Mortgage in Spain for Norwegian buyers

The Spain-Norway Double Tax Convention (1999) prevents double taxation between both countries.

If you remain Norwegian tax resident (183 days a year or less in Spain and your main economic interests not here):

• IRNR (Spanish non-resident tax): 19% on an imputed income of 1.1% of the cadastral value (if it was revised in the previous 10 years) or 2% otherwise — Norway is in the EEA and exchanges tax information with Spain, so it gets the EU rate, not the 24% charged to other non-residents (art. 25.1 of the Non-Residents Income Tax Act)
• If rented: 19% on net rental income — as an EEA resident you can deduct expenses, including mortgage interest (art. 24.6 of the same Act)
• Norwegian salary, folketrygd, tjenestepensjon: generally taxed in Norway while you live there, as the treaty provides
• Norwegian wealth tax (formuesskatt): Norway taxes its residents' net wealth; check with Skatteetaten how a Spanish property and its mortgage are counted and the current threshold
• Capital gains on sale: 19% in Spain, and the buyer withholds 3% of the price on account; relief for double taxation in Norway

If you become Spanish tax resident (more than 183 days a year in Spain, or your main economic interests are here — art. 9 of the Personal Income Tax Act):

• Worldwide income subject to Spanish IRPF, at progressive rates set jointly by the State and each region
• Norwegian pensions taxed as the treaty provides, with relief for double taxation
• Modelo 720 required if your assets abroad exceed €50,000 in any of its categories
• Norway may tax unrealised gains on some assets, such as shares, when you move out — check with Skatteetaten before you move

Action point: while you are Norwegian tax resident, your Spanish property is part of the wealth Skatteetaten looks at for formuesskatt. Ask Skatteetaten or a Norwegian adviser how the property and the Spanish mortgage are valued before you buy.

Your Spanish mortgage is in EUR. Your Norwegian income is in NOK. Banks cover the exchange-rate risk by lending a lower percentage (Banca March publishes 60% instead of 70% with income in another currency) or discounting the income they count; ask each bank how it treats NOK income and get it in writing.

How the krone affects you: if the krone weakens against the euro after you sign, your monthly payment costs more kroner; if it strengthens, fewer. Nobody can predict which over a mortgage of 20 years or more, so check that you could still pay if the krone weakened.

Strategies to mitigate:

• Open a EUR account in Spain and build up a cushion of several monthly payments before signing
• Compare the total cost of each NOK→EUR transfer (exchange-rate margin plus fees) between your bank and a currency-transfer specialist
• Avoid forced transfers: move the deposit money in advance rather than all on the day it is due
• Show folkepensjon / tjenestepensjon already being paid, and ask the bank how it weighs it