People who own real estate in Spain without being tax resident there at the same time pay a special tax: the so-called self-use tax. The self-utilization tax on real estate in Spain is a levy incurred both for own use for residential purposes and for a vacancy between two rentals. Only for the duration in which a property is actually rented or subject to construction measures, the self-use tax is waived. After all, you already pay income tax on rental income. The own-use tax rate is regularly 24 % on 1,1 % of the cadastral value or, if there is no such rate, half of the acquisition value. However, if you can produce a certificate proving the tax residence in an EU Member State, a tax rate reduced to 19% applies.

1st self-use tax in Spain – Introduction

Taxes have different functions as general taxes. On the one hand, they should provide the budget of the state or other public institutions with financial resources. On the other hand, however, they can also have a steering effect as their goal. Both are true, for example, of the tobacco, alcopoe tax and the nightingale tax, which dates back to the past. Our tax law is aligned with the Basic Law. In accordance with this, various principles are to be applied, including the performance principle. It requires that the collection of taxes does not create a disproportionately high burden in relation to the economic situation (efficiency) of taxpayers, or that it corresponds to it.

Why do we forward these general considerations? Because of course it can be different. Because abroad there seem to be tax regulations that deviate from these principles. And this also includes the self-use tax on real estate in Spain, which is discussed in this article.

2. What is the self-use tax in Spain?

The Spanish self-use tax is a levy that only foreign tax resident property owners have to pay on the use of their own properties in Spain. However, this is only the primary connection. Secondary, this also applies to all properties in their possession that remain unrented or otherwise unused. In order to establish the reference to the introduction, this means that one has to pay taxes on an object that one has either purchased or acquired by gift or inheritance. At least in the latter two cases, however, this is at most conditionally accompanied by an efficiency. The self-use tax is only one of many levies that you have to pay on real estate in Spain. The property tax alone must be paid separately here.

3. self-use tax regulations in Spain

The self-use tax in Spain is determined in the context of the annual income tax return. As already mentioned, it is attributable on the one hand to real estate that is used for own residential purposes. On the other hand, it is also to be expected if you want to rent a property, but could not find any tenants yet. This also applies to vacancies between two rentals. But even if neither a real self-use nor a rental is intended and a property is only empty, this tax applies. The only exception to the own-use tax exemption is for construction measures, while a property is vacant due to circumstances.

In principle, the cadastral value is the basis for calculating the own-use tax in Spain. It corresponds approximately to the German unit value. However, where there is a lack of a publicly recorded cadastral value for a property, 50 % of the acquisition value is taken as a flat rate basis. For further calculation of the tax, use is made of 1,1 % of the tax base. Finally, a regular flat-rate tax rate of 24% is applied to this value. However, taxpayers proven to be resident for tax purposes in an EU Member State are subject to a tax rate of 19 %.

It is also remarkable that no advertising costs are deducted, even if a rental takes place temporarily. In this case, the advertising costs can only be deducted pro rata temporis.

Finally, a reference to the collection of the tax: Upon submission of the income tax, the payment of the self-use tax is also due. Therefore, no separate request from the Spanish tax authorities, such as a tax assessment, is necessary.

4th self-use tax in Spain – Conclusion

At this point one can rightly sum up that the self-use tax in Spain is a very special tax. The mere fact that they only have to pay people who are exclusively tax resident abroad sets them apart. By the way, this also applies to Spanish citizens who regularly live abroad and only have a holiday property in Spain.

With regard to foreign countries, we would also like to add that self-use tax is not the subject of any point of the double taxation agreement with Germany. This is because in Germany there is no corresponding counterpart to the self-use tax. Consequently, there can be neither an exemption nor a credit in Germany. But maybe this is possible in Switzerland. Because a comparable tax is well known there.

But in order to take the bow again to our introduction, we should talk again about the performance principle. In fact, you can be of the opinion in this country that you feel the self-use tax, which you have to pay for the holiday home in Spain, as unfair. Finally, there is no connection here with the performance of real estate owners. But then there should actually be no car tax in this country. Although this reference provokes the often-repeated reply that the car tax is used to finance transport infrastructure, this is strictly wrong. Because the tax revenue of this tax in Germany, as well as the self-use tax in Spain, flows into the respective state budget. But at least the car tax still fulfils a steering function, namely the promotion of cars with the lowest possible emissions.