For most of us, taxation is something best left to a reasonably-priced accountant.

Galician taxes are best for families with children

But what many foreigners do not realise - and perhaps what even the best agents do not tell you - are the variations in taxation which exist throughout the country.

Spain is made up of autonomous communities or regions which are able in most cases to fix a number of important taxes.

So, for example, if you have children, you will get a much better deal if you live in Galicia, in north-west Spain.

There you can claim back the cost of a nanny to look after your brood.

But there are also distinct advantages of living in Navarra, in the north-west, where you can claim back up to EUR 1,535 in child benefit for your firstborn child.

Elsewhere in Spain, you are only entitled to a rebate of EUR 1,200.

When it comes to property, capital gains tax – which you pay when you buy a new home – has risen by between 6 and 7 percent in all parts of the country over the past year. The exceptions are the Basque Country and Navarra where the same tax has only risen by 5 and 6 percent respectively.

However, in Aragon, in eastern Spain, if you have a big family, you are only liable to pay as little as 2 percent.

As the Spanish birth rate falls, the idea is to try to encourage larger families and make buying homes cheaper.

Inheritance tax is another minefield.

Capital gains tax has risen across Spain

But if you have a similar property house in Las Palmas in the Canary Islands and you want to transfer ownership to a member of your family, you may pay up to 34 percent.

Carlos Lopez, associate director of company consultants BDO Audiberia, said: "The regional disparities are putting at risk the social cohesion of Spain.

"And they are the result of a lack of discipline among the Autonomous Communities in their spending policies."

But for those with large families, for example, the tax discrepancies can cause real problems if they live in parts of Spain which are less favourable to those with children.

Jose Ramon Losana, who is the head of a large family and president of the Federation of Large Families, pulls no punches in his criticism.

"This is a kingdom of fiefdoms. Each one does what they want. There is no State policy or party or nothing."

The Spanish Capital magazine published a detailed comparison of the best and the worst in terms of tax on housing, families, work and inheritance duties on properties.

Here we present a digested version of their findings.

THE FAMILY

The best: 

Navarra, described as a 'fiscal paradise', where you can claim up to EUR 1,535 back from income tax in terms of child benefit for your first child.  Average in rest of Spain: EUR 1,200.

Galicia also offers rebates of up to EUR 180 per year to care for children under three.

The worst:

Asturias and Extremadura, northern and western Spain – no rebates for children.

Others:

Catalonia – EUR 150 per year per child; Madrid - EUR 600-900 per family depending on income. Andalusia –EUR 50 per child.

HOUSING

The best:

Only Valencia and Asturias offer benefits to rent homes in a country where affordable homes are in short supply.

 The worst:

Madrid – If you buy a city centre home, 4 percent more capital gains tax.

Average capital gains tax: average 6-7 percent.

Larger families, younger people and the disabled benefit most on average from cash they can claim back.

Others:  

 Madrid (7 percent), Catalonia (7 percent) Andalusia (7 percent). 

EMPLOYMENT

The best:

Companies face general taxes in Basque Country and Navarra (32.5 percent) but average is 35 percent. They also offer rebates of between 10-15 percent for investing in your business. Canary Islands offer rebates to promote business. In Andalusia and Asturias benefits are offered for self-employed people.

INHERITANCE

The best:

Basque Country – nothing to pay. Asturias, Cantabria and Galicia – reformed this tax in 2004 so direct family pay little

Average: 7.3 percent

The worst:

Canary Islands –can pay up to 34 percent

Further reading: 

www.capitalrevista.es

[June 2004]

[Copyright Expatica 2004]

Subject: How your taxes vary across Spain, Living in Spain