Non-Resident Income Tax (IRNR) in Galicia: Complete Guide for Foreign Property Owners

What Is IRNR and Why Does It Affect You as a Property Owner in Galicia?

The Non-Resident Income Tax (Impuesto sobre la Renta de No Residentes, IRNR) is the tax that individuals and companies who are not tax residents in Spain must pay on income originating from Spanish sources. If you own a property on the Costa da Morte — in Corcubión, Fisterra, Muxía, or any other Galician municipality — and you live abroad for more than 183 days per year, you are required to file and pay this tax.

A common mistake is believing that if you don't rent out your property and generate no income, you have no tax obligations. The IRNR taxes both actual income (rental income) and imputed income (a notional income assigned simply for owning an empty property). Ignoring this obligation can result in penalties of up to 150% of the unpaid tax, plus late-payment interest.

Who Is Considered a Non-Resident for Tax Purposes?

The Spanish tax authority (Hacienda) considers you a non-resident if any of these conditions apply:

• You spend fewer than 183 days per calendar year in Spain (January 1 to December 31).
• Your centre of economic or vital interests is not in Spain (your main activity or family nucleus is in another country).
• Your spouse and minor children habitually reside in another country.

Tax residency does not depend on your nationality. A Spanish citizen living and working in London is a non-resident for Spanish tax purposes. Likewise, a German living in Berlin who owns a holiday home in Cee is a non-resident and must comply with IRNR obligations.

IRNR on Rental Income

If you rent out your Costa da Morte property, the rental income is subject to IRNR. The tax rate depends on your country of residence:

• EU/EEA residents (including the UK post-Brexit): A 24% rate applies to the taxable base. Since 2024, EU/EEA property owners can deduct allowable expenses (community fees, IBI property tax, insurance, repairs, mortgage interest), meaning the tax is levied on net income.
• Residents outside the EU/EEA: A 24% rate applies to gross income, with no possibility of deducting expenses.

Practical Example — Costa da Morte Property Worth €150,000:

• Monthly rent: €800 (€9,600 per year).
• Deductible expenses (EU/EEA): IBI €400, community €360, insurance €200, repairs €150 = €1,110.
• Net income (EU/EEA): €9,600 - €1,110 = €8,490.
• IRNR (24% of €8,490): €2,037.60 per year.

If the owner lived outside the EU/EEA, the calculation would be 24% of €9,600 = €2,304.

Imputed Income Tax: Paying Tax on an Empty Property

This is one of the concepts that most surprises foreign property owners. If your Galician property is not rented out and is not your primary residence, the tax authority assigns a notional income called imputed income (renta imputada). The taxable base is calculated as 1.1% of the property's catastral value (or 2% if the catastral value has not been revised in the last 10 years).

Example — Empty Property on the Costa da Morte Valued at €150,000:

• Catastral value (approx. 60% of market value): €90,000.
• Taxable base (1.1% of €90,000): €990 per year.
• IRNR (24% of €990): €237.60 per year.

This tax is paid annually using Form 210 (Modelo 210).

Form 210 (Modelo 210): When and How to File

Form 210 is the official form from the Spanish Tax Authority (AEAT) for non-residents to declare their Spanish-source income. It can be filed online through the AEAT Electronic Office or on paper at the relevant tax office.

Filing deadlines by income type:

• Rental income: Quarterly filing. Within the first 20 calendar days of April, July, October, and January (for the preceding quarters). You can also opt for annual filing before April 1 of the following year.
• Imputed income (empty property): Annual filing. Before April 1 of the year following when the income was imputed.
• Capital gains (sale): Within 3 months of the transfer.

To complete Form 210, you will need: your NIE, the property's catastral value (available on your IBI tax bill), income details, and applicable deductible expenses.

Double Taxation Treaties: UK, Germany, France, and the Netherlands

Spain has signed Double Taxation Treaties (DTT) with most countries. These treaties prevent you from paying tax twice on the same income. The key ones for Costa da Morte property owners are:

• United Kingdom: The Spain-UK treaty allows real estate income to be taxed in Spain. In the UK, you can credit the tax paid in Spain using the tax credit mechanism to avoid double taxation.
• Germany: The Spain-Germany treaty works similarly. Spanish real estate income is taxed in Spain, and Germany applies the corresponding exemption or tax credit.
• France: The Spain-France treaty allows taxation in Spain for real estate located on Spanish territory, with a tax credit available in France.
• Netherlands: Income from Spanish properties is declared in Box 3 of the Dutch income tax return, but the tax paid in Spain can be deducted.

Important: Even if a DTT exists, filing Form 210 in Spain remains mandatory. The treaty does not exempt you from filing — it allows you to offset the tax in your country of residence.

The 3% Retention on Property Sales

When a non-resident sells a property in Spain, the buyer is legally required to withhold 3% of the sale price and pay it to the Spanish Tax Authority. This withholding serves as an advance payment against any capital gain you may have made.

How it works:

• The buyer withholds 3% and pays it to Hacienda using Form 211 within 30 days of the sale.
• The non-resident seller must file Form 210 within 3 months to calculate the actual gain.
• If the actual gain is less than the 3% withheld, Hacienda will refund the difference.
• If there is a capital loss, the full 3% will be refunded.
• Capital gains tax rates: 19% for the first €6,000 and 24% for the remainder.

Example — Selling a Costa da Morte Property:

• Purchase price: €120,000 / Sale price: €150,000.
• Capital gain: €30,000.
• 3% withholding: €4,500 (paid by the buyer to Hacienda).
• Tax due: 19% of €6,000 (€1,140) + 24% of €24,000 (€5,760) = €6,900.
• Net amount owed: €6,900 - €4,500 = €2,400 to pay.

Quarterly vs. Annual Filing

The filing frequency for Form 210 depends on the type of income:

• Quarterly (rental income): Mandatory if rental income exceeds certain thresholds or if you prefer to stay current. Filed in April (Q1), July (Q2), October (Q3), and January (Q4).
• Annual: Available for rental income and mandatory for imputed income. Deadline: April 1 of the following year.

Quarterly filing spreads the tax burden throughout the year and avoids year-end surprises. Annual filing simplifies administration but concentrates the payment into a single moment.

Tax Deductions Available for Non-Residents

While the IRNR regime is less generous than the resident income tax (IRPF), some deductions are available:

• Deductible expenses (EU/EEA): IBI property tax, insurance, community fees, repairs, mortgage interest on the property, and property depreciation (up to 3% of the construction value).
• Depreciation: You can deduct up to 3% per year of the construction value (approximately 60-70% of the catastral value) as a depreciation expense.
• Double taxation relief: Applicable under international tax treaties.

For property owners outside the EU/EEA, unfortunately no expenses can be deducted from rental income.

Hiring a Gestor vs. DIY Filing

You can file Form 210 yourself through the AEAT electronic portal, but the process can be complex if you don't speak Spanish fluently or understand the Spanish tax system. A professional gestor can help with:

• Filing all annual or quarterly Form 210 returns.
• Correctly calculating the taxable base and applicable deductions.
• Requesting refunds of the 3% withholding after a property sale.
• Communicating with Hacienda if you receive notifications.
• Appointing a tax representative, which is mandatory if you live outside the EU/EEA and own real estate in Spain.

A gestor typically costs between €100 and €300 per year — a modest investment compared to penalties for late or incorrect filing (minimum 50% of the tax due).

Special Case: Partial Tourist Rental

If you use your Costa da Morte property part of the year for personal use and rent it out as a tourist property the rest of the time, consider the following:

• Tourist rental income is taxed as real estate capital income via Form 210.
• The period when the property is empty and not rented generates proportional imputed income.
• You must prorate: if you rent for 6 months, imputed income is calculated only for the remaining 6 months.
• You also need a tourist rental licence from the Xunta de Galicia and must comply with regional regulations.

Example — Tourist rental 6 months, personal use 1 month, empty 5 months:

• Rental income (6 months × €1,000): €6,000. IRNR (24% on net, EU): ~€1,100.
• Imputed income (5/12 of €990): €412.50. IRNR: ~€99.
• Estimated total: €1,199 per year.

Practical Summary: Non-Resident Property Owner on the Costa da Morte

For a property valued at €150,000 on the Costa da Morte, with a catastral value of €90,000, here are the most common scenarios:

• Empty property (imputed income only): ~€238 per year. Annual Form 210 before April 1.
• Rented year-round at €800/month (EU/EEA): ~€2,038 per year. Quarterly or annual Form 210.
• Partial tourist rental (6 months): ~€1,199 per year. Quarterly Form 210 + annual for imputed income.

Need help with your non-resident tax obligations on the Costa da Morte? Contact me, Cristina Vázquez. I'll connect you with trusted local gestores and guide you through all the tax paperwork to ensure your Galician investment is safe and profitable.