It is very important that residency is correctly determined. Fiscal residents in Spain pay taxes on their income worldwide, but non-residents are taxed only on their income within Spain.
Personal taxes include the following types:
Personal Income Tax (IRPF): national
Form 100 (or Form 150, etc.)
Filing period: April - June 25 of the following yearFor residents only: This is the standard "IRPF" income tax that most Spaniards pay.
The personal income tax rate in Spain goes from 19% to 47%. 47% applies when your base income is over 300,000€. (For the current numbers, type in google "tramos IRPF" for the current year.)
If you are a UK citizen, you must complete form FD9 to apply for UK income tax exemption. By completing this form you are consenting to the Spanish Revenue, certifying to HMRC that you are resident in Spain for the purposes of Spanish tax.
Non-residents Income Tax (IRNR): national
For non-residents only: Most non-residents are required to file income tax because they own a property (see article on Taxes for Property Owners), though you may also have to file because a Spanish company has paid you dividends, or because you worked for a few months during the year in Spain, etc.
Wealth tax (Impuesto de patrimonio): national
Both residents and non-residents must pay a wealth tax if their assets are over a certain threshold. For residents, this threshold is based on the region of their residency. See our article.
Report of foreign assets (Form 720): national
Filing period: January 1 - March 31 of the following year.See AlsoHow To Use A 529 Plan For Estate PlanningWhat You Should Know About Estate PlanningInvestment objectives, goals, constraints, policy statementHow to Optimize Taxes When You Tap Your Retirement AccountsFor residents only: For reporting purposes only, no tax is to be paid with this form. You are required to provide information to the Spanish tax authorities about any foreign bank accounts, investments, and real estate located abroad with a value over 50,000€. See our article.
Property Tax (IBI): local
Filing period: Varies depending on the municipality, but normally between September and November of each year.Each year, the municipality issues a property tax payment slip for all properties. The tax is usually between .5% and 1.1% of the cadastral value (valor catastral) of your property, which is roughly 20 times lower than the market value.
Municipal Tax (basura): local
Filing period: Varies depending on the municipality.This varies depending on where you live. Usually assessed per house or building. Sometimes the tax is combined with water consumption.
Motor Vehicle Tax (impuesto sobre vehículos de motor): local
Filing period: Varies depending on the municipality, but normally between September and November of each year.This tax is based on the age and the power of the vehicle. The larger the city is, the higher the tax. For an average car, it is about 60€ a year.
Besides these yearly or quarterly taxes, there are transaction-based taxes, such as:
- Inheritance and Gift Tax: regional
- Taxes on buying or selling a property: regional and local
- VAT Tax (IVA): national
Articles:
Taxes for Property Owners (residents and non-residents)
Taxes for Corporate Property Owners
Inheritance Tax (non-residents)
FAQs:
I live in Spain and work for a foreign company. How can I lower my taxes?
If I'm buying a property, can I save on taxes by creating a company?
How do I determine if I'm a non-resident for tax purposes?
To avoid double taxation, how can I prove that I'm tax-resident in a country?
What is the Beckham Law?
If I'm non-resident and have earnings in Spain, should I file taxes in Spain?
What happens if I'm a resident of both Spain and another country, according to the tax rules of both countries?
My company is sending UK citizens to Spain to work there for 18 months. Will they be liable for taxes in Spain?
As a Spanish resident, do I have to declare income earned outside Spain?
Why is Spain a good country for tax planning?
Which countries are blacklisted as tax havens?
What is a holding company?
Links:
Agencia Tributaria Spain's tax agency
UK: HMRC (UK's tax agency). Includes guides to leaving the UK, and determining residency.
Call us at 932 155 393 or fill out the form below.
How do I determine if I'm a non-resident for tax purposes?
Assuming you don't have Spanish citizenship, you're a resident if either:
- You're physically present in Spain for more than 183 days (including sporadic absences).
- The main base of your professional activities or economic interests are in Spain.
- Your spouse and children reside in Spain.
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To avoid double taxation, how can I prove that I'm tax-resident in a country?
Tax resident status can be accredited by presenting a residence certificate issued by the tax authorities from that country. The validity of such certificates is one year.
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If I'm non-resident and have earnings in Spain, should I file taxes in Spain?
In this situation, it's usually better to file taxes in Spain. Assuming there is a double taxation treaty between Spain and your country of residence, you can then choose in which country you want to declare these earnings. In most cases, your earnings won't be taxable in Spain because you are non-resident.
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What happens if I'm a resident of both Spain and another country, according to the tax rules of both countries?
In these cases the international agreements, if any, will apply. These agreements describe the tax rules that apply to avoid an individual to be considered resident in both countries.
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My company is sending UK citizens to Spain to work there for 18 months. Will they be liable for taxes in Spain?
Yes, the employees will need to file resident income tax forms in Spain, and report their earnings. Whether they pay taxes in Spain or the UK based on these earnings depends on their situation. Note that the purpose of the double taxation agreement is to avoid paying twice. It does not mean you can avoid paying at all, nor are you totally free to decide which country is the better choice. That may be considered fraud.
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As a Spanish resident, do I have to declare income earned outside Spain?
Yes, though it may be difficult for the Spanish tax authorities to find out about such income. Note that most countries have agreements with Spain to avoid double taxation.
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Why is Spain a good country for tax planning?
Spain has always had regulations for the creation of holding companies useful in international tax planning. In 2002, however, the government created regulations that have now made Spain one of the most competitive countries in the world for tax planning. Spain is even more advantageous now that the traditional tax havens of the world are being carefully watched in the aftermath of September 11th. The two best options are the Entidad de tenencia de valores extranjeros and Sociedades no residentes, sin establecimiento permanente.
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