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The Ultimate Guide to a Taxes in Spain

Who pays tax in Spain? Depending on if you are a resident or non-resident in Spain, you will be liable for different tax situations.

This guide will help educate you on taxes in Spain, property tax, wealth tax, income tax, and more.

As a foreigner resident, expat, in Spain, you may also be liable for tax on your worldwide income. Read more to find out!

Do Expats Pay Taxes in Spain?

Yes, as an expat in Spain, depending on your assets and financial situation you will be responsible for different types of taxes.

You must pay Spanish income tax that is based on your worldwide income.

Now if you are a resident or non resident in Spain you will have other types of liabilities.

Spanish Tax for Residents

After living in Spain for more than 6 months and 1 day (183 days), you will be considered a tax resident in Spain.

So as a Spanish resident, you must submit a tax return and pay Spanish income tax if you meet the following criteria:

if you are self-employed in Spain (run your own business)
income of more than 22,000€ per year
receive rental income of at least 1000€ per year
capital gains of more than 1600€ per year

Additionally, the Spanish government wants to be informed of your assets abroad. So if you have assets worth more than 50,000€ abroad, you must declare them through Form 720 (Modelo 720).

Depending on the income that you generate it will be taxed at different rates:

less than 12,450€: 19%
€12,450–€20,200: 24%
€20,200–€35,200: 30%
€35,200–€60,000: 37%
€60,000–€300,000: 45%
More than €300,000: 47%

However, the good news, is that as a resident of Spain, you will be able to claim deductions and allowances. This is a benefit that non-residents do not have.

Each case if different, so we highly recommend speaking with expert tax advisors. Our team of lawyers can assist you through your tax liabilities and provide a personalized approach.

Spanish Tax for Non-Residents

On the other hand, if you live in Spain for less than the 6 months and 1 day (183), then you are considered a non-resident for tax purposes.

Great news! In this case you will only pay taxes on income that you generate from Spain.

These taxes will be applied at a flat rate, without any deductions or allowances.

If you own a property as a non-resident in Spain, you will need to submit a tax return and pay Spanish property taxes, regardless of if you are renting out the property or not.

The general income tax for non residents in Spain is 24% if you are a non-EU citizen.

If you are an EU citizen it is 19%.

As a non-resident in Spain, you will also be liable for capital gains tax resulting from transferred assets, at a rate of 19%.

Investment interest and dividends are also taxed at 19%. However EU citizens are exempt from this interest tax. And also there are double taxation agreements depending on what country you are from.

Royalties earned are taxed at a rate of 24%.

Pension contributions are taxed on a scale of between 8% to 40%.

Income Tax in Spain

This personal income tax in Spain is called the "Impuesto de Renta sobre las Personas Fisicas" or "IRPF". And depending on your personal situation and which region of Spain you live in it can vary.

It would be best to consult a professional in regards to your specific case; however below you can find more general information.

2022 Spanish Tax Rates

Spain's tax rates for 2022 are:

less than 12,450€: 19%
€12,450–€20,200: 24%
€20,200–€35,200: 30%
€35,200–€60,000: 37%
€60,000–€300,000: 45%
More than €300,000: 47%

Then there is another income tax on savings, 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
26% for any savings income even more than €200,000

How to Register to Pay Spanish Taxes?

As a resident or non resident in Spain, you will need to register with the Spanish tax authorities.

First and foremost, as a foreigner, you need to make sure that you have a Foreigner's Identity Card, a NIE number.

What is Beckham's Law?

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.

The Spanish government modified this tax regime for the 2021 tax year. 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.

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.

Wealth Tax in Spain

If you have land in Spain, regardless of being a tax resident or not, you automatically must pay the wealth tax.

The Wealth Tax rates can vary progressively depending on which region of Spain you choose to live in. This tax rate is typically between 0.2% and 2.5%.

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%, though rates vary depending on which region you live in.

The Wealth Tax is applied to high net worth situations. However everyone has a standard tax-free allowance of 700,000€. Assets such as property, vehicles, savings, fine art, and other types of assets are counted towards this 700,000€ allowance.

Additionally, your main resident of spain, your house, has an additional allowance of 300,000€.

So if your assets and property in Spain are worth less than these amount you don't need to worry about the wealth tax.

However, if they are higher, we suggest contact our team of legal experts to help sort your tax situation in Spain.

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.

What are the Spanish Tax Allowances in 2022?

There are general deductions that you can claim as a resident of Spain.

Under the age of 65 is 5,500€.
Age of 65 to 75 is 6,700€.
Age of 75 and up is 8,100€.

Also, in the case that you have children who are under than age of 25, there are additional allowances, as follows:

€2,400 for the first child
€2,700 for the second child
€4,000 for the third child
€4,500 for the fourth child

Additionally, if you have a child who is under the age of 3, you will receive an additional 2,800€ allowance.

Some of the deductions that you can claim in Spain include:

charitable donations
payments of Spanish Social security
pension contributions
buying a new main home
costs of renovating your main home

Summary of Taxes in Spain for Expats

To be a tax-resident in Spain, you must spend more than 183 days in the country during a calendar year or have your center of economic activities located there, if it is not stated otherwise in a tax treaty.

Tax-residents are subject to Personal Income Tax on their worldwide income.

PIT is levied at progressive rates by the state and each autonomous region. The lowest combined top marginal tax rate is 43.5% in Madrid (on annual income exceeding €60,000), and the highest is 48% in Catalonia (annual income exceeding €175,000.20) and Andalusia (annual income exceeding €120,000).

Savings income is taxed at progressive rates between 19% and 23%. This includes capital gains and investment income such as dividends and interests.

Rental income is taxed at personal income tax general rates.

Non-residents are subject to Non-resident income tax at a flat rate of 24% on income from Spanish sources.

If a non-resident is a resident within the EEA that has concluded a tax exchange of information agreement, he or she will be subject to a reduced rate of 19%. Regarding dividends, capital gains and interests, they are subject to a 19% tax, unless the tax rate is reduced under a tax treaty.

Spain has enacted extensive controlled foreign company (CFC) rules, under which income retained in a non-EU controlled foreign company may be attributable.

Municipalities levy a real property tax up to 1.3% on the cadastral value of property. Transfer of real properties, which are not subject to V.A.T., may be taxed at a 6% tax rate, although this may vary according to each autonomous region.

Inheritance and gift tax ranges from 7.65% to 34%, although it may be higher in some autonomous regions.

Net worth tax is levied at progressive rates between 0.2% to 2.5%. Each autonomous region sets its own minimum amount exempt and its own scale rates. Madrid does not levy net worth tax.

The V.A.T. standard rate is 21%. Certain goods and services are taxed at 10%, 4%, 0% or are exempt.