Frequently asked questions on the taxation of France-Spain rental income
In which country must I declare rental income from a property located in France if I live in Spain?
Rental income from a property located in France is taxable in France under the general principle of real estate territoriality, even if you are a Spanish tax resident. You must therefore declare this rental income in France and pay French tax on it. However, if you are a Spanish tax resident, you must also declare your worldwide income in Spain, including this French rental income. The France-Spain tax treaty then eliminates double taxation through a tax credit mechanism or an exemption with progression.
Must I pay tax in Spain on a rental property located in Spain if I live in France?
Yes, absolutely. If you own property in Spain that generates rental income, that income is taxable in Spain under the non-resident income tax regime (IRNR). You must file quarterly returns for this rental income with the Spanish tax authorities and pay the corresponding tax. At the same time, you must also declare this income in France, where you are tax resident. Double taxation is avoided through a tax credit allowing you to deduct in France the tax paid in Spain.
What happens if my property in Spain is not rented out but remains at my disposal?
Even if your property in Spain is not actually rented out and remains at your disposal as a second home, you are subject to Spanish non-resident income tax as a non-resident owner. The Spanish tax authorities apply a deemed taxable base calculated as a percentage of the cadastral value of the property, generally 1.1% or 2% depending on the circumstances. This annual taxation applies regardless of whether the property generates actual income. You must declare it annually using Form 210.
How can I avoid being taxed twice on the same rental income?
Double taxation is avoided through the France-Spain tax treaty of 8 January 1963. The standard mechanism operates as follows: the country where the property is located has primary taxing rights, for example France for a French property. The country of tax residence, for example Spain, then takes this income into account but grants a tax credit corresponding to the tax already paid in the other country. In practice, you pay tax in the country where the property is located, then declare the income in your country of residence, which grants relief to prevent effective double taxation.
Must I appoint a tax representative if I rent out a property in the other country?
This depends on your situation and the country concerned. In France, non-residents receiving rental income may be required to appoint an accredited tax representative, particularly if they do not reside in the European Union or in a State that has concluded an administrative assistance treaty with France. In Spain, although appointing a tax representative is not systematically mandatory for European non-residents, it is strongly recommended in order to facilitate administrative procedures and ensure compliance with quarterly or annual reporting obligations.
What supporting documents must I retain to prove tax paid abroad?
To benefit from the double taxation relief mechanism, you must carefully retain proof of tax paid in the country where the property is located. This includes official tax assessments or tax certificates issued by the foreign tax authorities, proof of effective payment of the tax such as receipts or bank transfers, and where applicable a tax residence certificate confirming your status. These documents must be provided with your tax return in your country of residence to justify the tax credit claimed. They should be kept at least for the statutory limitation period, generally between three and six years.
How is rental income received through platforms such as Airbnb treated?
Income from short-term rentals via platforms such as Airbnb follows the same tax rules as traditional rentals: it is taxable in the country where the property is located. However, there are specific features. Certain platforms may withhold and remit local taxes or tourist taxes directly. Thresholds and tax regimes may differ depending on whether the activity is considered occasional or professional, and the tax treatment may vary according to the duration and frequency of the rentals. It is essential to declare this income in both countries in accordance with your tax residence status.
What are the risks if I fail to declare rental income received abroad?
The risks are significant and may include penalties for failure to file or late filing in one or both countries, which may reach 40% to 80% of undeclared amounts depending on the seriousness of the situation. Tax reassessments with late payment interest may cover several years, and in cases of proven fraud the limitation period may extend up to ten years. There may also be effective double taxation if relief mechanisms are not applied due to non-compliant filings, as well as increased difficulties during tax audits, often with unfavourable presumptions. Tax authorities are increasingly exchanging information, making omissions easier to detect.
