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Non-Residents Income Tax (IRNR) As the end of the year approaches, the question arises: am I obliged to pay IRNR in Spain? In this article we will explain what IRNR is, when, who must pay it and other essential details.  What is IRNR? IRNR (Impuesto sobre la Renta de No Residentes) is a tax payable by individuals or legal entities that generate income in Spain but are not tax residents in the country. This tax mainly covers income derived from property, rentals, economic activities or sales of real estate in Spanish territory. The application of IRNR is regulated by Royal Legislative Decree 5/2004 of 5 March.  Types of income from real estate property In the case of a non-resident individual taxpayer:   Imputed income from urban real estate, if the property is for its own use or is unoccupied. Income from rented property, if the property is rented. Capital gains, if the property is sold. If the taxpayer is a legal entity or non-resident entity:   Income from rented real estate, if the real estate is rented. Capital gain, in case of sale of the property. If the entity is resident in a tax haven (with effect from 11 July 2021, references made to tax havens are understood to be made to the definition of a non-cooperative jurisdiction), it may be subject to the Special Tax on Real Estate of Non-Resident Entities. Am I a tax resident? You are considered a tax resident if you spend more than 183 days during the calendar year in Spain or Spain is the main country of your economic activity, meaning that most of your income comes from or is related to activities in the country.  If you do not meet these requirements, then you will be considered non-resident and will be subject to IRNR if you have income in Spain.  When do I have to pay personal income tax? IRNR is paid annually, the deadline is 31 December.  How much do I have to pay? The Personal Income Tax (IRNR) return may vary depending on the type of income:  Form 210: For most income, such as rents or interest. Form 211: In the case of the sale of real estate, this is the form to be used by the purchaser to make the withholding. Form 213: For the payment of taxes on the ownership of real estate in the case of non-resident legal entities. If you have any doubts about which form to choose or you need help to pay your IRNR, do not hesitate to contact us, our tax specialists can answer any questions you may have.  What happens if you do not pay the IRNR? Failure to pay IRNR can lead to penalties and late payment interest that will increase the tax debt. In addition, if you own a property in Spain and have not complied with your tax obligations, you could face legal problems that may affect the registration and future sale of the property. 

Differences between a deposit contract and a sales contract When it is time to sign the contract, you may hear the terms ‘contrato de arras’ (deposit contract) and ‘compraventa’ (sale and purchase contract). Some people think that they are equivalent to each other. This confusion creates many problems at the time of the sale. To avoid these situations in the future, in this article we will explain the difference between a deposit contract and a purchase contract.  What are they for? Both contracts are related to the subject of purchase and sale. Although the deposit contract is not compulsory like the purchase contract, the deposit contract can facilitate the purchase process and make it much more comfortable.  Deposit contract The main function of this type of contract is to establish an agreement between the seller and the buyer. The potential buyer agrees to buy the property within a certain period and the seller agrees to sell his property to this client within the agreed period and under the specified conditions. Normally, the client gives an amount of money established in the contract, as a guarantee of the purchase.  Can the deposit contract be waived? Although the seller agrees to sell the house and the client agrees to buy it, both parties can withdraw from the contract. Normally, a monetary penalty set out in the contract is charged in advance.  Sales contract The contract of sale is a consensual legal act, a binding document in the process of buying and selling. This contract establishes the transfer of ownership. Both parties (they can be physical or legal) have obligations. The buyer is obliged to pay a previously negotiated price, and the seller is obliged to deliver an object specified in the contract.  Main differences Important to remember There are different types of “arras” and they will be part of terms and conditions of the purchase contract.  Also, there are another type of contracts, such as reservation agreement, option to buy purchase contract and more.  Conclusion Regardless of whether you need an earnest money contract or a purchase contract, professionals can help you with the problems that arise during the purchase of real estate, do not hesitate to contact our specialists.   Español English Nederlands

Buying a property in Spain through a company Is it possible to acquire a property in Spain in the name of a company? The quick answer is yes, but it is important to consider several factors first to avoid any inconvenience or legal problems. How to buy a property through a company? The process of buying a property in Spain through a company is comparable to that of a private individual, although there are some differences in documentation, tax obligations and deduction of expenses, among other aspects. For example, in the case of a company, it may be necessary to submit additional documents, such as articles of association, annual accounts or proof of solvency. In contrast, a private individual is not usually required to provide this level of accreditation in most cases. Furthermore, the accounting treatment of the property and the tax liabilities also vary between the two. Buy a property in Spain through a company being Non-Resident Like Spanish residents, a non-resident can also acquire property in Spain through an existing foreign company. This company, once registered in Spain, can operate as an investment vehicle in Spain without the need to create a new Spanish company.   It is important in these cases to have legal representation in Spain due to lack of knowledge of the regulations and to ensure that the procedure is carried out legally and safely, both for the company acquiring the property and for the transferee. Requirements to avoid being taxed by the wealth tax When a property is acquired in the name of a company, it creates a legal personality included in the assets of the company and therefore its value is considered to be part of the shareholders’ assets, either directly or indirectly. If the aim is to avoid taxation on the property, it is necessary to comply with the requirements for exemption of shares from Wealth Tax. These requirements are as follows: The company must carry out an economic activity and not be principally engaged in the management of movable or immovable property (immovable property not linked to an economic activity may not be considered as part of the company). The shareholders must have at least a 5% individual shareholding or a 20% joint shareholding with close relatives (spouse, ascendants, descendants or collaterals of the second degree). The taxpayer must exercise managerial functions, evidenced by a contract. The salary for management functions must represent more than 50% of the taxpayer’s income from work and economic activities. If the above requirements are not met, the tax office will consider that the property is not linked to the economic activity of the company, and therefore the book value of the property (purchase price) will be included in the equity of the partners according to their shareholding in the company. Possible tax penalties for buying the property. When a company acquires a property intended to be the residence of one of its partners and a rental contract is formalised, significant tax benefits arise. The company is able to deduct many of the costs associated with the purchase of the property, as well as those arising from the rental, from its corporation tax. This includes expenses such as maintenance, repairs and related taxes. In contrast, if the partner were to purchase the property directly as an individual, he or she would not have access to these deductions, which limits the tax advantages available. Tax benefits for the company owning the property When a company acquires a property intended to be the residence of one of its partners and a rental contract is formalised, significant tax benefits arise. The company is able to deduct many of the costs associated with the purchase of the property, as well as those arising from the rental, from its corporation tax. This includes expenses such as maintenance, repairs and related taxes.   In contrast, if the partner were to purchase the property directly as an individual, he or she would not have access to these deductions, which limits the tax advantages available. Tax obligations The main tax obligations of a company owning real estate include: Reflecting the property in the company’s balance sheets. Paying IBI (Real Estate Tax) on an annual basis. Declaring income derived from rentals or the sale of the property. If the property is new, pay the corresponding VAT (10% in most cases). If the property is second-hand, pay the Transfer Tax (Impuesto de Transmisiones Patrimoniales, ITP), the percentage of which varies according to the Autonomous Community. Pay the Stamp Duty (AJD), which varies between 0.5% and 1.5% of the value of the property. Also depending on the autonomous community. Buy the property with real estate tax advisors. Although it is legal to buy a property through a company, the Tax Agency could consider the transaction as an attempt to avoid tax, resulting in an investigation of the company and penalties. To avoid problems, contact our specialised real estate tax advisors.

Discover the Non-Lucrative Visa in Spain If you are looking for a way to reside in Spain without the need to make a large financial investment or to work, the non-lucrative visa is your best option. What is the Non-Lucrative Visa in Spain? The non-lucrative visa is a residence permit designed for non-EU citizens who wish to live in Spain without engaging in economic or professional activities. It is ideal for those who have sufficient financial means to support themselves and their family members. 5 key advantages of the non-lucrative visa in Spain 1. No minimum investment: Unlike other visas, such as the Golden Visa, there is no mandatory investment required to apply for the visa. 2. Access to the Schengen area: With this visa, you can travel freely throughout the 26 countries of the Schengen area, allowing you to explore much of Europe without the need for additional visas. 3. Family option: You can include your spouse and dependent children in the application, making this visa an excellent option for families looking for a new stage in Spain. 4. Pathway to permanent residence: After holding this visa for five years, you have the possibility to apply for permanent residence in Spain. 5. Future work flexibility: Although it does not initially allow you to work, there is the option to switch to a work permit in the future if your plans change and you decide to seek employment or start a business in Spain. Documents required for a non-lucrative visa in Spain To apply for this visa, you will need to gather a number of documents. It is crucial that they are all up to date and, in many cases, apostilled and translated into Spanish. The main documents include: 1. Valid passport: Must be valid for at least one year and have at least two blank pages. 2. Visa application form: Completely filled in and signed. 3. Recent passport photos: Must meet required standards. 4. Proof of financial means: This is a crucial point. You will need to demonstrate that you have sufficient financial resources to support yourself in Spain without working. This can include bank statements, investment declarations, proof of pensions, etc. 5. Marriage certificate: If your spouse accompanies you, you will need to present an apostilled and translated marriage certificate. 6. Medical certificate: This must be issued by a recognised doctor, stating that you do not suffer from diseases that could pose a risk to public health. 7. Clean criminal record: You will need a criminal record certificate from the countries where you have resided in the last 5 years. 8. Medical insurance: You must have private health insurance to cover your stay in Spain. 9. Proof of accommodation: Although not always necessary, it may be useful to show where you plan to live in Spain. Who can apply for a non-lucrative visa in Spain? This visa is designed for different profiles of people seeking to live in Spain and who obtain income from other countries, either through business profits, investments or pensions. It is ideal for retirees who wish to enjoy their retirement in a country with a relatively low cost of living and a very good quality of life, as well as for people with a passive income who can afford to live without working. It is important to note that, although some remote workers have used this visa in the past, the Spanish government has recently introduced the Digital Nomad Visa, which is more suitable for those who plan to work remotely while living in Spain. If this is your case, we recommend exploring this option. Step-by-step process to apply for your Non-Lucrative Visa 1. Prepare your documents: Gather all the necessary documents. It is highly recommended to have the help of an immigration lawyer to make sure everything is in order.   2. Pay the visa fee: Fees may vary depending on your nationality and the consulate where you apply.   3. Submit your application: Your lawyer will help you submit your application at the appropriate Spanish consulate or immigration office.   4. Attend the visa interview: You may be called for an interview. Be prepared to explain your reasons for moving to Spain and demonstrate your financial solvency.   5. Wait for the decision: Processing time can vary, but is usually around 3 months.   6. Receive your visa and TIE: Once approved, you will receive your visa. Once in Spain, you will need to apply for your Tarjeta de Identidad de Extranjero (TIE). Financial requirements for the Non-Lucrative Visa in Spain. The financial requirements established for the non-lucrative visa are in accordance with the IPREM and are updated every year. For 2024, the amounts established are: Main applicant: €2,400 per month (€28,800 per year). For each additional family member: €600 per month (€7,200 per year).   It is important to note that these amounts are indicative and may be subject to change. In addition, the Spanish authorities will assess your financial situation as a whole, not just these minimum amounts. Renewal and initial residence with the Non-Lucrative Visa. As with any other visa, you need to renew your residency before it expires. You will need to be aware of the time limits so that you do not run into legal problems. Initial residence: The visa grants you initial residence for 1 year. First renewal: Upon renewal, you get 2 additional years of residence. Second renewal: 2 more years. Permanent residence: After 5 years of continuous residence, you can apply for permanent residence. It is crucial that you start the renewal process at least 60 days before your current visa expires to avoid complications. Specialised immigration lawyers for Non-Lucrative Visa. Navigating the non-lucrative visa application process can be complex, especially if you are not familiar with the Spanish legal system. Having an immigration lawyer can make the difference between a successful application and a refusal. Our team of experienced immigration lawyers is here to help you every step of the way: Initial… Continue reading Discover the Non-Lucrative Visa in Spain

Licence of First Occupation: A Complete and Updated Guide Discover everything you need to know about the licence of first occupation in Spain, its importance, how to obtain it, and the necessary documents for its concession. Following you will find an essential guide for property owners and buyers. What is the Licence of First Occupation? The license of first occupation is a permit granted by the Public Administration that certifies a property meets all legal requirements from an urban planning perspective. Issued by the local Town Hall where the property is located, it ensures that the construction or refurbishment complies with current town planning regulations. How to obtain the Licence of First Occupation? Licence application The application for the license of first occupation can be submitted by the construction company, the person responsible for the renovation, the architect, the property owner, or a legally authorized representative. Once the provided documentation is reviewed and verified that all legal requirements for habitation are met, the local council will approve the application. If there are deficiencies, they must be corrected, and the application resubmitted. Documents Required for the Licence of First Occupation In order to obtain the licence of first occupation, it is necessary to present several documents related to the property and the applicant: Applicant´s ID (DNI or NIE) Copy of the property title deed Application form Construction completion certificate Proof of payment of the fee associated with the procedure Additional reports that may be required on a case-by-case basis However, during the home inspection, additional documents may be requested, such as the energy efficiency certificate, waste certificates, or water and electricity supply documents, among others. The Architect and the Responsible Declaration The architect plays a crucial role in this process, being responsible for the project design and ensuring compliance with all planning and building regulations.Once the construction is finished, the architect must issue a completion certificate, known as “Declaración Responsable” (or Responsible Declaration, in English), confirming the construction adheres to the approved project and legal urban requirements. This certificate is essential for applying for the licence of first occupation.Upon presenting the Responsible Declaration to the Town Hall, the property is authorized for occupation and use, allowing for the necessary utility connections to be contracted.In most cases, the architect will assist in managing and submitting the application for the licence of first occupation to the relevant authorities, simplifying the process for the owners. I want to talk with a lawyer When do you have to present the licence of first occupation? In the Valencian Community, Decree 12/2021 mandates the Responsible Declaration of first occupation in the following cases: First occupation of residential buildings and their installations. First occupation of dwellings undergoing extension, alteration, refurbishment or renovation. First occupation of buildings and installations changing their use to residential, such as commercial spaces. Why is it important to have the licence of first occupation? Obtaining a licence of first occupation is essential for homeowners, as it certifies that the property complies with the legal regulations for residential use.Its importance is undeniable as it constitutes the essential document for contracting basic utilities such as water, electricity and gas, which are necessary to live in the dwelling. Without a valid licence, these utilities cannot be accessed, and the property may be deemed uninhabitable, affecting its sale or rental.With that said, the absence of this licence may justify the annulment of a purchase contract. Consequences of not having the Licence of First Occupation Living in a property without a licence of first occupation can lead to significant fines and penalties due to health risks. Additionally, the property is considered legally uninhabitable, preventing the contracting of utility services, as well as its rental or sale as a dwelling. How to check if your property has a licence of first occupation To verify if a property has the licence of first occupation, head to the corresponding Town Hall where the dwelling is located and submit an application form along with the proof of payment, a photocopy of the owner’s ID and a copy of the property title deed. When does the Licence of First Occupation expire? This document is valid for 15 years. If you do not have the licence or it has expired, you will need to apply for a new licence or the corresponding renewal. Frequently asked questions What is the first occupation licence? The license of first occupation is a permit granted by the Public Administration that certifies a property meets all legal requirements from an urban planning perspective. Who can apply for the licence of first occupation? The application can be made by the construction company, the person in charge of the renovation, the Architect, the property owner, or a legal representative. What documents are required to obtain the licence of first occupation? You need the DNI or NIE of the applicant, a copy of the property title deed, the application form, certificate of completion of the works, proof of payment of the associated fee, and possible additional reports requested by the Town Hall. When is the licence of first occupation compulsory in the Valencian Community? It is compulsory for newly constructed buildings, refurbished or extended dwellings, and buildings changing their use to housing. Why is it important to have the licence of first occupation? It certifies that the property complies with legal regulations and is required to contract basic utility services such as water, electricity and gas. What happens if I do not have the licence of first occupation? Without this licence, the property is considered uninhabitable, preventing the contracting of supplies, and its sale or rental as a dwelling. The licence of first occupation is a crucial document to ensure a property complies with legal regulations and is fit for habitation. It is essential for contracting basic services and for any legal transactions related to the property.For any queries, as it is an essential aspect regarding the dwelling, please contact our Real Estate expert Lawyers and Architects in this matter for an… Continue reading Licence of First Occupation in Spain: A Complete and Updated Guide

Housing Law in Spain: Important developments and key aspects. The new Housing Law in Spain, officially Law 12/2023, of 24 May, for the Right to Housing, was finally approved by the Senate on 17 May 2023, thus being the most recent publication in the regulations regarding real estate rentals. Its main objective is to regularise the rental situation in the tensest areas of the market and to help all those who have difficulties in accessing decent housing to live in. What is the intention of the Spanish Housing Law? This law is responsible for regulating rental prices in areas recognised as stressed, i.e. those where the average rental price is well above what households can afford to pay for it. At the same time, it seeks to promote the creation and maintenance of public housing with the intention of ensuring the supply of available rents at reasonable prices, as well as to prevent situations of tension from arising in this market. What is a stressed area? A zone is declared stressed when one of the following circumstances occurs: 1. Average rent or mortgage burden plus basic expenses is more than 30% of the average household income in the area.2. The rental or purchase price has experienced a minimum growth of 3 points above the CPI in the corresponding autonomous community during the five years prior to the declaration of the area as a stressed area.The Autonomous Communities are responsible for classifying the areas as stressed areas, and may maintain this status for a period of 3 years, which may be extended depending on the circumstances. What is a large landlord according to the Housing Law? “Gran tenedor” or “large owner” means any natural or legal person owning more than 10 properties or areas of up to 1,500 m2 suitable for residential use, in the case of non-stressed areas.In case of stressed areas, the consideration changes. A large owner is the one who owns 5 or more urban properties for residential use located in the same area declared as stressed.Garages and storage rooms are excluded in both cases. Limit on the annual updating of rental contracts, the CPI (consumer price index) is eliminated. Rent updates will always be limited to the index stablished in this Law; the CPI will no longer be taken as a reference to avoid disproportionate increases. This way, a maximum of 3% is set for 2024, and from 2025 onwards a new index will be created that can be updated annually, which has yet to be determined. I want to talk with a lawyer Rent price regulation in stressed areas. The most important measure aimed at controlling the abusive increase in rental prices is the regulation of rents in stressed areas. The obligation is imposed on new tenants to maintain the price of the previous contract, and this cannot be increased by more than the corresponding annual price index.Let’s look at an example of a property that had a rent of 1,000 euros per month. When a new rent is proposed, the price of the new rent will be limited by the price of the previous contract (€1,000) plus the corresponding annual index (3% in 2024). Thus, when a new contract is agreed, it cannot exceed €1,030 per month.Where it is a large tenant, or in the case of properties that have not been rented as a principal residence in the last five years, it may not exceed the ceiling of the price applicable under the reference price index system.Exceptionally, in cases where the intervention of the competent administrations is necessary, the law recognises the possibility of an extraordinary annual extension of the contract once it ends for a maximum period of three years, provided that the tenant proves to be in a situation of social or economic vulnerability. Now the real estate agent’s fees are paid by the owner. Previously, it was not compulsory for the landlord to pay, however, with the current regulation, the expenses derived from the real estate management and the formalisation of the contract will be assumed by the landlord and not by the tenant. IBI tax surcharge for empty properties. Townhalls will be able to apply the IBI surcharge to properties that have been empty for more than 2 years, as long as the owner has at least 4 properties in this situation. Exceptionally, the IBI tax may reach up to 150% if the local councils deem it appropriate. Tax benefits for property owners In terms of taxation, the Housing Law presents a beneficial regulation of the IRPF for those owners who obtain rental income in stressed areas. The benefits will be higher or lower depending on different factors. 50% for new contracts in stressed areas. 60% on the net yield when refurbishment work has been carried out in the previous two years. 70% for those rented to young people between 18 and 35 years of age in stressed zones. 90% for new contracts in stressed areas with a reduction of at least 5% on the previous contract. These rental benefits are presented as compensation for the capping of rental prices. New measures to protect against evictions. The Housing Law shows a certain degree of tolerance towards evictions, providing re-housing solutions for those affected and delays in judicial evictions as notable measures.The scope of protection is extended in the case of situations of vulnerability, and the pre-judicial conciliation procedure is made compulsory when the owner is a large owner and the property is the occupant’s habitual residence. In addition, the tenant is recognised as being able to benefit from the various instruments of the housing policy programme. Prohibition to increase the price of the rent with extra expenses. It is prohibited to increase the price of the rent with new additional expenses such as rubbish charges, community fees, or others when these were not agreed in the contract.To find out more about this regulation you can contact our team of lawyers by email at info@legaliuris.eu or by contacting our offices.… Continue reading Housing Law in Spain

Schengen Visa in Spain: Short-stay permit for tourists. What is a Schengen Visa? A Schengen visa, also popularly known as a tourist visa, is a short-stay permit issued by the countries belonging to the Schengen Area that allows the interested to reside or visit these countries for a maximum of 90 days in periods of 180 days. These days can be continuous or spread out.It is known as a tourist visa, due to its use for holiday travel, meeting with family or friends, or for the processing of a long-term residence permit. Although in general, it is used for any process involving a short stay. For whom is a tourist visa required? The tourist visa is intended for citizens who do not belong to a country that is part of the Schengen area. For them, obtaining this authorisation is an essential requirement before travelling. This authorisation guarantees compliance with immigration regulations and allows entry and free movement through these countries. How to obtain a tourist visa for Spain In the case of those coming from the UK, simply entering Spain will be enough to obtain a permit, however for those coming from other countries, it will be necessary to apply for a tourist permit.If you only plan to visit Spain and do not intend to travel to other EU countries, you should apply for permission at the Spanish embassy or consulate in your home country.However, if your itinerary includes visiting other Schengen countries, then the visa application process changes. In this case, you should apply at the embassy or consulate of the country where you plan to spend most of your time during your trip. Is it possible to apply for an extension of the short-stay visa? In general, it is not possible to extend a tourist visa once it has been issued. The holder must return to his/her home country until the next possible period in order to comply with the regulations and avoid sanctions.However, in exceptional (and duly justified) circumstances, some authorities may consider requests for extension in unforeseen emergency situations, such as serious illness or unavoidable travel problems. In such cases, the tourist should contact the relevant consular authority as soon as possible. 90 days rule explained So that you do not have to ask for an extension or, in the most extreme cases, fail to comply with the established deadlines, we will explain with an example how the famous “90-day rule” works.Let’s say you arrive in Spain on 10 March. From that day on, the 90 days of your authorised period of stay starts to count.So, if we count 90 days from 10 March, we would arrive at 8 June. Until this day, you will be able to stay within the Schengen Area without any problems. However, after 8 June, you will have reached the limit and will have to go back and wait until enough days have passed within the 180-day period for your 90-day limit to be reset. What happens if the stay is not continuous? In this case, a tourist arrives in the Schengen Area on 10 March and stays until 20 March, using 11 of his 90 days allowed. He then leaves the Schengen Area and returns on 1 May, staying until 10 May, using another 10 days of his visa. In total, until 10 May, he has used 21 of his 90 days allowed. In this scenario, the tourist would still have 69 remaining days of his Schengen visa to use within the next 169 days.If you are still in doubt, you can use your inputs and outputs as an example in this calculator. What documents do I need to apply for a tourist visa for Spain? To apply for your tourist permit you will need the following documents:- Schengen visa application form.- Recent passport-size photograph- Valid passport- Travel medical insurance- Payment of the visa fee- Documents proving the purpose of the trip and the conditions of the stay and establishing the applicant’s intention to leave the Schengen area before the expiry of the visa.- Proof of financial means- Proof of residence in the consular district When do you have to apply for the tourist visa? You may not apply more than 180 days before your planned departure date. As a general rule, it is recommended that you submit your application at least 3 weeks in advance as this is the estimated issuance time you may be given. What are the penalties for overstaying? As with any residence permit, non-compliance with the conditions of the permit will lead to sanctions. You probably already know this, but it is mandatory that you control your stay if you do not want to face:- Prohibition of entry into Schengen area- Financial penalties- Criminal prosecution in extreme cases.If you still have any questions, you can contact our immigration lawyers who will be happy to help you. Visado Schengen en España: Permiso de corta estancia. Visado Schengen en España: Permiso de corta estancia. Legal Iuris • 15 marzo, 2024 • Uncategorized • No hay comentarios Visado Schengen en España: Permiso de corta estancia El Visado Schengen es uno de los visados más sencillos de solicitar y rápidos … Schengen Visa in Spain: Short term residence Schengen Visa in Spain: Short term residence Legal Iuris • 15 marzo, 2024 • Sin categoría • No hay comentarios Schengen Visa in Spain: Short-stay permit for tourists. What is a Schengen Visa? A Schengen visa, also popularly known as a tourist …

Beckham Law: All you have to know What is the Beckham Law? The Beckham Law is known as the tax regime for workers relocated to Spanish territory. This tax regime grants tax benefits similar to those of a non-resident for those who relocate their residence to Spain for work purposes.Spain is not a particularly attractive country fiscally speaking, so it is up to the Spanish government to introduce benefits or special regimes to attract foreign professionals, and this is exactly what this regulatory framework is intended to do.It was introduced in Royal Decree 687/2005, and after some modifications is still in force in 2023.Once granted, the beneficiary will be able to enjoy the tax advantages for a period of 6 years. It is important to note that this period is not renewable and cannot be applied for again, so once this period has elapsed, the taxpayer will be taxed under the normal Spanish resident regime. Requirements for Beckham Law Although it is voluntary and decision of the applicant, certain requirements must be met and the application must be submitted to the Tax Agency in order to benefit from the Beckham Law.Beckham´s law requirements: 1. The applicant must not have been a tax resident in Spain for the last 5 years.2. Proof of a new job justifying the person’s move to Spain.3. The peson applying cannot obtain income through a permanent establishment located in Spanish territory.4. Fulfil all formalities in due time and form. This refers to official documentation, maximum time since the impatriate’s entry into employment, and other formalities.On the other hand, the self-employed, directors of companies located outside Spain, those which own more than 25% of a company in Spain, and surprisingly sports professionals, are excluded. Advantages of the Beckham Law Probably the best known aspect of this regime is the advantages of using it, and not surprisingly. Many of them are reminiscent of the taxation of a non-resident, although this is not really the case. Reduced personal income tax In the “normal” regime there are several income brackets with a corresponding applicable rate, which is progressive and amounts to up to 47% for incomes of more than €300,000. However, with the regime applied by the Beckham Law, only 2 brackets are established: 24% for incomes below €600,000.47% for incomes above €600,000. Only income obtained in Spanish territorty is taxable. The taxpayer will only be taxed on income obtained in Spanish territory, excluding income obtained worldwide. Under the normal regime, all assets in worldwide would also be taxed. Wealth tax benefits With regard to wealth tax, you are only liable to tax on your assets located in Spain. Under the normal regime the tax is levied on the net value of your worldwide wealth. You will not have to fill form 720 There is no obligation to file form 720 because the taxpayer is treated as a non-resident. This form is for those assets outside the country with a value of more than 50,000, and must be filed by tax residents. I want to talk with a Lawyer Disadvantages of the Beckham Law Double taxation treaties cannot be applied Double taxation treaties are not applicable in this case because the worker is considered a non-resident and cannot access the certificate of tax residence in Spain. No deduction of expenses The applicant will not be able to apply tax benefits provided for the rest of taxpayers in the normal regime such as Social Security. You are not entitled to severance pay Once this regime has been adopted, the right to exemption from severance pay is lost, as is the right to the deduction for the minimum family allowance or descendants. Can my family benefit from the Beckham Law? The spouse together with their children under the age of 25 may qualify for this scheme, and in the case of disabled children, their age will not be taken into account. To do so, the family members must apply in the same tax year, and their joint annual taxable income must be lower than that of the “main expatriate”, who is the beneficiary of the employment relationship. How to apply for the Beckham Law in Spain First of all, you should bear in mind that you must apply for this scheme during the 6 months following the date of registration with the Social Security (that is, from the start of the employment relationship). We recommend that you start the procedure as soon as possible because if you do not submit it in time, it will be considered null and void. The application must be submitted to the Tax Agency using form 149, along with a copy of your passport and NIE, Social Security number and employment contract with the Spanish company. What happen if my application is rejected? The application is likely to be considered rejected if mistakes have been made in the submission of documentation, if deadlines are missed, if the applicant does not meet the requirements, and so on. If your Beckham Law application is refused you will not be able to reapply and you will have lost your chance to benefit from the scheme. So please make sure you follow the correct steps. Apply for the Beckham Law with fiscal advisors As you have been able to see, before applying for the Beckham Law tax regime, it is advisable to carry out a prior tax study of the applicant’s situation as, although everything seems to be advantageous, in reality it is aimed at a very specific profile of worker. At Legal Iuris we will analyse your tax situation and manage the application process so that you can take advantage of the tax benefits of this regime as soon as possible. Contact our lawyers for more information and advice on taxation. Check our latest articles Wet Beckham • 7 diciembre, 2023 Wet Beckham Wat is de Wet Beckham? De wet Beckham staat bekend als het belastingregime voor werknemers die gedetacheerd zijn op Spaans … Ley Beckham • 7 diciembre,… Continue reading Beckham-law

Second Chance Law in Spain What is the Second Chance Law? The Second Chance Law is the legal procedure by which a debtor (whether an individual or a self-employed person), in a situation of insolvency, can negotiate, reduce or even cancel all of his debts. It is intended for bona fide debtors who are unable to pay their debts and wish to make a new start.Currently, the second chance procedure is regulated by the Consolidated Text of the Insolvency Law (Texto Refundido de la Ley Concursal) approved by Spanish Royal Decree-Law 1/2020, of 5 May, recently amended by Law 16/2022, of 5 September. Second Chance Law Requirements. Not everyone who declares debts to a claimant will be covered by this regulation. This law is focused on more vulnerable situations and sets out minimum requirements that must be complied with if the person wishes to benefit from it.- The debtor must have enforceable debts with at least two different creditors. Financial institutions, public companies, suppliers, etc.- It is necessary to declare a state of current or imminent insolvency.- Proof that the debtor has always acted in good faith.- In case of having previously benefited from the Second Chance Law (LSO), or not having done so in the last 5 years after an exoneration with liquidation of the active mass, or 2 years, by a payment plan.These requirements constitute the intention of the law to demonstrate the good faith of the debtor, and that said debtor is in a difficult economic situation due to business or personal misfortunes and not due to bad faith. New Changes After the 2022 Law Amendment. On 1 January 2023, Law 16/2022 of 5 September came into force. This has led to important changes, among which we can highlight the following: The debtor can keep his habitual residence. Debtors can now settle their debts without having to liquidate all their assets whilst preserving their habitual residence. For this purpose, the possibility of a 3-year interest-free payment plan is foreseen as a standard rule, although it may be extended to 5 years when the debtor’s property is not foreclosed. Public Debt Can Be Cleared Up To €20,000. Although not all debts can indeed be cancelled, such as child support or the salary of dependent workers, among others, the Second Chance Law allows the exoneration of debts of up to €20,000 with public entities.This is not the maximum amount that can be accumulated, but rather it allows exemption of up to €10,000 per debtor with the Tax Office (Hacienda Pública) and €10,000 with the Social Security. For the first five thousand euros of debt, the exoneration will be full, and from this amount onwards the exoneration will reach fifty percent of the debt up to the maximum previously indicated. No prior out-of-court settlement attempt with creditors is required. The amendment completely removes the step before going to court that used to be the attempt to reach an amicable agreement with creditors, which in many cases was not effective and entailed additional costs that the debtor could not assume.The debtor is now free to prepare the documentation directly with his lawyer, which speeds up the process considerably. I want to talk with a Lawyer Procedure Initiating a second chance procedure is now easier than ever thanks to the recent changes. Since it is no longer necessary to reach an out-of-court agreement with creditors, the process can be initiated directly through the courts.There are two ways to apply for the debtor’s exoneration:1. Settlement procedure subject to a payment plan (this option would allow the habitual residence to be preserved).2. Proceeding to liquidate the debtor’s assets. Commercial Court application. The procedure is initiated by an application submitted to the Commercial Court, whether the debtor is self-employed or not, detailing the debtor’s current or imminent insolvency situation, and the fulfilment of all legal requirements to benefit from the Second Chance Law. Judicial Phase. Once the application has been submitted, the Court will review it and, if everything is in accordance with the requirements, the petitioner’s application will be admitted. 1. Exoneration with payment pland and allegations. In case the debtor would like to keep some of his goods and assets, he may commit himself to a payment plan in which the conditions, assets and amounts are fixed on an income and expense basis. This payment plan will generally have a duration of 3 years, although it can be extended to 5 years if the habitual residence does not change. 2. Exoneration with Liquidation of Personal Assets and Bankruptcy Proceedings. The second option to save the debt is by liquidating personal assets. This means that the debtor’s assets are placed at the disposal of the Court and will be liquidated at public auction in order to cover the debt incurred. Unlike the payment plan, here it is possible to achieve full debt cancellation. What happens after debt cancellation? Once the court case has been concluded and the debts have been cancelled or a payment plan has been established, the debtor can again enjoy the benefits that were available to him prior to acquiring this treatment. Project financing, bank cards and other formalities are once again at their disposal. Creditor´s claims. As previously explained, the essential pillar underpinning the Second Chance Law is the principle of good faith, so that, if good faith is disproved, it is possible that the exoneration of the debt may be cancelled, even after the trial has taken place.The case could be reviewed during the 3 years following the judgment, if requested by the creditors, either because they suspect income in favour of the debtor that has not been declared at the time of the trial (such as inheritances or donations) or because there are indications showing that the debtor has not acted in good faith. Advantages of the Second Chance Law. Debt cancellation. The main goal of anyone who decides to take advantage of the law is the possibility to fully cancel their exonerable debts in order to… Continue reading Second Chance Law 2023

Taxation for Non-Residents with rented properties. It´s becoming increasingly common for foreigners from different countries to be interested in Spain as a country to invest in, and although there are different means, the most common is still the purchase of properties. While many owners buy the property with the intention of enjoying it all year round, others opt to rent it out during the months when they are not using it in order to get a return on their investment. This is when the rental tax for Non-Residents comes into play. VIEW THIS POST IN DUTCH Who has to pay the tax? First of all, you will need to know if you are considered tax resident in Spain or another country and the implications of both scenarios. Without going into much detail, you will be a Spanish tax resident if: You stay in the country for more than 183 days in Spanish territory per calendar year. The main core or base of your activities or economic interests, directly or indirectly, is in Spain. Your spouse or minor children have their habitual residence in Spain, unless there is proof to the contrary If you do not meet any of these requirements, you are deemed Non-Resident for tax purposes and you will have to account for your rental income in a different way to residents. This tax is included in the framework of the Non-Resident Income Tax (IRNR), and the taxpayer is obligated to file the declaration of the income received from the rental income on form 210 (modelo 210). As its name indicates, is applicable to all those individuals and legal entities that do not have their tax residence in Spain but obtain income from the country, so they are having certain benefits from assets located there.  Precisely, this is what the territoriality of the tax refers to: the source of the income (Spain) and not the taxpayer one. For this reason, the income obtained from the rentals (which are originated in Spanish territory) will count for the non-resident’s taxation purposes. Applicable tax rate and fiscal implications. The IRNR Law quantifies the tax payable with distinction between income obtained through a permanent establishment and income obtained without a permanent establishment. In order to be considered a permanent establishment, the Non-Resident individual must have at least one full-time employee in Spain with a valid contract to carry out the commercial activity associated with the property. Otherwise (which is usually the most common case), the taxation will be subject to form 210 depending on the income generated by the rental of the property, whose total will be the taxable base on which, depending on your residence when the tax is filed, you will have to apply a tax rate or another that will make the investment more or less worthwhile financially speaking. The main difference is the different tax rate for EU and non-EU citizens. Resident citizens of an EU country, Iceland, Norway, or countries included European Economic Area (EEE) will be taxed at a rate of 19%, while Non-EU residents will be taxed at a rate of 24%. Another peculiarity between the EU citizen consideration has to do with the possibility of deducting expenses. If the owner of the property resides in any EU member state, Iceland or Norway or countries included European Economic Area (EEE), he/she will have the opportunity to deduct the expenses foreseen in the corresponding IRPF regulations as a reason derived from the rental. The situation is different for non-EU citizens, who will not be able to deduct any expenses and will have to declare the total amount of income for their corresponding taxation. Submission of the tax. At this point you are probably wondering whether it would be possible to somehow declare this tax in your country, as it may after all be seen as a benefit of your person. At the moment it is not possible, and it has an explanation. Due to the double taxation agreements signed between the different countries and Spain, the Spanish State has the power to tax the profits obtained by the properties located in the country in accordance to the Spanish legislation in force at the time. The deadline for declaring the income obtained from rentals by Non-Resident owners will be quarterly, being the first 20 days of the months of January, April, July and October respectively. Make sure you keep these dates in mind or have an advisor taking care of processing it, as not submitting this tax or doing so after the established deadline entails financial penalties that can reach up to 150% of the amount owed. Contact our team if you have any doubts regarding the payment and filling of your tax and for any other tax purposes. Contact UsFill the form with your enquiry and our team will make contact with you as soon as we can. Please enable JavaScript in your browser to complete this form.Name *Email *Phone numberTell us your situationGDPR Agreement * I consent to this website storing the information I have submitted so that they can respond to my enquiry. * Submit VIEW THIS POST IN DUTCH