Are you a tax resident in Spain and do you own property or other assets in France or abroad?
The 720 tax form will affect you
Are you a tax resident in Spain? Do you own assets worth more than €50,000 outside Spain?
Form 720 applies to you! Form 720 is an informative declaration that must be submitted by individuals who are tax residents in Spain, in which they provide an annual breakdown of the value of the assets and rights they hold abroad.
This is a reporting requirement introduced by the Spanish government to step up the fight against tax evasion.
Who is affected?
Individuals who, as tax residents in Spain, are owners, beneficiaries, holders, co-owners or authorised holders of assets and rights located abroad, and whose aggregate value of such assets exceeds €50,000, are required to complete Form 720.
Owners, beneficiaries, co-signatories and authorised signatories of assets held abroad.
When you should do it ?
The first Form 720 must be filed within one year of acquiring tax resident status in Spain; in other words, the Form 720 for 2024 must be filed electronically between 1 January 2025 and 31 March 2025.
Once you have submitted your first return, you will only need to submit Form 720 again if the total value of the assets or rights changes by more than €20,000, or if you have ceased to be the owner or holder of them during the year.
In any case, you will be required to complete Form 720:
When you have sold or purchased a property abroad
When you have sold your investments
If you have some savings or other bank's account abroad
When you have opened or closed a bank account abroad
What needs to be declared?
The assets to be declared are divided into different categories:
Banks accounts abroad
securities, rights and insurance policies managed abroad
Properties abroad
Cryptocurrencies
The declaration is mandatory if one or more of these groups have a value exceeding €50,000.
It will need to be updated the following year if the value of the assets in each category increases by €20,000; if nothing has changed, there is no obligation to do so annually
How and when should we submit it ?
It must be submitted electronically between 1 January and 31 March of the following year. It is possible to submit the declaration after the deadline or in another format, but the penalties are severe.
Once you have submitted your first return, you will only need to submit Form 720 again if the total value of the assets or rights changes by more than €20,000, or if you have ceased to be the owner or holder of them during the year.
What are the penalties for failing to submit a declaration?
Historically, the penalties were very severe, with fixed fines of up to 150% of the tax due. However, following a ruling by the Court of Justice of the European Union (CJEU) in 2022, Spain was required to amend these penalties, making them more proportiona
Nevertheless, it is strongly recommended that you comply with this requirement to avoid any risk of penalties.
Do you own property in Spain as a non résident ?
The IRNR tax applies to you……
The tax on imputed income (“Rentas imputadas”) for non-residents is a flat-rate calculation based on the property’s assessed value.
If you are a non-resident for tax purposes in Spain, you will be required to pay the tax on imputed income (‘Rentas imputadas’) annually. This is 19% of 1.1% of the property’s cadastral value for citizens of the European Union (including Iceland and Norway). Otherwise, it is 24% of 1.1% for others. This 1.1% becomes 2% if the cadastral value has not been updated in the last 10 years.
The calculation of IRNR on imputed income depends on several factors, including the country of residence of the non-resident owner, the date of the last update to the land registry, and the tenancy status of the property.
Unlike the Property Tax (IBI), which is levied by the local council where the property is located, it is your responsibility to calculate, complete and submit the IRNR tax return form to the tax office on an annual or quarterly basis.
It should be noted that the ‘rendimiento del capital inmobiliario’ is also payable by residents in Spain on properties that are not their main residence.
Do you own a property in Spain and rent it out?
Spanish tax on rental income applies to you …
Taxes on rental income vary depending on the type of rental (standard long-term / short-term / holiday let) and your status (resident/non-resident).
Taxation of standard long-term leases (5-year tenancy agreements)
A standard long-term rental (5 years) offers a significant dual tax advantage (which short-term and holiday rentals do not):
Expenses (major works – such as façade renovation, IBI property tax, mortgage interest, service charges, insurance, maintenance works and costs, etc.) are deductible from gross rental income. However, this applies only to owners who are residents of the European Union (plus Iceland and Norway).
And on top of this net income, there is also a 50% allowance… But only for homeowners residing in Spain.
Don’t forget, of course, to file your annual tax returns, whether you are a resident or non-resident in Spain.
If you are a Spanish resident, you will need to declare this income on your personal income tax return (IRPF). You must declare your net rental income after deductions.
If you are a non-resident, you are liable for IRNR (Non-Resident Income Tax). You must submit an annual tax return for each property owner and will be taxed at a rate of 19% on your net rental income if you are an EU resident (including Iceland and Norway) and at 24% if you are a non-EU resident.
Similarly, for non-residents in Spain who are resident in another EU country, this income is exempt from tax in their country of residence; however, it must be declared for the purposes of income tax in that country using the tax credit method.
Taxation of short-term rentals (lasting from 1 month to a maximum of 18 months)
Short-term rentals (‘alquiler de temporada’) are for periods of between 1 and 18 months. Short-term rentals are subject to higher tax rates than standard rentals. In particular, resident owners are not eligible for the 50% tax allowance. Temporary rentals are taxed on net rental income (rent minus expenses, mortgage interest and other charges over the rental period) for resident owners in the European Union (plus Iceland and Norway) and on the full amount for others.
As with standard contracts, landlords must complete a tax return
If you are a Spanish tax resident, you are liable for personal income spanish tax IRPF
If you are a non-resident for tax purposes, you are liable for IRNR tax. You must submit a quarterly tax return. You will be taxed at a rate of 19% on net rental income (with an obligation to declare this in your country of origin) if you are a property owner resident in the European Union (plus Iceland and Norway), and at a rate of 24% for others.
Taxation of holiday rentals (stays of less than one month)
When and what do you need to declare to the Spanish tax authorities regarding holiday rentals?
It will depend of your tax situation :
If you are resident in Spain, you will declare this when completing your personal income tax return. You must declare your net income, i.e. your income minus tax-deductible expenses (including mortgage interest); and this must be limited to the period of occupancy. The 50% allowance for rentals (provided for in Article 23.2 of the Income Tax Act) does not apply. If you are resident in Spain, you will declare this when completing your IRPF (income tax) return. You must declare your net income, i.e. income minus tax-deductible expenses (including mortgage interest); and furthermore, limited to the period of occupancy. The 50% allowance for rentals (provided for in Article 23.2 of the Personal Income Tax Act) does not apply.
If you are not resident in Spain, you are required to submit an annual personal tax return . This income is treated and taxed as ‘rendimiento de capital inmobiliario’ (income from property capital). The income to be declared is the total revenue, with the possibility of deducting the costs or expenses provided for in the IRPF (limited to the rental periods) if the landlord is a resident of the European Union (plus Iceland and Norway).
The tax rate is 19% for EU residents and 24% for others.
Please note that the new government measures provide for the introduction of a 21% VAT rate for holiday rentals (to be confirmed in the first half of 2025)
Do you own a property in Spain worth more than €700,000?
The Spanish wealth tax applies to you……
IThe Spanish wealth tax
L’Impôt sur la Fortune (Impuesto sobre el Patrimonio – IP)
L’impôt sur le patrimoine espagnol (IP) est un impôt régional qui taxe les biens et actifs des particuliers dépassant un certain seuil.
Who is affected?
- Tax residents in Spain: taxed on their total worldwide assets.
- Non-EU/EEA residents: taxed solely on their assets located in Spain.
- Exemptions and thresholds :
Excess of €700,000 per person (varies by region).
Exemption for the principal residence up to €300,000 (rarely applicable to non-residents).
A sliding scale of 0.2% to 3.5%, varying according to the region in which the property is located.
Regional rules :
Madrid is applying a 100% rebate, thereby waiving the property tax for taxpayers.
Catalonia and the Balearic Islands apply higher rates.
The Solidarity Tax on Large Fortunes (ISGF)
In 2022, Spain introduced a temporary tax on high net worth individuals, known as the “Impuesto de Solidaridad de las Grandes Fortunas” (ISGF), aimed at addressing regional disparities in the IP.
Who is affected?
Net assets over 3 milions eur in Spain
Non-resident Europeans are liable for this tax solely on their Spanish assets.
Scale of ISGF : :
3 à 5 millions € → 1,7 %
5 à 10 millions € → 2,1 %
+10 millions € → 3,5 %
Interaction with the IP Tax :
The ISGF is deductible from corporation tax, which means that if you already pay corporation tax in a region where this tax applies, the ISGF will simply make up any shortfall.
Impact on Madrid and Andalusia :
These regions exempt the IP, but the ISGF still applies.
How is a non-resident European affected?
If you own a property in Spain with a taxable value of more than €700,000, you will be liable for property tax depending on the region.
If your Spanish assets exceed €3 million, you will be liable for the ISGF, even if the region where your property is located exempts you from property tax (e.g. Madrid).
Vous pouvez déduire l’IP de l’ISGF, mais l’ISGF reste exigible même si votre région accorde une exonération totale d’IP.
Tax changes in 2025
In 2025, changes to national and regional tax laws may affect foreign buyers in Spain, in particular:
The Housing law of 26 May 2023 stipulates that, from 2024, the flat-rate deduction applied to rental income for landlords resident in Spain will be reduced from 60% to 50%. In other words, from the 2025 tax return onwards, landlords residing in Spain will be taxed on 50% of net rental income, instead of 40%.
Please note, if the tenancy agreement was signed before 26 May 2023 and is still in force, the landlord is not affected by the changes introduced in the Housing Act. They benefit from a transitional arrangement. This means that the 60% reduction on their rental income still applies, as was the case until now. However, if the tenancy agreement was signed after 26 May 2023, the new 50% reduction applies to rental income.
For further information, property owners who do not reside in Spain are not entitled to a flat-rate reduction.
The big news for 2025 is the Spanish Government’s Bill on housing measures, of which we are currently aware only of the broad outlines, but not yet the details. So, what are the main tax measures in this bill?
PLEASE NOTE… A bill remains provisional, as it must be approved by Parliament before it can be implemented; therefore, at this stage, nothing has been finalised.
100% exemption from personal income tax (IRPF) for landlords who let out their property in line with the reference index published by the INE (‘Índice de Referencia para la Actualización de Arrendamientos de Vivienda’, IRAV).
The abolition or reduction of tax benefits associated with the SOCIMI scheme (real estate investment companies).
A 21% tax on tourist accommodation rentals.
100% increase in taxes on the purchase of property by a non-EU foreigner who is not a resident of the European Union
****This last point warrants an explanation : This means that a non-EU foreign national residing in the EU will be able to buy property without seeing their tax bill increase. For example, a Canadian resident in France or Spain (who pays tax there) will not pay any additional tax. However, a Canadian resident in Canada will pay this new tax. And a citizen of the European Union living outside the European Union would not pay it. For example, a French person living in Canada or China would not pay it, so one would have to be both a non-resident
The ‘provisional’ tax on large fortunes (ISGF), which came into force in 2023, will remain in place in 2025. It is likely that this tax will become permanent.
The rate applicable to the national capital gains tax on property in the highest bracket and depending on the region (over €300,000) is rising from 28% to 30%.
Some regional goverment has announced a reduction in the tax rate on the purchase of second-hand homes (ITP) to 4% for young people under the age of 40. This applies in all the autonomous communities governed by the PP. That is to say, the majority of Spain’s regions, including the Community of Madrid, the Valencian Community and Andalusia
The Balearic Islands have reduced the ITP – the tax payable on the purchase of an existing property – to 4% if the price does not exceed €270,151. And to as little as 2% for young people under the age of 36.
Cantabria has reduced the standard rate of its property transfer tax from 10% to 9%.
If you are neither a property owner nor a resident in Spain, Spanish tax laws do not apply to you! Unless, of course, you plan to invest in Spain at some point.
If you need advice or assistance with tax settlements, or further information regarding inheritance and gift tax in Spain, OPENNESS BY CARLOTA can help you……
For further assistance , please contact me !
www.opennessbycarlota.com contact@opennessbycarlota.com
