Spain: financial implications of owning a holiday home

It may not be the most exciting part of owning a holiday home in Spain, but it's vital that you're in the know when it comes to the financial requirements that it entails.

Even if you're not officially a Spanish resident, you still need to be on the ball as there are certain regulations that will still apply to you.

With this in mind, the following information should give you a basic grounding in what the Spanish financial system means for you if you own a holiday home in the country.

First things first

Consider employing an independent financial advisor. If you're non-resident in Spain, make sure they're familiar with both the Spanish financial system and that of your country of residence.
Additionally, you could have a fiscal representative in Spain. This could be an accountant, a lawyer or gestor (an official able to deal with tax issues), for example. They will be able to act on your behalf in this respect.
If you do employ a fiscal representative, they must be registered with the Spanish Tax Agency as such. This is called the Agencia Estatal de Administración Tributaria or, informally, the Hacienda.
Both residents and non residents need a tax reference number: the Número de Identificación Extranjero (NIE). As well as for tax purposes, recent changes to regulations mean that you now need an NIE before you can purchase property in Spain. You will need it for dealing with utility companies and opening a bank account.
To obtain an NIE you will need to go to the foreigners' office - Oficina de Extranjeros at your local police station or apply for one through your nearest consulate.
The Spanish Tax Agency have some pages available in English on their website - aeat.com.

Resident or non-resident?

If you spend 183 days or more in Spain during the country's tax year, then you are considered resident by the authorities and will be taxed as such.
The Spanish tax year is the same as the calendar year, unlike in the UK.
It's a good idea to keep an exact record of how many days you spend in Spain in case the country considers you resident and you need to prove to the authorities that you're not.
Even if you're considered non-resident in Spain, you are still liable to pay tax on any income originating there; rental income, for example.
Double taxation treaties are in place between Spain and many other countries to avoid paying tax both in Spain and your country of residence.