Being a tax resident in Spain
Tax residence in Spain.
You would be a tax citizen if you spend more than 183 days in Spain in any calendar year. It is not necessary for these days to be consecutive. For example, becoming a tax resident might take three months, followed by a five-week visit and a second two-month visit.
Even if you do not spend 183 days in Spain, you will be considered a tax resident if your centre of economic interests is in Spain. Your "centre of economic interest" refers to the location of your primary source of income, especially earned income or the majority of your assets.
There is also a third evaluation that is used. If you pass the first two exams but live in Spain with your spouse and minor children, you will be considered a tax citizen. You may need to prove that you are not a Spanish tax resident in this situation. Paying your taxes in the United Kingdom, for example, is insufficient to show that you are not a Spanish tax resident for this assessment. When your family lives here, you bear the burden of evidence, and it can be difficult to convince the tax authorities otherwise.
Personal tax in Spain.
The following are the major forms of personal taxes in Spain:
Income Tax - Earned income, certain pension income, and rental income are all affected. It's classified as the IRPF (Impuestos sobre la Renta de las Personas Fisicas).
Savings Tax - This segment includes taxes on investment income (bank interest, dividends, and so on) as well as capital gains. To distinguish between earned income and investment income and capital gains, we use the term savings tax. This is due to the fact that income tax and savings tax have different rates. In the Spanish tax code, however, it is referred to as IRPF.
Wealth Tax - You may be required to pay wealth tax per year, depending on your net worldwide wealth and where you reside in Spain. It's known as Patrimonio.
Inheritance and Gift Tax - Inheritances and gifts are both subject to the same tax laws. Impuestos de Sucessiones y Donaciones is the name of the tax (ISD).
The key difference between Spain and the United Kingdom is that Spain has a wealth tax and a gift tax. Prizes such as the lottery and premium bonds are tax-free, but all other large prizes are taxed as profits. Compensation, such as compensation for pension mis-selling, is taxed as profits in Spain.
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