Moving to Mallorca – What Next?

So, you have bought your property in Mallorca, and the dream is about to become a reality. Exciting stuff! So what should come first?

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The best advice is to get this done at the beginning. Use a local ‘gestoria’ and lawyer to advise you on the process and, if possible, to actually do it for you. The Oficina de Extranjería (Immigration Office) is not the most exciting place in the world – in fact, this is definitely not the Mallorca you were dreaming of – but to get what you need, you have to be there physically. If you are moving here full-time, a residencia card is obligatory, and if you are coming from the UK with Brexit looming, it’s best to get it done.

Tax is also something to think about, as a non-resident you are liable to pay a non-resident income tax, if you are renting your property then you need to declare your income. See our Tax Guide here.

At a more local level, signing on to the Padrón at your Town Hall is a happier item on your to-do list. Take your passport, NIE (or Residencia card if you already have it), the deeds to your property and a recent utility bill, and you will receive a ‘Certificado de Empadronamiento’. Along with being registered and able to vote in local elections, the best of all is an entitlement to discounted travel around Spain. Flights to the mainland can be reduced by 50%, inter-island travel by 75%. You can get the ‘Certificado de Viaje’ once you’re on the Padrón and it is well worth the bother!

Language

If you’re getting mixed up with your “buenos días” and “bon dia”, your “gracias” and “gràcies”, then you know of the language complexities in your new home. While many live in Mallorca without learning a single word of Spanish or Catalan, those that do can definitely notice a difference in their daily life. Neighbours become friends, shopkeepers know you by name, the people in your preferred coffee bar will know what you want before you’ve sat down; in general, people open up to you.

There are language schools in the north, and there are private teachers who offer one-to-one sessions and conversation classes. Also, as English is essential to islanders, many are keen to learn from you. Language exchanges are frequent and these involve nothing more than sitting having a coffee and chatting in two languages, picking up vocabulary and phrases along the way.

For children, the younger they are, the easier it will be for them to learn. With sponge-like brains, their capacity to pick up a new language will thrill and astound you. In a local school, the children can receive extra help, but nothing works better than playing with new friends.

Social Life

Depending on where you are living, you will find it relatively easy to find new friends. Foreign residents tend to converge naturally as they frequent the same bars and restaurants. But once the novelty wears off, there are plenty of ways to integrate and meet people from the whole community.

Sports Centres in the north have swimming classes and regular municipal-run activity for many sports including general fitness. There are also private groups that meet every week including football, rugby, netball, athletics and more. Trail running in the Tramuntana is popular, and many meet at the weekends and compete in local races. Language classes will help you join in fully, but even if your grasp of the language is weak, a willingness to learn is often repaid with patience and help.

If sport is not your thing, there are plenty of local groups and organisations that hold regular meetings and events. Whether it’s charity appeals or wine appreciation, bridge or art classes, there’s plenty of activity, and a quick look on Facebook or asking around will point you in the right direction.

Life in Mallorca is relaxed, it can be cold and quiet in the winter, lively and bright in the summer, but each season rewards with its stunning landscape and inimitable charm. There’s so much more to it than the beach and living here (for long holidays or long-term) means it is all there for the taking.

Tax Guide for Non-Resident Property Owners in Spain 2016

Management of Non-resident Taxes

 

Income Tax

As non resident in Spain and owner of a property you are liable to the non residents income tax. This tax is paid once a year. You pay it before the end of the current year for the previous one (in 2016 you will pay for financial year 2015). The amount due is calculated on the cadastral value of your property. This amount is the result of applying a 19.5% on the 1.1% of the assessed value.

Cadastral Value x 19.5% x 1.1%

Please note that if you rent your property you also have to declare this income but instead of declaring this income once a year you will have to declare it quarterly. The amount to declare is the entire amount received from the tenant, without deducting any costs*.

*Nevertheless, as we are dealing with taxpayers resident in another European Union member state, the expenses described in the Law on Personal Income Tax (IRPF) can be deducted when calculating the taxable base, as long as proof is provided that these expenses are directly related to income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.

  • Income accrued in 2014: 24.75%
  • Income accrued in 2015: 19.5%

 

Wealth Tax

Wealth Tax has been re-established temporarily for tax years 2011, 2012, 2013, 2014 and 2015, accruing on 31 December of each of these years. Wealth tax is an annual tax, payable on the total value of your taxable assets as at 31st December. If you are resident in Spain you are liable to the tax on your worldwide assets; if non-resident, then only on your Spanish assets.

Tax base: The current tax-free allowance for non-residents is 700,000 €

Obligation to declare: All taxpayers with a positive tax liability are obliged to file a tax return.

 

Local Taxes for Property Owners

Local yearly Property Tax: The Impuesto sobre Bienes Inmuebles (known as IBI) is fixed by the local authorities ayuntamiento), depending on both the value of the land and of the property itself. This tax is paid yearly (before the end of November), and you can go to the local tax office and pay it directly when you receive the yearly notice in your postbox, or you can arrange an automatically debit from a Spanish bank account (the best option if you do not live permanently in Spain).

Local yearly rates: House-owners in Spain are also required to pay yearly rates, which is a contribution to street lighting, maintenance of facilities and rubbish collection. The yearly amount again depends on the area and is paid to the local council.

 

This text was written by the offices of Alfonso Benavides Y Asoc. S.L.

 

Find out More:

If you would like further information regarding this information, contact Alfonso Benavides Y Asoc. S.L. by email.

5 Reasons to Book Your Holiday Early

Early Booking vs Last Minute

We get it, last minute discounts are very eye catching. Those big savings, prices in red, great value. They make you feel much wiser than those who paid full price almost a year before. But if you look a bit closer you might come to one conclusion: Late bookers don’t get to be choosers.

At Prestige Villas, we deal all the time with early booking enquiries and last minute enquiries and we can say from experience that those booking early get the ideal villa for their party and the best peace of mind.

Reason 1: What’s so great about booking early is that you get to pick from the crop. If your group are looking for something a little special, for example, a group of 10 or more, 2 weeks during peak season or something walking distance to town, then you’re more likely to find it when you put your mind to it early. Flights are still plentiful and often have good prices before the rest of folks catch on to booking.

Can Barbas
Fantastic holiday villa for the whole family. Sleeps 8 and has great entertainment – pool, jacuzzi, table tennis, PS3, Apple TV, Pizza oven and built in BBQ. Walking distance to the beach and restaurants in Puerto Pollensa.

Reason 2: The deposit for the majority of our properties is 25%, so that gives you enough time to save up bit by bit to pay off the balance two months before you arrive. Having this put away keeps the strain off in January, which is the normal booking period, but often when the purse strings are feeling the most squeezed because of Christmas.

Beautiful and tranquil villa just outside of Pollença. Great for 10 guests, such as one extended family or two families travelling together.

Reason 3: Don’t stress out trying to find the right place for you with just a few weeks notice. Do yourself a favour by getting everything booked and organised in plenty of time so you can organise the holiday that’s right for you and your party.

Walking distance into Puerto Pollensa. Recently renovated to give it a fresh and bright feel. Fantastic for eight guests.

Reason 4: And last but not least – you get to have something to look forward to! As the days tick by, you’ll be safe in the knowledge that your next holiday is already taken care of.

Ca Na Margalida
Quaint cottage in the countryside, halfway between Pollença and Puerto Pollensa.

Reason 5: Get the holiday itinerary sorted. If you book early, you’ll have plenty of time to do some research on the best places in the area to see. What restaurants are the most popular and what beaches are must visits. Reviews of restaurants, attractions, bars and shops are everywhere nowadays so go ahead and look building your ideal trip.

Mallorca has been voted third in the Telegraph’s ‘Top 10: summer holiday islands in Europe’ and is a favourite for many families as it’s ideal for children of all ages and is a well-established tourist destination, getting better and improving every year. At just two hours away from the UK and direct flights for most major airports, it’s a perfect choice. It’s not all about stag and hen parties in Magaluf, there’s so much more to Mallorca than that.

So to conclude, if you book early, you can safely save your desktop photo as the beach in Mallorca.

See the full collection of properties available to book online: take me away!

It’s hot, like, really hot

This year to date we’ve had some extremes in Mallorca, we had snow in February and a little heat wave in May and now here it is, the summer sun. The big light in the sky is on and it’s not cooling down anytime soon.

So far this summer we’ve reached temperatures of 30ºC during beautiful cloudless skies. What’s more, the evening temperatures are remaining high, according to the AEMET. Although we don’t necessarily need their fancy gadgets to tell us this, feeling warm enough in shorts and t-shirt at 11pm is fact enough.

We’ll be experiencing some Southerly winds blowing a coastal breeze over the next few days and according to eltiempo.es the temperatures will climb throughout this week. That makes a welcome change from last weeks rain showers and thunder storms. Roll on summer with it’s hot days and mild evenings.

Get the suntan lotion out, we’ll see you at the beach!

Move along Saint Valentine, here comes Sant Jordi

Tradition has it that on 23rd April, la Diada de Sant Jordi, people in the areas of Catalunya and the Balearic islands do something special for their loved ones. Unlike the hyped up Valentines day, Sant Jordi is a much more modest affair. Men across the region will buy a rose for their ladies in their life and woman will buy a book for the men.

The rose, symbolising passion, is usually accompanied by corn to symbolise fertility. This isn’t a new thing, this tradition has been on the go since the 15th Century. What’s great about this day is that it goes fairly unknown throughout the World so is a fantastic opportunity to catch on to the festivities and buy your loved ones a rose or a book, regardless of where you are. Nobody is going to be upset about receiving a gift on Sant Jordi, are they?

So, give it a shot, ladies go out and find the perfect book (preferably not an e-book) for the men in your life and you guys go out and get a rose. There’s no restrictions here, it can be your other half, your mum, dad, brother, friend or neighbour. They won’t expect it and one thing that’s guaranteed – they’ll love it.

The Balearics flourishes from the harsh winter weather

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Image from @MiquelSalamanca

The image of the Balearics above on the left hand side showed our islands in August, the right hand photo is the very same photo but in April. Despite residents complaining of a harsh, cold winter this year the land has welcome such wet conditions and is flourishing as best it can. Let’s hope this green spell lasts for as long as possible!

Trail Running

We’re Mallorca-bound for Advanced Week 2015. All trails have been Tòfol-tested!Stay tuned & follow every step from the 29th March until the 4th April. #AdvancedWeek2015

Posted by Salomon Running on Friday, 13 March 2015

The flavour of this month is, not only panades, but it’s Trail Running. Seeing growing popularity over the past few years, Mallorca has been an increasingly popular destination to go running in.

In this video you can see Salomon runner Tòfol Castanyer during the #AdvancedWeek2015 running through the beautiful Serra Tramuntana.

Buying a Property in Mallorca

Buying process in Spain 
Once you have found the property you love, it is time for the paperwork. The property is selected and the terms agreed on. The property must then be secured. This can be done through private contracts between the two parties. It is customary that 10% of the purchase price is paid at this time. On completion a deed of conveyance ‘Escritura Pública’ must be signed by both parties under notary’s supervision in Spain.

Legal Advice in Spain 
It is advisable to appoint a local lawyer, who speaks the purchaser’s language who will carry out a title search, and advise the purchaser on all aspects of the investment.

NIE Numbers
All non-Spanish citizens require a personal identification and tax number to buy a property, referred to here in Spain as an NIE number. This can take some time (estimated between 3 and 6 weeks) so we recommend you apply early. Please note this does not affect your status in your home country. You can either apply for an NIE yourself at the Department of Extranjeros (Foreigners Department) ensuring you take your passport, or through your chosen legal advisor. Non EU applicants should contact their embassy for details of application.

Taxation in Spain
As a simple rule, when buying a property in Spain if you allow approximately 10%-12% on top of the asking price you will normally end up with some change in your pocket.  This will include Property Transfer Tax or VAT*, Notary and Land Registry fees, solicitor fees as well as any possible mortgage costs.

Property transfer tax & Stamp duty
On re-sales there is a property transfer tax set at on the following sliding scale:

Purchase price up to 400.000 € is 8%
Purchase price from 400.001€ to 600.000 € is 9%
Purchase price from 600.001€ and more is 10%

*Vat & Stamp duty
For first sale of newly built properties VAT is 10% and 1.2% Stamp duty.
For commercial property and first sale of a building plot, or a plot sold from a company Vat is 21% plus 1.2% Stamp duty

Registration 
The registration of the property is done by entering the deed of conveyance “Escritura Publica” at the land register office.

Completion
Completion can take place on whatever date you and the seller agree upon, from as little as one week (as long as you get the mortgage company to agree) up to one year if desired, from the date of signing the Option Contract. This date will be detailed in the Option Contract.

If the purchase is financed by a mortgage, the bank representatives will be present in order to authorise the new mortgage and pay the seller. If you are not able to attend on the specified date you are able to grant your solicitor/lawyer power of attorney so he or she can complete on your behalf.

Completion will take place between the relevant parties in front of the Notary who will witness the signing and transfer of the title deed or Escritura de Compraventa. The Notary acts for neither party specifically, but is a government official responsible for the execution of public documents; He/she will confirm the identity of both parties, and will check the Land Registry to verify legal ownership and that there are no out-standing debts or orders against the property.

The balance of the purchase price will be paid to the seller at this time, and any remaining purchase tax and fees will also be paid if going through a mortgage provider (if paying in full these taxes need only be paid within the month). The Escritura will then be registered by the lawyer in the corresponding Property Register. Once the Deed is signed you will be given the keys to your new property and a copy of the title deed, until the formal deed comes to you from the land registry (or via your Mortgage provider if they have acted on your behalf).

Congratulations! – it’s yours…home sweet home. Sit back and raise a glass of bubbly or two in celebration!

If you are interested in buying property in Mallorca and would like to speak to one of our sales team then we are happy to give any assistance you may require. Contact us

Palma de Mallorca comes up trumps

If you’ve been keeping an eye on the Sunday Times list of “best places to live” then you’ll have spotted Mallorca’s capital city Palma right at the number one spot. The city is filled with history and is a marvel to walk around the narrow streets taking in the beautiful architecture and shop in the boutiques. The city was voted top for it’s great restaurants, living standards and is just a short drive from the airport where there are regular flights to the UK. Mallorca is doing it’s best to shake off the party animal reputation is has due to the popularity of stag and hen parties going to Magaluf. The island has much more to offer from sports, art and culture, whatever your bag you’re sure to find it in Mallorca.

 

If that wasn’t reason enough, here are six reasons summarised by El Pais: Six reasons Palma is the best place to live (Spanish)