Spanish tax rates: The Basics of Taxes in Spain for Expats

The taxes in Spain are not the lowest in the world, but there are still many ways to limit the tax burden. In this article, we tell you the basics of the Spanish taxation.

The Spanish tax year runs from January to December, just like a normal calendar year. This means that taxes for the previous year should be filed during the following period: 1st of May until 30th of June. If you are an expat in Spain, you are also responsible for paying taxes. The only difference is that tax rates might differ depending on how long you stay in the country. In order to pay your taxes, you have to obtain the NIE number. The tax authority in Spain is the Spanish Tax Agency.

Tax Residency in Spain

The tax residency is not the same as having a resident permit in Spain. There might be a case where you have the residence permit but you are not held as a tax resident. If you fulfil one out of the three requirements on the list, you are considered as a tax resident in Spain:

  1. You live in Spain more than 183 days (6 months) per calendar year (does not have to be consecutive days)
  2. You have economic interests in the country.
  3. You have a spouse or children that live in Spain .

Bear in mind that it is your responsibility to declare yourself a tax resident in Spain, if you fulfil the conditions.

What taxes do you have to pay in Spain?

Income tax

If you are a Spanish tax resident, you have to pay the income tax, in Spanish la Renta de las Personas Físicas (IRPF). The income consists of your income obtained and capital gains realized and is paid progressively on the basis of how much you earn. Income obtained include the salary from your work, the capital income, economic activities and patrimonial profits and losses. The highest tax rate, 45%, is paid when you earn 60.000 euros or more.

In the case of not being a tax resident, you have to pay only the tax of the incomes that you have earned in Spain. The fixed tax rate for this is 24% on the gross income but in case of tax residents in the EU it could be reduced to 19%.

In the resident tax declaration, you should mention all the income that you have earned worldwide.

Wealth tax

The wealth tax considers all the persons who own some kind of highly valued property or assets in Spain. It applies, if you have a personal allowance of 700.000 euros and in Catalonia, 500.000 euros. The wealth tax is not fixed and it can vary between 0,2% and 2,5% progressively.

Inheritance and succession tax

If you inherit something and the asset is in Spain, you will have to pay the inheritance tax. The same applies if you live in Spain and the asset resides somewhere else. The amount of the inheritance tax depends on the region and municipality.

Capital gains tax

If you have capital gains in Spain, meaning that you sell property or shares, you have to pay the capital gains tax. If you are a resident, you will have to pay 19-23% of taxes. Non-residents have to pay 24% but this can be deducted to 19% if you live inside of the EU.

VAT

The VAT is an indirect tax which is paid at the same time when you purchase a product. Depending on the product or service, the VAT can be 21%, 10% or 4%. The company that sells the goods or services is liable to pay the VAT.

Keep in mind that you might be eligible for allowances or deductions regarding different types of taxes. Our tax advisors at AvaLaw Legal Services helps you to calculate your taxes and figure out, whether you are eligible to minimize your tax burden.



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