Mortgage in Spain for Irish buyers

The Spain-Ireland Double Tax Convention (signed in 1994, published in Spain’s BOE on 27 December 1994) governs how income and capital gains are taxed between the two countries.

If you remain Irish tax resident (less than 183 days/year in Spain):

• IRNR (Spanish non-resident tax): 19% on imputed income (1.1% of the cadastral value if it was revised in the previous 10 years, 2% otherwise) for every year the home is not rented (Non-Residents’ Income Tax Law arts. 24.5 and 25.1; IRPF Law art. 85)
• If rented: 19% on net rental income; as an EU resident you can deduct expenses such as mortgage interest, IBI, community fees and repairs (art. 24.6)
• Salary for work done in Ireland: taxed in Ireland; pensions follow the treaty rule for each type of pension
• Capital gains on sale: Spain taxes 19% and the buyer withholds 3% of the price on account (art. 25.2); Ireland relieves double taxation under the treaty
• Inheritance tax: Spanish property triggers Spanish ISD (Impuesto de Sucesiones) even if the heirs live abroad; Irish CAT may also apply, so ask an Irish adviser how Spanish tax paid is credited

If you become Spanish tax resident (>183 days/year):

• Worldwide income subject to Spanish IRPF, on the State scale plus your region’s scale
• Irish pension reportable in Spain with treaty relief
• Modelo 720 required if your assets abroad exceed €50k in any of its categories (EU assets included)
• Special regime for people moving to Spain for work ("Beckham Law", art. 93 of the IRPF Law): 24% on Spanish-source income other than savings up to €600,000 (47% above), for the year you move and the next five, if you were not resident in the previous five years

Action point: consult both an Irish tax accountant (for Irish CGT/ARF impact) and a Spanish gestor (for IRNR/ITP) before purchasing. Particular care if drawing from PRSA or ARF.