Taxes for Non-Residents with Property on Mallorca

Anyone who owns a property on Mallorca but is not tax resident in Spain generally falls under the Spanish Non-Resident Income Tax, the Impuesto sobre la Renta de no Residentes (IRNR). The decisive factor is not whether you have an NIE or how often you visit the property, but whether you are considered a resident or non-resident under Spanish rules.

Resident or Non-Resident: the tax difference

A natural person is considered tax resident in Spain in particular if they stay in Spain for more than 183 days in the calendar year, if the center of their economic interests is in Spain, or if their spouse and minor children usually live in Spain. The classification generally applies for the entire calendar year.

Residents pay tax in Spain on their worldwide income via IRPF. Non-residents only pay tax in Spain on certain income from Spanish sources. This includes income from a property on Mallorca: even if the property is only used privately and no rental income is generated.

Owner-Occupation: tax even without renting

For an owner-occupied or vacant property, Spain assumes a notional property yield. This is declared using Modelo 210. The tax base is generally based on the cadastral value (valor catastral), which can be found on the IBI assessment and in the cadastral reference of the property.

The rate is generally 1.1% of the cadastral value if the cadastral value has been newly determined or revised in the relevant period; otherwise 2%. The IRNR tax rate is applied to the amount thus determined.

For taxpayers resident in the EU, Iceland, Norway or Liechtenstein, the general rate is 19%. For other non-residents, it is generally 24%. For pure owner-occupation, no ongoing costs are deductible.

Renting: declare rental income separately

When renting, the actual rental income received is taxable in Spain. Modelo 210 is also used regularly for this. Taxpayers from the EU and certain EEA states can generally deduct costs directly related to and documented for the rental under the IRNR rules. Non-residents outside this EU/EEA framework, on the other hand, are generally taxed on gross income.

Annual declaration and deadlines

For owner-occupation or vacancy, the declaration must generally be submitted in the calendar year following the tax year. Rental income is generally declared quarterly; depending on the case, an annual grouping may also be possible for income from 2024 onwards.

Why tax advice is important

The non-resident tax seems formal at first glance, but in practice it is prone to errors. Common risk points are incorrect residency, overlooked owner-occupation, incorrect cadastral value, failure to apportion rental and owner-occupation days, missing documentation for cost deductions, incorrect tax rate, or late filing.

Advice is also important because the Spanish declaration interacts with the home country. When selling a property by non-residents, the buyer generally withholds 3% of the purchase price as an advance payment on Spanish tax and remits it via Modelo 211.