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Holiday rental income – income tax payable in Spain

By David Goodall - Thu 28th Jul 2011

* DON'T get caught tax evading

* Tax authorities in Spain ARE tightening the noose

* It suits the Spanish – it is aimed at NON-residents

I have written much about Tax Avoidance and Tax Evasion in the past and explained the difference between the two. I’d like to draw your attention one item that falls under the heading of ‘Examples of tax evasion’

Not declaring income from property letting

There is very clear evidence that the Spanish Tax Authorities (La Hacienda) are now taking the subject very seriously. Given the Spanish Government’s massive budget deficit and the need for more revenue, I contend that holiday rental income is a ‘soft’ option. Everyone knows it happens, the houses / apartments don’t move and the Town Hall know who the owner is!

If you are a property agent you really should be telling your owners.

Not surprisingly, the Spanish public support such a move as the vast majority of non-payers are Non-residents. Most taxpayers in Spain would love to see British and Irish citizens fined heavily for not paying their due taxes.

Ok, so you think I’m alarmist, it won’t come to that, I reckon I’ll get away with it. Even though I knew that this was a tax evasion issue, I never brought it to my readers’ attentions until now. In the last few days I have seen evidence that it is starting to happen. La Hacienda is cracking down.

My Telegraph

This is the blog of the ‘Daily Telegraph’. A post by Anna Nicholas indicates that the authorities ARE beginning a crackdown on non-payment of tax on holiday rental income.

Anna’s thoughtful contribution is good evidence…. But what follows is better

These people know what it’s all about. They advertise the properties which produce the income that should be taxed in Spain. They have copied Anna Nicholas’ blog on their website!

What do I think?

As the economic crisis deepens in Spain, there will be a more proactive and ruthless approach to tax evasion of this kind. So for those coasting along the coast evading tax, perhaps now is the time for a little honesty, pay the 25% tax, before the Spanish taxman comes knocking at the door and looking to claim for previous years. Alternatively, pack up your illegal letting and stop worrying.

If you have any issues, any comments or just additional information please email me

Comment on this Blog

If you wish to contact the Tax Office in Alicante Province, the address and phone number is; Center Montañeta, 8. 03001 Alicante Phone: 96 514 97 00 I hope this is helpful but drop me a line if I can help further. davidgoodall
David Goodall - Mon, 11th Jun 2012
I have Danish neighbours who are on benefits from Denmark and working here in Spain they rent a house very very cheaply and the owner also Danish doesn't pay taxes on the income. I've looked everywhere for a means of reporting them but no success - can anyone help please. I am really annoyed as I have worked all my life and paid taxes in England but am entitled to nothing except my pension which I've paid for!!!!!
Mike - Mon, 11th Jun 2012
Wish I could find a number to report someone who rents the house out without paying taxes and works without paying taxes. It makes me sick because he criticises the UK because he has to pay taxes there !
Juliafinney - Thu, 1st Sep 2011

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