A guide to taxes in Spain
Who has to pay Spanish taxes? A guide to taxes in Spain in 2017, including up-to-date Spanish tax rates, VAT in Spain, income tax in Spain, Spanish property taxes and taxes in Spain for non-residents.
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.
This guide to taxes in Spain includes:
- Tax in Spain for residents and non-residents
- Income tax in Spain
- Spanish tax rates
- Filing a Spanish tax return
- Tax in Spain for non-residents
- Tax deductions and allowances
- Spanish tax for married couples
- Spanish property tax
- Capital gains tax in Spain
- Spanish wealth tax
- Inheritance and gift tax in Spain
- VAT in Spain
- Corporate tax in Spain
- Spanish tax authority contact
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 will need to submit a Spanish tax return and pay Spanish income tax on your worldwide income if:
- your annual income from employment is more than EUR 22,000;
- you are self-employed or run your own business;
- you receive rental income of more than EUR 1,000 a year;
- you have capital gains and savings income of more than EUR 1,600 a year;
- it is your first year declaring tax residency in Spain.
You will have to declare all assets abroad worth more than EUR 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, professional costs, etc. Spanish tax rates are progressive.
Tax in Spain for non-residents
If you live in Spain for less than six months (183 days), you are classed as a non-resident and will only be taxed on the income earned in Spain. Your income is taxed 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. See Spanish non-resident tax rates.
Dual taxation agreements
Spain has signed many treaties with other countries to avoid double taxation (ie. paying tax in your home country and in Spain). The Spanish tax authority (Agencia Tributaria) maintains an up-to-date list of treaties.
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 and while the state has reduced taxes and simplified income tax bands, this has not happened right across Spain.
Each region sets its own Spanish tax bands and rates of income tax, so how much income tax you pay depends on where you live. Madrid has the lowest tax rates in Spain starting at 19 percent and rising to 43.5 percent for the highest earners, while in Andalucia the top rate is 48 percent for income more than EUR 120,000. Read more in our guide to Spanish income tax.
Although tax rates in Spain are not uniform across the country, for simplicity purposes below are the basic Spanish tax rates applied to employment income. In reality, your total liable tax will be a calculation of the state's general tax rates plus the relevant regional tax rates. For tax rates in Spain for each region, see here.
Spain's tax rates in 2017 (for income earned in 2016) are below.
- Up to EUR 12,450: 19 percent
- EUR 12,450–20,200: 24 percent
- EUR 20,200–35,200: 30 percent
- EUR 35,200–60,000: 37 percent
- More than EUR 60,000: 45 percent
Looking at 2016 figures (2015 income) shows government efforts to decrease and simplify 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 percent
- More than EUR 60,000: 46–47 percent
You will need to register to pay tax in Spain with the Agencia Tributaria, the Spanish tax authority, whether you are a resident or non-resident. You will 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.
You must 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. Guidelines for filling out Form 30 can be found here.
Filing your Spanish tax return
In the first year of tax residency, everyone has to file a Spanish tax return. After the first year, you don’t have to file a Spanish tax return if your income from all sources is less than EUR 8,000 and you have less than EUR 1,600 of bank interest or investment income. Furthermore, the same applies if your rental income is less than EUR 1,000 or you earn less than EUR 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. You can find information on how to complete and submit your Spanish tax return, information of previous tax returns and payments made. You will need your digital identification certificate to access this service. You will need to submit your tax return for the 2016 calendar year during May and June 2017, with the deadline for submission and for payment of tax being 30 June 2017.
As from 2016, the general flat income tax rate for non-residents is 24 percent and 19 percent if you are a citizen of an EU/EEA state.
Other income is subject to Spanish non-resident taxes as follows:
- Capital gains resulting from transferred assets are taxed at a rate of 19 percent.
- Investment interest and dividends are taxed at 19 percent, although are typically lower through double taxation agreements. Interest tax is exempt for EU citizens.
- Royalties are taxed at 24 percent.
- Pensions are taxed at progressive rates, from 8 percent to 40 percent.
To apply to pay income tax as a non-resident of Spain, use Modelo 149. You can then make your income tax declaration on Modelo 150. If you 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 came to play for Real Madrid in 2003.
Under the regime, you are only taxed in Spain on Spanish income at a rate of 24 percent up to EUR 600,000 (2015 and 2016). For more than EUR 600,000, in 2016 the tax rate was decreased from 47 percent to 45 percent. There’s no capital gains tax payable on interest outside of Spain.
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. You can get reduced taxation for up to five years.
Resident taxpayers in Spain are granted certain Spanish tax deductions. A basic personal allowance for everyone under the age of 65 is set at EUR 5,550, or EUR 6,700 from age 65 and EUR 8,100 from age 75.
If you have children under 25 living with you, earning an income of less than EUR 8,000, you can claim an additional allowance of:
- EUR 2,400 for the first child
- EUR 2,700 for the second
- EUR 4,000 for the third
- EUR 4,500 for the fourth
- Additional allowance of EUR 2,800 for each child under three years.
If you have a parent or grandparent living with you, with an income of less than EUR 8,000, you can claim an allowance of EUR 1,150 if they are over 65 and EUR 2,550 if they are over 75.
In general, you can claim tax deductions in Spain for:
- payments into the Spanish social security system
- pension contributions
- the first EUR 1,500 of dividend interest
- the costs of buying and renovating your main home
- charitable donations.
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 a better option. There is a married couples allowance (declaracion conjunta) of EUR 3,400 for the second taxpayer, in addition to a general allowance of EUR 5,550 granted to the first taxpayer.
If you own a property in Spain and are living in it on 1 January in any given year, you will be liable to pay a local property tax called 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 value of the land, the plus valia.
Spain's capital gains tax (the tax paid on profits from selling property or other investments) was cut from 21 percent to 20 percent in 2015 and to 19 percent in 2016, payable on profits up to EUR 6,000; the rate rises to 21 percent on profits up to EUR 50,000, and 23 percent thereafter. 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.
Wealth tax in Spain is payable on the value of your assets on the 31 December each year. Although wealth tax was abolished in Spain in 2009, it was reintroduced in 2012 and 2013, and from 2015. Although there are calls to abolish weath tax again, the government reconfirmed it will continue in 2017. If your wealth is more than EUR 700,000 you will be liable for wealth tax of 0.2–2.5 percent on net assets, although variations exist within regions: residents pay tax on world-wide assets, while non-residents pay Spanish assets only.
The rules regarding inheritance and gift tax in Spain (also called succession tax) have now changed so that non-residents from within the EU/EEA are treated the same as residents. Previously, non-residents were charged around 80 percent more than residents. Now the rate is around 1–7 percent for all (depending on region). If you have paid the higher rate in the past (specifically from 1 January 2011–2015), you may be entitled to a refund.
As of 2017, some regions such as Andalucía have updated their inheritance and gift tax policies, resulting 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, tax and writing a Spanish will.
There are three levels of VAT (value-added tax) or Impuesto sobre el Valor Añadido (IVA) in Spain:
- IVA general – 21 percent on goods and services.
- IVA reducido – 10 percent on passenger transport, toll roads, amateur sporting events, exhibitions, health products, non-basic foods, rubbish collection, pest control and wastewater treatment.
- IVA superreducido – 4 percent on essential foods, medicine, books and newspapers.
As of July 1, 2017, the Spanish tax authority will implement a new VAT policy which will require all VAT payers (chiefly freelancers) to submit all invoice data online via the official Agencia Tributaria website within four days of the date of issuance, and no later than the 16th day of the month following its issuance. In 2017 VAT payers will be granted an eight-day period instead of four.
The general rate of corporate tax in Spain was reduced in 2015 to 28 percent and to 25 percent for 2016 and 2017. Newly formed companies pay 15 percent for the first two years of business. A reduction of 10 percent tax may be granted to profits locked into a special reserve for five years. Company tax returns must be filed within six months and 25 days after the end of the accounting period. Payment is by instalments in April, October and December, each instalment usually being 18 percent of the tax liability. Read more about taxes for self-employed workers and 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 circumstances.
Tax in Spanish
- Tax in Spanish (n): el impuesto, el tributo, la contribución
- Tax in Spanish (a): de impuestos, fiscal, tributario, impositivo, imponible, contributivo
- Tax in Spanish (v): tasar (assessment), gravar impuestos.
- Agencia Tributaria: the Spanish tax authority provides information on all aspects of tax in Spain for individuals and companies.
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