Spanish Tax Rate

Spanish Income Rate

Tax payment in Spain is vital. Failure to pay tax can attract severe penalties for anyone who resides or works in Spain. The Spanish tax rate for residents and non-residents are different. Taxes vary across the country is split between the regional and state government. This is why it varies from region to region. You need to stay updated and understand the rates and rules of Spanish tax rate. This is necessary due to the regular changing government rates and also to avoid penalties and fines. Also, remember, the Spanish tax system runs for a whole year.

Who is Liable to Tax Payment in Spain?

You are liable for tax payment if you are a resident and non-residents who reside or work in Spain. Thus you need to understand whether you are a Spain resident or non-resident. Additionally, understand the tax payment laws for a resident or non-resident. A Spanish resident and non-residents are liable to tax payment. This article will give you all information you need regarding the Spanish tax rate.

Spanish Resident Tax

You are considered a resident of Spain if you have been living in Spain for 183 days or more on a calendar year. Also, if your interest in the country is family or business you are considered a Spanish resident for tax purposes. A Spanish resident is liable to tax payment from any worldwide income.

A Spanish resident is subject to filing the tax return and payments on income generated worldwide under the following circumstances:

• You generate a yearly income exceeding €22,000.

• You own and run your business.

• Get profit and income savings of more than €1600 annually.

• Receipt of rental income exceeding €1,000 per year.

• It’s your first-year declaration of tax payment in Spain.

Spanish Non-Resident Tax

You are considered a non-resident if you live in Spain for less than 183 days in a calendar year. Therefore you pay taxes from the income you receive while in Spain. Non-resident taxes rates are fixed. There are no allowances and reductions.

Spanish Income Tax

Spanish income tax rates vary from region to region. Below are the basic employment of Spanish income.

Personal tax allowance Spain is comprised of two categories: Income savings and general income.

  • A tax of up to €12,450 at 19%
  • From €12,450–€20,200 at 24%
  • From €20,200–€35,200 at 30%
  • From €35,200–€60,000 at 37%
  • From €60,000–€300,000 at 45%
  • More than €300,000 at 47%

Income Savings Tax

Income savings tax is tax imposed on savings income. It comprises of the following:

  • Interest acquired from savings.
  • Income and returns from the transfer of capital to a third party. If the capital exceeds the transferring company equity, it is taxed as general income.
  • Money received from capitalization, life and disability and insurance policies.
  • Profits generated from assets transfer.

General Taxable Income

General income is taxed on any income generated worldwide.

General Spanish income tax is composed of:

  • All incomes excluding income taxable from savings.
  • Profits that are not from asset transfer.
  • Income from capital transfer to another third party company. In which the receiving company’s equity exceeds the transferring company capital.

Personal Tax Allowance Spain

If you are a Spain tax resident receive personal allowances from the income you generate. Personal tax allowances in Spain vary depending on age, disability and number of children you live with and home location.

For a person:

  • Under 65 years of age, the allowance received is €5,550
  • From 65 years receive €6,700
  • From 75 years you get €8,100.

If children of less than 25 years are involved additional allowances is given as follows:

  • 1st child – €2,400
  • 2nd child – €2,700
  • 3rd child – €4,000
  • 4th child – €4,500
  • For children under 3 years an additional allowance of €2,800 for each.

Additionally, if you live with your parents or grandparents, you are entitled to an extra allowance. But this varies and depends on o their age and if your income is less than €8,000.

Spanish Tax Deductions

You are eligible to receive deductions in Spain under the following circumstances.

  • Contributions to the Spanish social security system.
  • Contributions made on the basis of charity. For example, widows, widowers and orphans.
  • Payment to unions such as pension unions and college contributions up to €500 maximum.
  • Deduction of €2,000 for other expenses on people posted to work in other cities or with the disabled workers.
  • Expenditures to renovate or rent a home.

Capital Gains Taxes

Capital gains tax is tax from the sale of assets or investments. A resident of Spain needs to pay taxes on assets sold worldwide. A non-resident is liable to payment of capital gains tax for the sale of Spanish property.

Capital gains tax is charged as follows:

  • For the first €6,000 a charge of 19%
  • €6,000–€50,000 a 21% charge
  • €50,000–€200,000 a 23% charge
  • More than €200,000 a 26% charge.

For property sale such as a home, you are eligible for the exclusion if you are above 65 or below 65 and selling your family home.

Property Taxes

Property taxes are Spanish tax rates paid by people who have a property in Spain. It applies to Spain residents and non-residents. The tax is levied based on the property value rate. The rate depends on the type of property (rural or urban) and the municipal location.

The local municipality charges tax for an increase in the value of the sold property. The tax calculation is based on the duration of ownership and the property value.

Property taxes are paid by the property seller except for property donation.

Inheritance Tax

The Spanish inheritance tax is the tax charged on people who earned a right to inherit property in Spain. The tax rule applies to both residents and non-residents. The tax is subject to payment upon receiving the said property.

The tax payment is dependent on the relationship between the taxpayer and the receiver and the wealth of the donor.

Some powerful autonomous communities have the privilege of changing the inheritance taxes regulations. However, the EU court ruling in 2014 led to reforms on inheritance tax regulation which were affected from 1 January 2015. The court ruling established that the autonomous communities change of state regulations was biased and a breach of the agreement. However, despite the laws, the inheritance law tax rates are bound to modify from the autonomous communities.

Inheritance laws in Spain differ from one region to another. It’s therefore vital you check the Spanish tax rate rules in your region. The Spanish tax rate should be imposed equally on every individual with the same qualification as the other.

Married Couple Tax

The married couple (homosexual or heterosexual) can choose whether to be taxed individually or as a couple. It would be good if you, compare the tax rates when charged as a couple or individual.

Also, remember there are married couple allowances. The first taxpayer is paid a general allowance of €5,550 and €3,400 for the second.

Spanish Tax On Pensions

The Spanish pension system is mandatory for all residents. The pension system is composed of state, company and employee and private pension. To be eligible to receive your pension you must have made social security payments.

Some situations such as maternity leave, joblessness, and workplace fatalities are exclusions to your contribution period.

How To Become A Spanish Tax Resident

To become a tax resident of Spain you must have lived in the country for 6 months or more in a calendar year. It can be consecutive days or not. Being a tax resident means you are obligated to pay different taxes such as tax gains, income taxes and more.

To become Spanish tax residents you need to meet the following criteria:

  • Spend more than 183 days in a year.
  • Your centre of interest in the country such as business.
  • Families like children, parents or spouses (legally married) are in Spain.

Entry into the country within the first 6 months you are eligible for tax payment, even if your stay is indefinite. With the exception, if you moved from the UK. The reason is because of the UK/Spain tax treaty.

If you move into Spain after the first 6 months, you are regarded as a non-resident if you have not spent 6 months or more. However, you are considered a resident by the authorities if your visits have been frequent except if you live in a tax treaty country.

UK/ Spain Double Taxation Treaty

The UK and Spain have signed a double tax treaty for residents who are residents in both the UK and Spain. That is under the UK and Spanish rules consecutively.

The agreements entail the following:

  • You are considered a tax resident in the country that you have a permanent home.
  • If your permanent residence in the two countries, tax resident is paid in the country where your centre of interest lies.
  • If the above is indeterminable, you are considered a resident in the country you spent more time in during the year. If still undeterminable the authorities will make a decision based on your nationality.

Ensure you take caution and understand the treaty timing laws before you decide to move. If you are unsure, get expert advice from a tax professional.

Registration For Tax Payment In Spain

For a Spanish resident or non-resident, you need to register with the tax authority to pay taxes. You will need to get a foreign identity card number. You can get the card through the application from the local foreign office or police station within 30 days of entry into the country.

To register you fill the modelo 30 form. The registration is done, whether you are a resident or non-resident. Moreover, it’s done based on whether for the first time registration or details change.

Spanish Tax Year Returns Filing

Every Spanish resident or non-resident needs to file a tax return within the first year after registration. The tax year filings run from 1 January-31 December. Also, remember, in Spain, there is no time extension on tax returns filing. Therefore it’s important to pay before the tax due to avoid fines and penalties.

Tax returns filings are excluded in the following cases:

  • An income of less than €8,000
  • An income of less than €1,600 bank investment
  • Income from the rent of less than €1,000
  • An employment income of less than €22,000. Below this, the income tax is deducted by the employer.

Exclusive Tax Payments For Foreigners On Contracts

Spain has a special tax payment system for foreigners working on assignments or contracts with a Spanish company. The income tax varies with the amount of individual income.

The Spanish tax rates on such are as follows:

  • Income of up to €600,000 pays a tax rate of 24%.
  • Income exceeding €600,000 pays a 47% tax rate.
  • 3% tax rate for income above €200,000 from capital gains.

Tax Liabilities In Spain

Tax liabilities depend on how you hold your assets and take income. Spain is a favourite destination for expatriates. The tax on income in Spain is high. The rich individuals and families fear living in Spain and becoming residents because of the high taxation rates.

However, there are ways you can reduce the annual tax payments. If you are thinking of becoming a Spanish tax resident, you need to look deeper and understand the tax system. With the help of professional tax advisors, you can be able to reduce tax liabilities. A tax expert can help take advantage of tax planning opportunities.

Every individual situation is different and may not work for each person. Therefore, consider your needs, what you want to achieve and what works best for you.

Spanish tax rate is high and complicated. Ensure before you become a Spanish resident, you get all the information. As mentioned above, tax experts can help you make brilliant decisions based on tax planning opportunities.

Also, tax payment is very vital in Spain. Ensure to pay before the tax due. This is to avoid unnecessary fines and penalties. Also, remember tax evasion from a Spanish resident is a crime. Always stay updated with the Spanish tax rate because of the regular state tax law changes.

Each individual is entitled to an equal tax payment system whether rich or poor. Tax payment should be charged according to the tax authority laws.

8 thoughts on “Spanish Tax Rate

  1. Peta Cole |

    I have a question about taxes under the NLV.
    It says above that you wont have to make a declaration or pay tax unless “You generate a yearly income exceeding €22,000.” My income is less than that but part of it is “Receipt of rental income exceeding €1,000 per year.” So would I be liable for tax? But on the other hand the personal tax allowance is only E6,700 for over 65.So I presume any income above that that will be taxed. This seems to contradict the E22,000 yearly income threshold. Can you explain please.

    Reply
    1. Anna |

      Peta Cole,

      One of our lawyers will contact you to explain Spanish Taxes.

      Regards,

      Reply
  2. tom sorensen |

    I want to move to Spain next year from the US. My social security (pension) is about $22,000 per year and I’m 71. What will I pay in taxes in Spain.

    Reply
    1. Anna |

      Hi Tom,

      one of our lawyers should be in contact with you shortly for your questions.

      Greetings

      Reply
  3. Mark |

    I need to apply for a schengen visa in spain, I am a bit confused about the requirements, can you please contact me?

    Reply
    1. Anna |

      Hi Mark,

      one of our lawyers should be in contact with you shortly for your questions.

      Greetings

      Reply
  4. Sharaq |

    Could you help me with the spanish tax allowances 2021? I am a foreigner and I need someone’s support.

    Reply
    1. Anna |

      Hi Sharaq,

      one of our lawyers should be in contact with you shortly for your questions.

      Greetings

      Reply
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