Becoming a Spanish tax resident
Becoming a Spanish resident means that you will be liable to pay Spanish tax on any worldwide income and gains. This is different for non-residents living in Spain, who are liable to pay Spanish income tax on all Spanish sources of income and gains.
In this article, we will explore the Spanish tax resident rules and how savings capital gains, employment, rental and pension income are taxed in Spain. It is important to abide by the tax rules of Spain, however, you also need to understand how you can benefit from reducing tax liabilities for yourself and your heirs.
SPANISH TAX RESIDENT
Spain does not allow a split treatment for your resident status. You are a resident or non-resident for a whole tax year.
You will become a Spanish tax resident if you:
Spend altogether more than 183 days in one calendar year in Spain. This time frame does not account for residing in Spain at once but rather collectively. Temporary absences between the 183 days may be ignored unless you can prove that you are a habitually resident elsewhere.
Hold a base of economic or professional activities in Spain. Therefore, if you earn the most of your worldwide income in Spain, you will be deemed as a Spanish tax resident.
Hold a centre of vital interest in Spain, such as your spouse and/or your dependent minor children living in Spain. Regardless of how many days you spend in Spain, you will be considered a Spanish tax resident, unless you hold a tax residency certificate issued by another country.
In Spain, tax is divided into Renta General (General Income) and Renta Del Ahorro (Savings Income).
SAVINGS INCOME
This includes:
Interest income.
Dividends.
Income from life assurance contracts.
Purchased annuity income.
Capital gains on the sale/transfer of assets.
TAX RATES
Residents of Spain are a tax on all worldwide savings income and capital gains at these saving rates:
19% for up to 6,000€ or below.
21% for 6,000€ to 50,000€.
23% for over 50,000€.
For non-residents, Spain charges a flat rate of 19% for taxes on savings income and capital gains.
GENERAL INCOME AND TAX RATES
Spanish residents are taxed on worldwide general income at different rates depending on the Spanish Autonomous Community where you are a resident off. Any form of income not categorised as savings income is considered general income, including:
All earned income.
Rental income.
Notional rental income.
Income from royalties.
Gains not made on the sale/transfer of assets and gambling.
Each Spanish Autonomous Community may vary in state & regional tax rates. If you are a Spanish non-resident, you pay taxes on Spanish source general income, which currently is:
Flat rate of 19% for residents of an EU/EEA.
Flat rate of 24% for residents outside the EU/EEA.
DEDUCTIONS AND ALLOWANCES
Spanish residents are allowed to make various deductions and allowances, including payments into the Social Security system, contributions to a qualifying pension scheme and alimony and maintenance payments.
The Mínimo Personal y Familiar is a personal allowance system that provides a tax credit against the total tax payable. Depending on age and family member dependencies, you may receive:
| Taxpayer minimum | ||
|---|---|---|
| General | €5,550 | |
| Over 65 years | €6,700 | |
| Over 75 years | €8,100 | |
| Minimum for descendants (under 25 years or disabled) | ||
|---|---|---|
| 1st decendant | €2,400 | |
| 2nd decendant | €2,700 | |
| 3rd decendant | €4,000 | |
| 4th decendant and onwards | €4,500 | |
| Descendants under 3 years | €2,800 | |
| Minimum by ancestors | ||
|---|---|---|
| Over 65 or disabled | €1,150 | |
| More than 75 years | €2,550 | |
OUR SERVICES
At PSI Consultants, our experienced legal, fiscal & visa experts can help you acquire residency & nationality in Spain through property investment in Spain. We will guide you through the whole process of gaining Golden Visa residency in Spain and we offer a wide range of services related to the management and transmission of property ownership in our department dedicated to conveyancing, donations & inheritances. Also in our legal department we manage the obtaining of NIEs, Residences, Wills, private contracts, representation and personalized legal consultation on all related matters.
If you would like to learn more about our Spanish services in the Costa Blanca area, please feel free to contact us at any time when our office is open between 9am - 2:30-pm, Mondays to Fridays.
CONNECT WITH US
Feel free to ask any legal or fiscal questions that you need answered. You are more than welcome to also email or call us.