Non-resident taxation in Spain: IRNR, tax treaties and filing obligations

Any individual or company that earns income in Spain without being a Spanish tax resident is subject to Non-Resident Income Tax (IRNR), governed by the Consolidated Non-Resident Income Tax Act, approved by Royal Legislative Decree 5/2004. This tax operates in parallel with the double taxation treaties signed by Spain, which can significantly reduce a non-resident's tax burden. Complying with it correctly requires knowing which income is taxed in Spain, at what rate and within what deadline.

Tax residence: the decisive concept

A person is tax resident in Spain where they spend more than 183 days in Spanish territory during the calendar year, or where the main centre or base of their activities or economic interests is in Spain (Article 9 of the Personal Income Tax Act, Law 35/2006). Anyone who meets neither of these criteria —or who, meeting them, proves residence in another State through the relevant certificate— is taxed under IRNR on their Spanish-source income.

The tax residence certificate issued by the competent authority of the other State is the document that triggers the application of the double taxation treaty. Without it, the payer of the income applies the general IRNR rates and the non-resident will have to reclaim the difference through a refund.

Which income is taxed in Spain under IRNR

Income obtained in Spanish territory is taxed in Spain under IRNR (Article 13 of the Act), including:

• Income from property located in Spain (rent and deemed income).
• Capital gains on the transfer of property located in Spain.
• Dividends paid by resident companies.
• Interest on loans agreed with residents or used in Spain.
• Employment income arising from an activity carried out in Spanish territory.
• Pensions and other similar benefits received from Spanish payers.

IRNR rates: EU/EEA versus third countries

The IRNR rate depends on the taxpayer's State of residence and the type of income:

• Residents in the European Union or the European Economic Area with effective exchange of information: a general rate of 19% on net income (with the possibility of deducting expenses linked to earning the income where the taxpayer is resident in the EU or the EEA).
• Residents in third countries: a general rate of 24% on gross income, without the deduction of expenses that Article 24.6 reserves for EU and EEA residents, save for the personnel, materials and supplies costs allowed by Article 24.2 for economic activities carried out in Spain without a permanent establishment.
• Dividends and interest: a rate of 19% as a general rule, reducible by treaty.
• Capital gains: a rate of 19% for any non-resident on transfers of assets (Article 25.1.f).3.º of the Act). The general 24% rate of Article 25.1.a) does not apply to these gains.

Double taxation treaties: how they reduce the burden

Spain maintains a wide network of double taxation treaties (DTTs) with more than ninety countries, based on the OECD Model Convention. These treaties allocate taxing powers between the source State (Spain) and the recipient's State of residence and, in most cases, set maximum withholding rates lower than those of IRNR:

• Dividends: 5% or 15% (depending on the size of the holding), against the general 19%.
• Interest: 0% or 10% in many treaties.
• Royalties: a reduced rate or exemption.
• Capital gains on property: in most treaties, the State where the property is located (Spain) retains the power to tax.

Exemption from or reduction of withholding requires the Spanish payer to hold, before payment, the tax residence certificate of the foreign recipient issued by the tax authority of the other State.

The filing forms

IRNR compliance is structured through several forms:

• Form 210: the ordinary IRNR return. Income from let property is filed annually, in the first twenty calendar days of April of the year following accrual; deemed income on property, from 1 April to 31 December of the following year; all other income with tax due, in the first twenty calendar days of April, July, October and January. It is filed by the non-resident themselves or their representative in Spain.
• Form 211: the 3% withholding on the acquisition of property from non-residents. It is filed by the buyer within the month following the deed.
• Form 216: withholding and payment on account of IRNR on income paid to non-residents (dividends, interest, rent). It is filed by the resident payer monthly or quarterly.

Failure to file or late payment generates surcharges and late-payment interest; voluntary late filing without a prior demand entails surcharges of 1% to 15% depending on the time elapsed.

The obligation to appoint a representative in Spain

Non-residents who earn income in Spain subject to IRNR are obliged to appoint a tax representative before the Spanish tax authorities where they are not resident in another EU Member State and they operate through a permanent establishment, fall within Articles 24.2 or 38 of the Act, or the tax authorities so require because of the amount and characteristics of the income or their ownership of property in Spain (Article 10 of the Act). Joint and several liability for the tax falls on the payer and on the depositary or manager of the assets, not on the representative, whose own exposure is the penalty for failing to appoint one where the law requires it, so both roles call for a careful assessment of the exposure.

How we help at RCM Legal

The most common mistake we see in non-resident taxation is failing to apply the double taxation treaty —whether through unawareness or through not holding the residence certificate in time— and being taxed at the general domestic rate when the treaty allowed a significant reduction. The second source of problems is failing to declare deemed income on unlet property (the annual Form 210): the Tax Agency detects it by cross-checking the Land Registry and the Cadastre, and the omission generates surcharges and interest on a tax that in many cases amounts to only a few hundred euros.

We analyse the taxation of your Spanish income, determine which treaty applies and on what terms, manage the returns before the Tax Agency and, where appropriate, claim refunds of withholding applied in excess. If you have property, investments or business activity in Spain without residing here, talk to us about your situation.