If you are living and working in Spain, you will be liable to pay taxes in Spain on your income and assets and will need to file a Spanish tax return. Whether you pay Spanish taxes on your worldwide income, or Spanish-based income only, depends on your residency status.
If you are classed an official resident in Spain you will be subject to Spanish tax on your worldwide income, calculated on a progressive scale, although tax deductions exist. If you are a non-resident in Spain you will only pay tax in Spain on Spanish income – typically at a flat rate – which also includes potential income on Spanish property even if you don’t rent out your property. Spanish tax is also applied to property ownership, investment interest and goods and services (VAT) in Spain.
Taxes in Spain are split between state and regional governments, with each of Spain’s 17 autonomous regions deciding on its own tax rates and liabilities. This means that Spanish tax rates can vary across across the country for income tax, property tax, wealth tax, capital gains tax and inheritance tax. In addition, workers in Spain must contribute to Spanish social security taxes. The Spanish tax year runs from 1 January to 31 December.
Who has to pay tax in Spain?
Spanish tax for residents
If you have got been living in Spain country for 6 months (183 days) or a lot of of the civil year (not essentially consecutively) otherwise you have your main ‘vital’ interests in Spain (for example, your family or business is in Spain), then you’re classed as a Spanish resident for tax functions.
As a Spanish resident, you may got to submit a Spanish legal instrument and pay Spanish revenue enhancement on your worldwide financial gain if:
- your annual financial gain from employment is over EUR 22,000;
- you are freelance or run your own business;
- you receive income of over EUR 1,000 a year;
- you have capital gains and savings financial gain of over EUR 1,600 a year;
it is your 1st year declaring tax residency in European country.
You will have to be compelled to declare all assets abroad price over EUR 50,000 (using Modelo 720, or ‘Form 720’). Your nonexempt financial gain is that the financial gain left once deductions for contributions to social insurance in European country, pension, personal allowance, skilled prices, etc. Spanish tax rates are progressive.
Tax in European country for non-residents
If you reside in European country for fewer than six months (183 days), you’re classed as a non-resident and can solely be taxed on the financial gain earned in European country. Your financial gain is taxed at flat rates with no allowances or deductions. If you’re a non-resident and own a property in European country, whether or not or not you rent it out, you may got to submit a legal instrument and pay Spanish property taxes for non-residents (or ‘imputed’ revenue enhancement on your property) further as native Spanish property taxes. See Spanish non-resident tax rates
Income tax in European country
Personal income tax in European country is termed Impuesto Diamond State Renta sobre las Personas Fisicas or IRPF. Spanish revenue enhancementes ar split between state and region and whereas the state has reduced taxes and simplified financial gain tax bands, this has not happened right across European country.
Each region sets its own Spanish tax bands and rates of revenue enhancement, therefore what proportion revenue enhancement you pay depends on wherever you reside. Madrid capital of Spanish capital has all-time low tax rates in Spain beginning at 19% and rising to forty 3.5% for the very best earners, whereas in geographical region the highest rate is 48% for financial gain over EUR one hundred 20,000. scan a lot of in our guide to Spanish revenue enhancement.
Spanish tax rates 2017
Although tax rates in European country aren’t uniform across the country, for simplicity functions below are the fundamental Spanish tax rates applied to employment financial gain. In reality, your total liable tax are a calculation of the state’s general tax rates and the relevant regional tax rates. For tax rates in European country for every region, see here.
Spain’s tax rates in 2017 (for financial gain earned in 2016) are below.
- Up to EUR 12,450: 19%
- EUR 12,450–20,200: 24%
- EUR 20,200–35,200: 30%
- EUR 35,200–60,000: 37%
- More than EUR 60,000: 45%
Looking at 2016 figures (2015 income) shows government efforts to decrease and modify taxes in Spain:
- Up to EUR 12,450: 19.5 percent
- EUR 12,450–20,200: 24.50 percent
- EUR 20,200–34,000: 30.50 percent
- EUR 34,000–60,000: 38–39 %
- More than EUR sixty,000: 46–47 %
Register to pay Spanish tax: residents and non-residents
You will have to be compelled to register to pay tax in European country with the Agencia Tributaria, the Spanish tax authority, whether or not you’re a resident or non-resident. you’ll want your Foreigner’s positive identification (NIE) range, that you’ll get through the native Foreigner’s workplace (Oficina American state Extranjeros) or police office among thirty days of arrival in European country.
You must fill out Modelo thirty to register your obligation to pay Spanish tax as a resident or non-resident for the primary time, or to vary your details. pointers for filling out type thirty is found here.
Filing your Spanish income tax return
In the initial year of tax residency, everybody needs to file a Spanish income tax return. once the primary year, you don’t got to file a Spanish income tax return if your financial gain from all sources is a smaller amount than EUR 8,000 and you have got but EUR 1,600 of bank interest or investment financial gain. what is more, identical applies if your income is a smaller amount than EUR 1,000 otherwise you earn but EUR 22,000 as AN worker, as your Spanish revenue enhancement can are subtracted by your leader.
To make a Spanish revenue enhancement declaration, see Modelo a hundred. you’ll notice data on the way to complete and submit your Spanish income tax return, data of previous tax returns and payments created. you’ll want your digital identification certificate to access this service. you’ll have to be compelled to submit your income tax return for the 2016, 12month throughout could and June 2017, with the point for submission and for payment of tax being 30 June 2017.
Spanish taxes for non-residents
As from 2016, the overall flat revenue enhancement rate for non-residents is 24% ANd 19% if you’re a national of an EU/EEA state.
Other financial gain is subject to Spanish non-resident taxes as follows:
Capital gains ensuing from transferred assets square measure taxed at a rate of 19%.
Investment interest and dividends square measure taxed at 19%, though square measure generally lower through double taxation agreements. Interest tax is exempt for EU voters.
Royalties square measure taxed at 24%.
Pensions square measure taxed at progressive rates, from 8% to 40%.
To apply to pay revenue enhancement as a non-resident of European country, use Modelo 149. you’ll then build your revenue enhancement declaration on Modelo a hundred and fifty. If you a non-resident owner, you must build your tax declaration on Modelo 210.
Special Spanish tax for foreigners performing on assignment
There is a special tax regime for foreigners returning to figure in Spain on associate employment agreement with a Spanish company. this is often generally referred to as ‘Beckham’s Law’ because it was allegedly got wind of in order that participant David Beckham didn’t ought to pay tax on his worldwide image rights once he came to play for Real Madrid in 2003.
Under the regime, you’re solely taxed in Spain on Spanish financial gain at a rate of 24% up to EUR 600,000 (2015 and 2016). For quite EUR 600,000, in 2016 the charge per unit was faded from 47% to 45%. There’s no capital gains tax due on interest outside of Spain.
If you’re a Spanish tax resident (spending quite 183 days a year in Spain) and haven’t been resident in Spain within the last ten years, you’ll apply to be taxed underneath this regime inside six months of inbound in Spain. you’ll get reduced taxation for up to 5 years.
VAT (IVA) in Spain
There are 3 levels of VAT (value-added tax) or Impuesto sobre el valorousness Añadido (IVA) in Spain:
- IVA general – twenty one p.c on merchandise and services.
- IVA reducido – ten p.c on traveller transport, toll roads, amateur sporting events, exhibitions, health product, non-basic foods, rubbish assortment, tormentor management and waste treatment.
- IVA superreducido – four p.c on essential foods, medicine, books and newspapers.
As of legal holiday, 2017, the Spanish tax authority can implement a brand new VAT policy which is able to need all VAT payers (chiefly freelancers) to submit all invoice information on-line via the official Agencia Tributaria web site inside four days of the date of issuing, and no later than the sixteenth day of the month following its issuing. In 2017 VAT payers are going to be granted associate eight-day amount rather than four.