What is IRNR in Spain?
All non-resident foreigners in Spain are required to declare to the tax center (Hacienda) the income (financial, professional, salaries, pensions) that they have received on Spanish territory during the year and/or the property they have purchased. As an owner, this declaration must be completed whether or not you generate rental income.
Which tax base and which IRNR tax rate?
In the event that you have purchased property as a second home, whether you return there or not, the tax base is made up of 1.1% of the cadastral value of the property. In the case of rental income in Spain, the tax base is the difference between the rental income received and the costs invested in the property. The tax rate is similar in both cases. This tax rate was modified with the Spanish tax reform of 2014 and is currently 19%.
How to declare the IRNR tax in Spain?
Unlike the Property Tax (IBI) which is claimed by the town hall of the place where your property is located, it is up to you to calculate, complete and present each year or each quarter the tax declaration form. IRNR at the tax office. However, you can appoint a tax representative to undertake this process. https://www2.agenciatributaria.gob.es/wlpl/OV17-M210/index.zul
What are the possible deductions?
In the case of a conventional rental
If you rent your Spanish property long term, you can deduct 60% of the rental income (i.e. the amount resulting from the subtraction of deductible expenses such as taxes, water bills, electricity, etc, and maintenance expenses), regardless of the age of the tenants. Until January 31, 2014, landlords could deduct up to 100% of costs if their tenants were under 30, but this is no longer the case.
Deductible expenses include electricity , water , gas and telephone bills , home maintenance and repair costs (excluding extension work and other non-essential work), as well as interest on mortgage loans contracted for the purchase of the house.
For tenants , the tax deduction on their rent is only available for contracts signed before January 1, 2015 . For tenants who meet this condition, the applicable deduction is 10.05% of the amount paid, provided that their taxable income is less than 24,107.20 euros. This is all at the national level, but many Autonomous Communities also offer rent-related deductions.
In which country do I have to pay the taxes on this rental income, and how can I avoid double taxation of this income by France and Spain?
Rental income is always taxable in the country where the property is located. You must also declare it in France (art 4A and 4B of the general tax code). In order to avoid double taxation, a tax credit on this income equal to the French tax is applicable.
Each year you must declare this income as usual (land or furnished income as the case may be in the box provided for this purpose). In addition you must file the 2047 declaration and declare the income on the 1st page and the tax credit part on the last page. Do not forget to report the result in box 8tk of your income statement.
