Mortgage in Spain for Swedish buyers

The Spain-Sweden Double Tax Convention (signed in 1976, published in Spain’s BOE on 22 January 1977) governs cross-border taxation between both countries. Spain’s Finance Ministry lists no later protocol amending it. For income from a Spanish property, Sweden uses the credit method: it taxes that income and deducts the Spanish tax paid (Article XXIV).

If you remain Swedish 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 Sweden: taxed in Sweden
• Pensions: the treaty has specific rules for each type of pension; check yours with Skatteverket or an adviser
• ISK / KF accounts: stay under Swedish rules while you are Swedish tax resident
• Capital gains on sale: Spain taxes 19% and the buyer withholds 3% of the price on account (art. 25.2); Sweden relieves double taxation under the treaty

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

• Worldwide income subject to Spanish IRPF, on the State scale plus your region’s scale
• Swedish pension reportable in Spain with treaty relief
• Modelo 720 required if your assets abroad exceed €50k in any of its categories
• 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

Your Spanish mortgage is in EUR. Your Swedish income is in SEK, and Sweden has not adopted the euro, so every move in the SEK/EUR exchange rate changes what your payment costs you in kronor.

What banks publish: up to 70% is the maximum Spanish banks publish for non-residents. With income in another currency, Banca March lends up to 60%, and Bankinter offers its fixed rate only with income or assets in euros. Ask each bank in writing how it converts your SEK income for affordability.

Ways to reduce the exposure:

• Open a EUR account in Spain and build a cushion of mortgage payments before signing
• Compare the exchange cost of your SEK→EUR transfers (margin plus fees) between providers before paying the deposit
• Show ISK / KF holdings as savings the bank can take into account
• Keep the payment well below the limit (35% of income) so a weaker krona does not squeeze your budget
• Document allmän pension / ITP if you are retired, with the official pension statements