Taxes in Spain: an introductory guide for expats (2024)

Who has to pay Spanish taxes? A guide to taxes in Spain, including up-to-date tax rates, VAT, income tax, property taxes, and taxes for non-residents.

If you are living and working in Spain, you are liable to pay income taxes 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’re a resident of Spain, you must pay Spanish tax on your worldwide income. Taxes apply on a progressive scale, although tax deductions exist. If you are a non-resident in Spain, you only pay tax in Spain on Spanish income, typically at a flat rate. This also includes potential income on Spanish property even if you don’t rent out your property. Spanish tax also applies to property ownership, investment interest, and goods and services in Spain.

Taxes in Spain are split between state and regional governments. This means that Spanish tax rates can vary across the country for income tax, property tax, wealth tax, capital gains tax, and inheritance tax in Spain. Furthermore, workers in Spain must contribute to Spanish social security taxes. The Spanish tax year runs from 1 January to 31 December.

This guide to taxes in Spain includes:

Who has to pay tax in Spain?

Spanish tax for residents

If you have been living in Spain for six months (183 days) or more of the calendar year (not necessarily consecutively) or you have your main vital interests in Spain (for example, your family or business is in Spain), then you are classed as a Spanish resident for tax purposes.

As a Spanish resident, you must submit a Spanish tax return and pay Spanish income tax on your worldwide income in the following cases:

• Your annual income from employment is more than€22,000.
• You’re self-employed in Spain or run your own business.
• You receive rental income of more than €1,000 a year.
• You have capital gains and savings income of more than €1,600 a year.
• It is your first year declaring tax residency in Spain.

In addition, you must declare all your assets abroad worth more than€50,000 (using Modelo 720, or Form 720). Your taxable income is the income left after deductions for contributions to social security in Spain, pension, personal allowance, and professional costs. Spanish tax rates are progressive.

Tax in Spain for non-residents

If you live in Spain for less than six months (183 days) in a calendar year, you are a non-resident and only pay taxes on the income from Spain. Taxes apply to your income at flat rates with no allowances or deductions. If you are a non-resident and own a property in Spain, whether or not you rent it out, you will need to submit 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.

Dual taxation agreements

Spain has signed many treaties with other countries to avoid double taxation. The Spanish tax authority maintains an up-to-date list of treaties.

Income tax in Spain

Personal income tax in Spain is called Impuesto de Renta sobre las Personas Fisicas or IRPF. Spanish income taxes are split between state and region. Each of Spain’s 17 autonomous regions decides on its own tax rates and liabilities.

Consequently, while the state has reduced taxes and simplified income tax bands, the tax system throughout Spain remains complex. In the simplest terms, the amount of taxes you pay in Spain depends on where you live.

Spanish tax rates in 2023

The following are the basic Spanish tax rates on employment income. As tax rates in Spain are not uniform across the country, your total liable tax will be a calculation of the state’s general tax rates plus the relevant regional tax rates.

Spain’s tax rates in 2023 are as follows:

• Up to €12,450: 19%
• €12,451–€20,200: 24%
• €20,201–€35,200: 30%
• €35,201–€60,000: 37%
• €60,001–€300,000: 45%
• More than €300,000 47%

Income tax on savings is levied at the following rates:

• 19% for the first €6,000 of taxable savings income
• 21% for the following €6,000–€50,000
• 23% for the following €50,000–€200,000
• 27% for the following €200,000-€300,000
• 28% for any amounts over €300,000

Register to pay Spanish tax: residents and non-residents

You will need to register to pay tax in Spain with the Spanish tax authority, whether you are a resident or non-resident. First, you’ll need your Foreigner’s Identity Card (NIE) number, which you can get through the local Foreigner’s Office (Oficina de Extranjeros) or police station within 30 days of arrival in Spain.

Fill out Modelo 30 to register your obligation to pay Spanish tax as a resident or non-resident for the first time, or to change your details.

Filing your Spanish tax return

Everyone has to file a Spanish tax return in the first year of tax residency. After the first year, you don’t have to file a Spanish tax return if your income from all sources is less than €8,000 and you have less than €1,600 of bank interest or investment income. The same applies if your rental income is less than €1,000 or you earn less than €22,000 as an employee, as your Spanish income tax will have been deducted by your employer.

To make a Spanish income tax declaration, see Modelo 100. The tax year in Spain runs from1 January to 31 December. Eligible residents must file tax returns between 11 April and 30 June of the year following the tax year. There are no extensions on filing tax returns in Spain.

You can find information on how to complete and submit your Spanish tax return, information on previous tax returns, and payments made. To access this service, you need your digital identification certificate.

The process of managing yourtax declarations, optimization, and planning in Spain may be much easier with the help ofaccounting andtax advice services such asBalcells Group or ATA Spain, who can assist you with everyphase of the process.

Filing US taxes from Spain

Despite the fact that every US citizen and Green Card holder must file a tax return with the IRS even when living abroad, many expatriates still fail to do so. Many are unaware of these obligations, thinking that as an expat they do not need to pay or file tax returns in the US; as a matter of fact, you do! For more information and help filing your US tax returns from Spain, contactTaxes for Expats and see our guide to filing US taxes from abroad.

Spanish taxes for non-residents

The general flat income tax rate for non-residents is 24%, or 19% if you are a citizen of a country in the European Union or the European Economic Area.

Other income is subject to Spanish non-resident taxes at the following rates:

• Capital gains resulting from transferred assets are taxed at a rate of 19%.
• Investment interest and dividends are taxed at 19%, although are typically lower through double taxation agreements. Interest tax is exempt for EU citizens.
• Royalties are taxed at 24%.
• Pensions are taxed at progressive rates, from 8% to 40%.

To apply to pay income tax as a non-resident of Spain, first obtain Modelo 149. Next, use the Modelo 150 form to make your income tax declaration. If you are a non-resident property owner, you should make your tax declaration on Modelo 210.

Special Spanish tax for foreigners working on assignment

There is a special tax regime for foreigners coming to work in Spain on an employment contract with a Spanish company. This is sometimes known as Beckham’s Law, as it was allegedly set up so that footballer David Beckham did not have to pay tax on his worldwide image rights when he joined Real Madrid in 2003.

Employees on assignment in Spain pay a 24% tax rate on income up to €600,000. Rules brought in in 2021 saw the government increase the tax rate on income exceeding €600,000 to 47%. Additionally, posted employees now pay a 3% tax on income above €200,000 that is generated from dividends, interest, or capital gains.

If you are a Spanish tax resident (spending more than 183 days a year in Spain) and have not been resident in Spain in the last 10 years, you can apply to be taxed under this regime within six months of arriving in Spain. Consequently, you can reduce your taxation level for up to five years.

Spanish tax deductions and allowances

Resident taxpayers in Spain receive certain tax deductions. The basic personal allowance for everyone under the age of 65 is €5,550, or €6,700 from age 65, and €8,100 from age 75.

If you have children under 25 living with you, you can claim an additional allowance of:

• €2,400 for the first child
• €2,700 for the second
• €4,000 for the third
• €4,500 for the fourth
• An additional allowance of €2,800 for each child under three years

If you have a parent or grandparent living with you and your total income is less than €8,000, you can claim an allowance of €1,150 if they are over 65 and €2,550 if they are over 75.

In general, you can claim tax deductions in Spain for:

• Payments into the Spanish social security system
• Spanish pension contributions
• The costs of buying and renovating your main home
• Charitable donations

In 2023, deductible individual contributions to pension plans are capped at €1,500, down from €2,000 in 2022. The maximum deduction on contributions to company plans, however, has risen from €8,000 to €8,500.

Tax in Spain for married couples

If you are married (either in a heterosexual or same-sex marriage), you can choose to be taxed separately or together. You should compare the Spanish tax rate you would pay as individuals to the tax you would pay as a couple before your final decision, as it is not always the better option. There is a married couple’s allowance (declaración conjunta) of €3,400 for the second taxpayer, in addition to a general allowance of €5,550 granted to the first taxpayer.

Spanish property tax

If you own a property in Spain and are living in it on 1 January in any given year, you must pay a local property tax or Impuesto sobre Bienes Inmuebles (IBI). The amount is the rental value multiplied by a tax rate set by the local authorities. This applies to non-residents and residents. There is also basura, a rubbish collection tax. Non-resident property owners may also need to pay imputed income tax at flat rates on potential rental income on Spanish property.

If you sell a property in Spain, you have to pay a property transfer tax, Impuesto Transmisiones Patrimoniales (ITP). When a property is sold, the local authority charges a tax on the increase in the value of the land, the plus valia.

Capital gains tax in Spain

Spain’s capital gains tax (the tax on profits from selling property or other investments) is as follows:

• First €6,000: 19%
• €6,000–€50,000: 21%
• €50,000–€200,000: 23%
• More than €200,000: 26%

If you bought a property before 1994, you may be liable to pay more tax than before as taper tax on capital gains tax has been abolished.You might be eligible for an exemption if you are over age 65 and selling your main home or if you are under 65 and selling your main home to buy another main home in Spain.

Spanish wealth tax

Wealth tax in Spain is payable on the value of your assets on 31 December each year. Assets valued at more than €10 million can be taxed up to 3.5%. Rates vary depending on which region you live in, and a couple of regions don’t charge the tax at all.

Everyone has a standard €700,000 tax-free allowance, and homeowners are allowed a further €300,000 against the value of their main residence.

For the 2022 and 2023, a solidarity tax for ‘great fortunes’ (ISGF) has been introduced for residents who have assets and holdings greater than €3 million. The taxable rates are identical to wealth tax, but they apply everywhere in Spain rather than on a regional basis. This means that people who live in regions where wealth tax doesn’t exist will instead need to pay solidarity tax.

Inheritance and gift tax in Spain

Since 2015, non-residents from within the EU/EEA have been treated the same as residents when it comes to inheritance and gift tax in Spain (also called succession tax). Before the change, non-residents paid around 80% more than residents. The Spanish Supreme court ruled that non-residents who paid the higher rate in the past are entitled to a refund.

In 2017, some regions such as Andalucía updated their inheritance and gift tax policies. This resulted in many families not having to pay inheritance tax. Check your specific region’s laws for more information. You should seek specialist advice on these taxes as the Spanish tax system is complex. Read more in our guide to Spanish inheritance law.

VAT (IVA) in Spain

Spain has three levels of value-added tax (VAT) or Impuesto sobre el Valor Añadido (IVA):

• 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

In 2021, the government increased IVA from10% to 21% on alcoholic drinksand drinks containing added natural and derived sweeteners and/or sweetening additives. The tax hike excluded baby milk and drinks considered as food supplements for special dietary needs.

All IVA payers (primarily freelancers) must submit all invoice data online within four days of the date of issuance, and no later than the 16th day of the month following its issuance.

Corporate tax in Spain

The general rate of corporate tax in Spain is 25%, though newly-formed companies are able to pay a rate of 15%. A reduction of 10% tax may be granted to profits locked into a special reserve for five years.

Companies must file tax returns within six months and 25 days after the end of the accounting period. Payment is by installments in April, October, and December, each installment usually being 18% of the tax liability. Read more about taxes for freelancers in Spain.

The information given here provides a general overview only; you should always get professional advice from a Spanish financial professional concerning your specific circ*mstances.

Tax rebates and reliefs in Spain

Energy-efficient home improvements

In addition to the deductions explained above, the Spanish government has begun introducing tax reliefs for people taking on green building projects. Tax credits of up to 40% may be available to homeowners who make energy-efficient home improvements or convert their properties to renewable energy sources. The specific rules may vary from region to region.

Charity contributions

As an individual taxpayer, you can offset 80% of the first €150 you donate to charities or foundations, and 35% of any donation above this sum. This deduction rises to 40% if you donate to the same charity for three or more consecutive years. Companies can claim 35% on donations, or 40% on repeat donations lasting three or more consecutive years.

Tax avoidance and evasion in Spain

Tax evasion (evasión fiscal) is an ongoing problem in Spain, with billions lost each year to unpaid taxes. This comes in many forms, from large companies failing to fully declare their taxable bases to workers being paid ‘cash in hand’.

The penalties for tax fraud vary. For sums of up to €3,000, a fine of €1,500 applies. More serious offences are subject to fines of between 50% and 100% of the amount of undeclared tax. If the amount undeclared exceeds €120,000, jail terms of up to five years are possible, alongside significant fines.

The Spanish tax authority is increasing its efforts to clamp down on tax evasion. In early 2023, it announced that it would double down on investigating digital nomads and remote workers who claim they don’t reside in Spain in an attempt to pay income tax at non-resident levels.

Tax in Spanish

• (Nouns) Tax in Spanish: el impuesto, el tributo, la contribución
• (Adjectives) Tax in Spanish: de impuestos, fiscal, tributario, impositivo, imponible, contributivo
• (Verbs) Tax in Spanish: tasar (assessment), gravar impuestos.

Useful resources

• Agencia Tributaria: the Spanish tax authority provides information on all aspects of tax in Spain for individuals and companies