One of the most common transactions we conduct at our law firm is the purchase or sale of real estate property on the Costa Blanca by European citizens.
When the purchase of a house in Spain takes place, it is not always for the purpose of establishing permanent residence in our country. Most of the time the use of this property is as a holiday home, a second residence on the Costa Blanca or an investment. Therefore, the residence of the buyer remains that of his country of origin and he or she is taxed in Spain by the Income Tax of Non-Residents.
At Savloir, we advise you to appoint a legal and tax representative as a non-resident in Spain for your convenience, in order to expedite and facilitate the payment of taxes. However, in some cases it is not only advisable, but the appointment of a representative becomes mandatory.
In the following article we aim to shed light on one of the most recurring issues in the process of buying a property in Spain. Is it mandatory to appoint a legal and tax representative in Spain for non-residents?
What does it imply and what functions does a legal and tax representative have in Spain?
Legal representative in Spain for non-residents
It is the power granted by law for one person to act on behalf of another. Legal representatives in Spain are persons who act on behalf of those who do not have the capacity to act; those who hold the title of the representative bodies of legal persons (companies), that is, their administrators; and those who represent entities without legal personality.
Tax representative in Spain for non-residents
A Tax Representative is the natural or legal person that allows companies which are not established in Spain to operate as a buyer and seller in the Spanish territory. You can appoint any natural or legal person domiciled in Spain as a tax representative. Your tax representative in Spain becomes an interlocutor before the Spanish authorities.
Functions of the Tax Representative for Non-Residents in Spain
- Filing of the Annual Non-Resident Tax.
- Obtaining a CIF for non-resident companies.
- Submission of VAT returns.
- Constant and fluid communication with the Spanish Tax Agency.
Voluntary Representation
Voluntary representation is the type of representation that occurs, not because it is required by law, but because it is the will of the person being represented.
This can be carried out by anyone with the capacity to act. It is accredited by any means accepted in the Law. Representations for standardised documents approved by the Administration, whether a simple authorisation or a power of attorney when required, are valid.
Is it mandatory to appoint a legal and tax representative in Spain for a non-resident citizen?
NON-residents in Spain can obtain income with or without permanent establishment:
Non-resident taxation through permanent establishment
A person is considered to act through permanent establishment in the Spanish territory if he or she is the owner, continuously or habitually, of installations or workplaces of any kind, in which he or she performs all, or part of, his or her business activity. Also, if he or she acts in it/them through an agent who is authorised to act, in the name of and on behalf of the non-resident, who regularly exercises those powers.
In particular, it is understood that the following constitute permanent establishment: headquarters, branches, offices, factories, workshops, warehouses, shops or other establishments. Also, mines, oil or gas wells, quarries, farms, forestry or livestock; or any other place of exploration or extraction of natural resources, as well as construction, installation or assembly works which last for more than 6 months.
Is a non-resident, who rents his or her real estate property in Spain, considered to operate through a permanent establishment in Spain?
No. In accordance with Spanish tax regulations, the mere leasing of real estate is not one of the circumstances considered as a permanent establishment.
Taxation of non-residents without permanent establishment
Taxpayers operating without permanent establishment, whether natural or legal persons, are taxed in accordance with IRPF regulatory regulations, for each transaction, as provided for in Articles 24 and subsequent articles in the Consolidated Text of the IRNR Law.
In which cases is a representative in Spain mandatory
The Spanish Tax Agency mentions four cases in which it will be mandatory to establish a legal and tax representative in Spain:
- If you have permanent establishment in Spain.
- In the event that certain expenses can be deducted in order to determine the taxable amount subject to taxation in Spain.
- If an income-attribution entity established abroad engages in an economic activity in the Spanish territory, and all or part of it is continuously or regularly carried out through facilities or workplaces of any kind, or acts there through an agent authorised to act, in the name of and on behalf of the entity.
- If expressly required by the Tax Administration
- In the case of residents in countries or territories with which there is no effective exchange of tax information, who are owners of property located in Spain or of rights that are fulfilled or exercised in Spanish territory, excluding stock values traded on official (secondary) markets.
English, French and German-speaking Spanish law firm on the Costa Blanca
Whatever your starting situation, at Savloir we recommend that before initiating any transaction or activity in Spain, you contact a Spanish law firm specialising in tax law which speaks your native language fluently: English, French or German.
After presenting your case, a tax lawyer will be able to advise you from the beginning on what your obligations and duties are before the Spanish Tax Agency and whether it is mandatory for you to have a Legal and Tax Representative in Spain.
At Savloir, we offer the service of legal and tax representation for non-residents in Spain. Our legal team consists of English, French and German speaking professionals of different nationalities. Do not hesitate to contact us with any doubts or queries you may have in this regard.
