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.