Does a non-resident who owns a property in Spain have to appoint a fiscal representative?

This is one of the most common questions from foreigners buying a property in Ibiza or elsewhere in Spain. The short answer is that in most cases it is not compulsory, although it can be highly advisable.

When a fiscal representative is compulsory

Article 10 of the Spanish Non-Resident Income Tax Act (Royal Legislative Decree 5/2004) requires a representative – an individual or company domiciled in Spain – to be appointed in the following cases:

• Where the non-resident operates in Spain through a permanent establishment, such as an office or a business.
• In certain cases involving pass-through entities (entidades en régimen de atribución de rentas) carrying on activities in Spain.
• Where the Spanish Tax Agency requires it because of the amount and nature of the income obtained in Spain.
• Where the taxpayer is resident in a country or territory that has no effective exchange of tax information with Spain.

The Spanish General Tax Act (Ley General Tributaria, Article 47) also sets out the obligation to appoint a representative in the cases laid down by law.

What if I only own a property, whether I let it or not?

If the owner lives in a country with an effective exchange of information, such as an EU member state, and carries on no activity through a permanent establishment, there is no obligation to appoint a representative. They can file their own Spanish non-resident income tax returns, such as Modelo 210 (Spanish non-resident income tax return), or instruct a tax adviser to do so.

Deadline and penalty where it is compulsory

• The appointment must be notified to the Spanish Tax Agency (Agencia Tributaria) within two months of the date it is made.
• Failing to do so is a serious offence, punishable by a fixed fine of €2,000, or €6,000 if the taxpayer is resident in a non-cooperative jurisdiction.

Why it may be worth it even when not compulsory

Even when the law does not require it, many foreign owners prefer to have a tax adviser in Spain acting as their representative. This allows them to:

• receive and respond in time to requests and notices from the Spanish tax authorities;
• file non-resident tax forms correctly and on time;
• coordinate other formalities, such as selling the property, the 3% withholding or wealth tax.

Failing to answer a tax authority request because it was never received or not understood is a frequent cause of penalties and tax assessments for non-residents.