Expats take note! There are times to give thanks to the much maligned Spanish adminsitrative system.
The legendary labyrinthine, under resourced and inefficient administrative system of Spain sometimes works to the benefit of the many expats in Spain.
Non resident property owners are meant to pay annual income tax.
“But I don’t rent out my house!” I hear many a scandalised voice say.
“Well, hmm, that may be true”, I respond, gearing myself up for the inevitable need to explain something completely absurd, “the fact is that everyone with a second home in Spain is, ermm, deemed to be receiving rent”. I go on smiling as though this is the most logical thing in the world….”think of it this way – you are regarded as paying yourself rent”.
Seeing the confused expressions across my desk, I make the mistake of trying to justify this further by saying “residents and non residents in Spain are treated the same which makes it fair”.
Digging a bigger hole for myself I go on “the thing is that the Spanish system seems to be built on mistrust and this tax probably originated because everyone in Spain is thought to be hiding rental income from the taxman”.
Inevitably, my audience now thinks that I am as mad as a march hare.
The trials and tribulations of being a tax adviser in Spain…!
Well, the fact is that many non resident holiday home owners have not been told that they need to file the annual tax return for this tax or, many choose to ignore the obligation.
Well, the tax office set out to do something about this a few years ago when it required the electricity suppliers to provide it with their lists of customers. Added to this, for the last 20 years, property owners have been required to provide a Spanish tax registration number when they buy a property. The same tax registration number appears on the electricity company customer lists as well as tax declarations.
So a bright spark in the tax office decided to write a program that goes through the electricity company customers lists and matches these to the property rental tax declarations filed by non residents and, hey presto, out pops a list of property owners who have not filed their tax returns. The computer then prints out a polite request to be sent to the propety owner requesting that they send in a copy of the tax return or ‘regularise’ their tax situation. (The reader will not be suprised that the slightly odd word ‘regularise’ is much used in Spain)
This is not a bad way of raising a bit of much needed cash for the Spanish economy to ease its debt burdens.
More likely, is the human factor.
The amazing thing is that it seems that very few of these notifications are actually being sent out by the tax office. Perhaps the computers are working to rule too.
I have a picture in my mind of piles and piles of printed out notifications sitting on someone’s empty desk in the Málaga tax office, awaiting for the incumbent to come back from maternity/paternity/sick leave due to stress/bank holiday/normal holiday/having a cup of coffee.
You see the notification still needs to be put into an envelope and logged into the notifications database. I can just imagine the demotivated and underpaid tax officer, slouched with one elbow on table resting chin lightly on hand and using a single index finger on the keyboard.
It doesn’t matter how clever the computer sytem might be, it still needs a civil servant somewhere to do something, and thats why we should give thanks to the legedary inefficiency of the Spanish bureaucrat!
So receiving one of these notices is a bit like winning a lottery prize. Best to act on it straight away though, as the tax is not usually such a big deal and failure to respond may result in getting stuck in the quagmire of getting unexpected tax assessments and then having to fight them.
By the way, if a person does not appoint a fiscal representative in Spain then all tax notifications are sent to the property by registered post. If the person is not at home to receive, then the notice is legally served by an entry in the provincial gazette that no one reads.
So if you have not received a notice, beware, you might have done so via the gazette.