Spanish tax for residents.

For tax reasons, you are considered a Spanish resident if you have lived in Spain for six months (183 days) or more of the calendar year (not necessarily consecutively) or if your major vital interests are in Spain (for example, your family or company).

You must file a Spanish tax return and pay Spanish income tax on your international income if you live in Spain. After deducting contributions to social security in Spain, pension, personal allowance, and professional fees, your taxable income is what's left. The tax system in Spain is progressive.

Tax in Spain for non-residents.

If you spend less than six months (183 days) in a calendar year in Spain, you are considered a non-resident and only pay taxes on income earned in Spain. Your income is taxed at a flat rate, with no allowances or deductions. You must file a tax return and pay Spanish property taxes for non-residents (or imputed income tax on your property) as well as local Spanish property taxes if you are a non-resident and own a property in Spain, whether or not you rent it out.

Dual taxation agreements.

To prevent double taxes, Spain has negotiated many accords with foreign nations. The Spanish tax administration (Agencia Tributaria) keeps a list of treaties up to date.

Income tax in Spain.

The Impuesto de Renta sobre las Personas Fisicas, or IRPF, is Spain's personal income tax. The income tax in Spain is divided between the state and the area. The tax rates and obligations are set by each of Spain's 17 autonomous regions. As a result, while the government has lowered taxes and streamlined income tax bands, Spain's tax structure remains complicated. To put it simply, the amount of taxes you pay in Spain is determined on where you live.

Spanish tax changes.

The Spanish government adopted two new tax measures on January 1, 2021: the financial transaction tax (FTT) and the digital service tax (DST). The changes largely raised taxes on major businesses and high-income individuals.

The basic Spanish tax rates on employment income are listed here. Because tax rates in Spain are not consistent throughout the nation, your total due tax will be determined by adding the state's general tax rates to the applicable regional tax rates.

Register to pay Spanish tax: residents and non-residents.

Whether you are a resident or a non-resident, you must register with the Agencia Tributaria, the Spanish tax administration, to pay tax in Spain. To begin, you'll need your Foreigner's Identity Card (NIE) number, which you may obtain within 30 days of your arrival in Spain from the local Foreigner's Office (Oficina de Extranjeros) or a police station.

Spanish taxes for non-residents.

Non-residents pay a flat income tax rate of 24%, or 19% if they are citizens of an EU/EEA country.

Other income is taxed at the following rates for non-residents in Spain:

• Capital gains on the sale of assets are taxed at a rate of 19%.

• Interest and dividends on investments are taxed at 19%, although are usually lower due to double taxation agreements. EU nationals are free from paying interest taxes.

• Royalties are taxed at a rate of 24%.

• Pensions are taxed at progressive rates ranging from 8% to 40%.

Special Spanish tax for foreigners working on an assignment.

For foreigners who come to work in Spain under a contract with a Spanish firm, there is a unique tax regime. Although the Spanish government amended this tax scheme for the 2021 tax year, it is still known as Beckham's Law.

On income up to €600,000, employees on assignment in Spain pay a 24% tax rate. The government has increased the tax rate on income exceeding €600,000 to 47% in the new tax law for 2021. Additionally, posted workers are now subject to a 3% tax on dividends, interest, and capital gains income exceeding €200,000.

You can seek to be taxed under this system within six months of arriving in Spain if you are a Spanish tax resident (spend more than 183 days per year in Spain) and have not been living in Spain in the previous ten years. As a result, you can lower your tax rate for up to five years.

Tax in Spain for married couples

You can opt to be taxed individually or jointly if you are married, whether heterosexual or same-sex. Before making a final decision, compare the Spanish tax rate you would pay as an individual to the tax rate you would pay as a couple since it is not always the best option. In addition to the general allowance of €5,550 provided to the first taxpayer, the second taxpayer is entitled to a married couple's allowance (declaración conjunta) of €3,400.

Spanish property tax

You must pay a local property tax, or Impuesto sobre Bienes Inmuebles, if you own a property in Spain and live there on January 1 of each year (IBI). The amount is calculated by multiplying the rental value by a tax rate established by the local government. Both non-residents and locals are affected. There's also basura, which is a garbage collection tax. Non-resident property owners may be required to pay flat-rate imputed income tax on prospective rental revenue from their Spanish property.

If you sell a home in Spain, you must pay the Impuesto Transmisiones Patrimoniales, or property transfer tax (ITP). The extra valia is a tax levied by the local government on the increase in the value of a property when it is sold.

Capital gains tax in Spain

The capital gains tax in Spain (the tax on earnings made from the sale of real estate or other assets) is as follows:

• €6,000 - 19%

• €6,000 to €50,000 - 21%

• €50,000 to €200,000 - 23%

• More than €200,000 - 26%

Because the taper tax on capital gains tax was eliminated, if you acquired property before 1994, you may be required to pay more tax than previously.

If you are over 65 and selling your primary house, or if you are under 65 and selling your main home to acquire another main property in Spain, you may be eligible for an exemption.

Spanish wealth tax

In Spain, wealth tax is levied on the value of your assets on December 31st of each year. In autonomous communities that haven't adopted their own rates, the government increased the top tax band rate by 1% beginning in the 2021 tax year. This implies that, depending on the area, assets worth more than €10 million might be taxed up to 3.5%.

In addition to the €700,000 tax-free threshold, homeowners can deduct an additional €300,000 off the value of their primary house.

Inheritance and gift tax in Spain

When it comes to inheritance and gift tax in Spain, non-residents from the EU/EEA have been taxed the same as residents since 2015. (also called succession tax). Depending on the location, the rate is about 1–7% for everyone. Non-residents used to pay about 80% more than residents before the reform. Non-residents who paid the higher rate in the past are entitled to a refund, according to the Spanish Supreme Court.

Some areas, including Andalusia, changed their inheritance and gift tax rules in 2017. As a result, several families avoided paying inheritance tax. For further information, look up the legislation in your area. Because the Spanish tax system is complicated, you should obtain professional guidance on these issues. More information may be found in our guide on Spanish inheritance law.

VAT (IVA) in Spain

The VAT (value-added tax), also known as the Impuesto sobre el Valor Aadido (IVA), in Spain is divided into three levels:

• General: 21% on goods and services.

• Reducido: 10% on passenger transport, toll roads, amateur sporting events, exhibitions, health products, non-basic foods, rubbish collection, pest control, and wastewater treatment.

• Superreducido: 4% on essential foods, medicine, books, and newspapers.

The government raised the VAT on alcoholic drinks and drinks containing additional natural and derived sweeteners and/or sweetening additives from 10% to 21% starting in 2021. Baby milk and beverages that are considered food supplements for those with specific dietary needs are exempt from the tax increase.

All VAT payers (mostly freelancers) must send all invoice data to the Agencia Tributaria online within four days of receipt and no later than the 16th day of the month following receipt.

Corporate tax in Spain

In Spain, the general rate of corporation tax is 25%. For the first two years of operation, newly created businesses pay 15%. Profits held in a special reserve for five years, however, may be eligible for a 10% tax discount.

Tax returns must be filed within six months and 25 days of the accounting period's conclusion. Payments are made in three instalments: April, October, and December, with each instalment typically equaling 18% of the tax amount. Learn more about the taxes that apply to freelancers in Spain.

The material provided here is just intended to provide you with a broad overview; you should always seek expert advice from a Spanish financial specialist on your individual situation.

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