Non-resident Income Tax 2007 – Important changes
Dated 2nd June 2006
Capital Gains Tax in Spain is due to change. On march 10th 2006 the Spanish government passed the personal income tax bill which partially modifies the following tax laws: corporation tax, non-resident income tax and wealth tax. It is intended to ensure that taxation for residents of other European countries do not pay more than Spanish residents in similar tax brackets. One of the most significant changes that will affect non-resident income tax from 2007 onwards will be the significant reduction from 35% to 18% of the capital gains tax applied to property sales or transfers. It is important to note the with-holding tax will be reduced from 5% to 3%.
In addition, the Personal Income Tax bill establishes that Capital Gains tax arising from the sale or transfer of property in Spain by persons over the age of 65 and persons who are considered to be in a situation of dependence shall be exempt totally from capital gains tax.
However it should be noted it should be noted this only applies to residents in spain and therefore does not apply to non-residents, meaning non-residents aged over 65 will till be liable to pay capital gains tax on the profit of selling their home in Spain
