Tax Measures for Non Residents. Balearic tax reform 2016

 Established tax measures of the General Budget LAW for the Autonomous Region of the Balearic Islands

 Plus established tax measures for NON Residents

After the approval of the General Budget Law for the Autonomous Region of the Balearic Islands, that comes into effect on the 1st January 2016.

An increase in the scale of the taxes granted to the autonomous region is established for the year 2016, although in certain taxes these will be back dated for 2015, these taxes being that of the Personal Income Tax and Wealth Tax. Concerning the Wealth Tax the non residents may choose to pay tax in the scale most convenient to them, as you will see it is better to pay the state scale rather than the autonomous scale under which the residents must pay.

The news concerning this rise in taxes can be seen in the Inheritance Tax between parents and children. Up until now the tax payable was 1% on the inheritance received, and with the new approved tax measures, the 1% will be applied on the first 700.000€ value of the inheritance for each heir, and the remainder under a scale which is later attached.

 tax measures for non residents

 

Details:

Personal Income Tax. (IRPF)

The autonomous rate increases. This scale will be applicable for the tax year 2015.

This will be back dated.

The joined state and autonomous rate (Region of the Balearic Islands) will be the following:

Scale for tax residents in Spain

Tax base up to Total amount Remainder to be paid up to Rate %
0,00 € 0,00 € 10.000,00 € 19,00 %
10.000,00 € 1.900,00 € 2.450,00 € 21,25 %
12.450,00 € 2.420,63 € 5.550,00 € 23,75 %
18.000,00 € 3.738,75 € 2.200,00 € 26,75 %
20.200,00 € 4.327,25 € 9.800,00 € 29,75 %
30.000,00 € 7.242,75 € 5.200,00 € 32,75 %
35.200,00 € 8.945,75 € 12.800,00 € 36,25 %
48.000,00 € 13.585,75 € 12.000,00 € 37,75 %
60.000,00 € 18.115,75 € 10.000,00 € 41,75 %
70.000,00 € 22.290,75 € 20.000,00 € 44,50 %
90.000,00 € 31.190,75 € 30.000,00 € 45,50 %
120.000,00 € 44.840,75 € 55.000,00 € 46,50 %
175.000,00 € 70.415,75 € Henceforth 47,50 %

 

Income Tax for Non Residents. (IRNR)

Tax for properties located in Spain whose owners are individual persons not resident and/or Non Resident Companies without permanente establishment. The tax will depend on whether the property is rented or not.  DETAILS (AÑADO PDF)

  • In the case of the property being rented, the tax base will be calculated on the profit received, paying separate tax for each income.

In general, the tax base will be the total profit. However, these being tax payers who are resident in another member State of the European Union, concerning the income obtained from the 1st January 2010, and of Iceland and Norway, to calculate the tax base they may deduct the expenses contemplated in the IRPF Law, as long as these are shown to be directly relationated to the income.

Rate of tax

EU Residents, Iceland and Norway Remained of tax payers
19 % 24 %
  • If the property is not rented, and the owner is an individual (the property is used by the owner or it is empty) the amount that results from applying the land registry value of the property appearing the Rates Receipt (IBI) will be considered as income under the following percentages:
    • In general 2 per 100.
    • In the case of a property whose land registry value has been revised or modified and come into force in the tax period or in the period of 10 previous tax periods 1,1 per 100.

A proportional part of this amount will be declared if the property has not been owned during the full year or if during part of same the property has been rented.

Rate of tax

EU Residents , Iceland and Norway Remainder of tax payers
19 % 24 %
  • Only companies resident in a country or territory considered as a tax haven that be the owners or possess in Spain any type of ownership, property or royalties of enjoyment of same, are subject to a special tax rate. The tax base is formed by the land registry value and if this does not exist will be used the value calculated in accordance to the regulations of Wealth Tax. The rate will be 3 per 100.
    • However, this special rate will not be applicable to:
      • The States, foreign public Institutions and International organizations.
      • Entities that develop economic operations different to the simple posesión or rental of properties.
      • Companies that are valued in secondary markets with officially recognised values.

 

Capital Gains from the sale of an estate in Spanish territory (IRPF / IRNR)

In general the capital gains obtained by non resident individuales without permanent establishment are subject to Non Resident Income Tax.

The calculation of the amount of capital gains is made in the following way:

Sales taken place as from the 1st January 2015:      

  1. In general: The profit will be calculated by the difference between the values of sale and purchase.
  2. Transitory System: Possible reduction of profit, in the case of patrimony elements purchased prior to the 31st December 1994, as per the rules of the Ninth Transitory Regulation of the IRPF Law. As from the 1st January 2015 is established a limit of 400.000 euros to apply this transitory system, refering to the combined values of sale corresponding to the patrimony elements sold from the 1st January 2015 to which have been applied the transitory system. When the value of sale of all the patrimony elements to which have been applied the reduction rate, sold from the 1st January 2015 until the date of sale of the patrimony element be over 400.000 euros no reduction will be applied.

To the capital gains obtained is applied the rate of tax according to the tax year and the income earned from the sale or the reimbursement of stocks or shares from the capital or patrimony of collective investment institutions, these are taxable at a rate of 19%

In general the capital gains obtained by individual residents, are subject to Personal Income Tax.

Rate of tax for 2015.

Tax base Total Rate
Up to                  6.000,00 19,50 %
The following  44.000,00 21,50 %
Hereinafter

(as from 50.000 euros)23,50 %

 

Rate of tax for 2016.

Tax base Total Rate
Up to                  6.000,00 19,00 %
The following  44.000,00 21,00 %
Hereinafter

(as from 50.000 euros)23,00 %

Wealth Tax

The rate increases. This scale will be applicable for the tax year 2015. This application will be back dated.

The minimum exempt is also reduced. The Inland Revenue Office had it fixed in 800.000€ and it is reduced to 700.000 € as it was in previous tax years.

This increase can only be seen in the Wealth Tax of those Resident in the Baleares, the non Residents will pay tax on the state or autonomous scale, whichever is more to their benefit.

Autonomous Scale (for those resident in Baleares):

Tax base up to Total amount Remaining value up to Rate %
0,00 € 0,00 € 170.472,04 € 0,28 %
170.472,04 € 477,32 € 170.465,90 € 0,41 %
340.937,04 € 1.176,23 € 340.931,81 € 0,69 %
681.869,75 € 3.528,66 € 654.869,76 € 1,24 %
1.336.739,51 € 11.649,05 € 1.390.739,49 € 1,79 %
2.727.479,00 € 36.543.28 € 2.727.479,00 € 2,35 %
5.454.958,00 € 100.639,04 € 5.454.957,99 € 2,90 %
10.909.915,99 € 258.832,82 € En Adelante 3,45 %

State Scale (for the Non Residents, this always being more beneficial for them):

Tax base up to Total amount Remaining value up to Rate %
0,00 € 0,00 € 167.129,45 € 0,2 %
167.129,45 € 334,26 € 167.123,43 € 0,3 %
334.252,88 € 835,63 € 334.246,87 € 0,5 %
668.499,75 € 2.506,86 € 668.499,76 € 0,9 %
1.336.999,51 € 8.523,36 € 1.336.999,50 € 1,3%
2.673.999,01 € 25.904,35 € 2.673.999,02 € 1,7 %
5.347.998,03 € 71.362,33 € 5.347.998,03 € 2,1 %
10.695.996,96 € 183.670,29 € Henceforth 2,5 %

Onerous Patrimony Transfer Tax and Juridical Acts.

With the new taxation measure, is established a new stretch in the rate, for when the values of the property are over 1.000.000 €, that will pay tax at 11%.

Therefore the new scale is the following:

Total value of the property Total amount Remaining value up to Rate %
0,00 € 0,00 € 400.000,00 € 8,00 %
400.000,00 € 32.000,00 € 200.000,00 € 9,00 %
600.000,00 € 50.000,00 € 400.000,00 € 10,00 %
1.000.000,00 € 90.000,00 € Henceforth 11,00 %

 

Inheritance and Donation Tax.

A special rate is established for inheritance of the people within Group I and II (children, parents, spouses):

  • This chart if applicable to those Resident in Spain and those of the EU and/or EEE.
Total value of property Total amount Remaining value up to Rate %
0,00 € 0,00 € 700.000,00 € 1,00 %
700.000,00 € 7.000,00 € 300.000,00 € 8,00 %
1.000.000,00 € 31.000,00 € 1.000.000,00 € 11,00 %
1.000.000,00 € 141.000,00 € 1.000.000,00 € 15,00 %
3.000.000,00 € 291.000,00 € Henceforth 20,00 %
  • The remainder of relationships or groups will be subject to the state scale as below.

The Non Community Residents, should apply th estate regulation under which is the following scale in force since the 1st January 2013:

Tax base up to Total amount Remainder to be paid up to Rate %
0,00 € 0,00 € 7.993,46 € 7,65 %
7.993,46 € 611,50 € 7.987,45 € 8,50 %
15.980,91 € 1.290,43 € 7.987,45 € 9,35 %
23.968,36 € 2.037,26 € 7.987,45 € 10,20 %
31.955,81 € 2.851,98 € 7.987,45 € 11,05 %
39.943,23 € 3.734,59 € 7.987,46 € 11,90 %
47.930,72 € 4.685,10 € 7.987,45 € 12,75 %
55.918,17 € 5.703,50 € 7.987,45 € 13,60 %
63.905,62 € 6.789,79 € 7.987,45 € 14,45 %
71.893,07 € 7.943,98 € 7.987,45 € 15,30 %
79.880,52 € 9.166,06 € 39.877,15 € 16,15 %
119.757,67 € 15.606,22 € 39.877,16 € 18,70 %
159.634,83 € 23.063,25 € 79.754,34 € 21,25 %
239.389,13 € 40.011,04 € 159.388,41 € 25,50 %
398.777,54 € 80.655,08 € 397.777,54 € 31,75 %
797.555,08 € 207.266,95 € Henceforth 36,50 %