Wealth Tax (Impuesto sobre el Patrimonio) This tax return shows the value of the non-resident’s assets located in Spain. tax-free allowance of Euros 700,000 per person.

Income Tax (Impuesto sobre la renta) For non-residents this tax may involve paying income tax on investments held, including interest on funds on deposit in bank accounts, and letting income from properties. A non-resident is always under an obligation to file an income tax return based on the “notional” income. This “Notional Income tax” is payable even if you do not rent your holiday home out to others.

Local rates (IBI)

Capital Gains Tax If on sale of your property in Spain you are non-resident in Spain for Spanish tax purposes, the buyers lawyers are obliged to retain 3% of the sale price. The buyer then deposits this sum with the Spanish tax authorities on account of the seller’s Capital Gains tax liability in Spain.

Plusvalia Tax The Plusvalia tax is a tax assessed by the local Town Hall based on the “notional” increase in the value of the land between the times you bought the property to the date of sale.

The Spanish Inheritance and gift tax (Impuesto sobre suceciones y donaciones) is a tax on the “acquisition” of the asset by the beneficiaries not a transfer tax payable by the Estate of the deceased as is the case with Inheritance tax in the UK.

This means that the liability for payment of Spanish inheritance tax falls directly upon the beneficiaries themselves. Therefore, when considering inheritance tax planning issues, it is the tax position of the ultimate beneficiaries together with that of the Estate, which needs to be considered under Spanish Law.

In addition there will be Plusvalia tax payable as the acquisition of the property by beneficiaries is treated as a transfer of land for the purposes of the Plusvalia tax. Please see above.

The nature of the business you propose to establish will determine the type of business structure to be formed. It will be different if the business is designed to run a restaurant or nightclub compared, to say, a computer software house or timeshare organisation.

This decision will also be influenced by the share capital of the company and the partners or shareholders the company will have in Spain.

Sociedad Anonima (SA): this is equivalent to a UK Public Limited Company or an American Corporation and requires a minimum share capital of Euros 120,000.

Sociedad De Responsabilidad Limitada (SL): a Private Limited Company, which has a minimum share capital of Euros 3,005.

Sucursal (Branch): A permanent branch office with some independence but with the same legal status as the parent company.

Empresario Individual: a Sole Trader, where an individual manages the business, provides the capital and assumes the risk.