Who has to pay Spanish taxes? A guide to taxes in Spain in 2019, including up-to-date tax rates, VAT in Spain, income tax in Spain, property taxes and taxes 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
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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 €22,000;
- you are self-employed or run your own business;
- you receive rental income of more than €1,000 a year;
- you have capital gains and savings income of more than €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 €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, and professional costs. Spanish tax rates are progressive.
Tax in Spain for non-residents
If you live in Spain for less than six months (183 days) in a calendar year, 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.
Dual taxation agreements
Spain has signed many treaties with other countries to avoid double taxation. 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. 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.
Spain’s tax rates in 2019 are as follows:
- Up to €12,450: 19%
- €12,450–€20,200: 24%
- €20,200–€35,200: 30%
- €35,200–€60,000: 37%
- More than €60,000: 45%
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. There are English-language guidelines available to help you fill out Form 30.
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 €8,000 and you have less than €1,600 of bank interest or investment income. Furthermore, the same applies if your rental income is less than €1,000 or you earn less than €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. To access this service you will need your digital identification certificate.
You will need to submit your tax return for the 2018 calendar year by 30 June 2019.
The process of managing your tax declarations, optimization, and planning in Spain may be much easier with the help of accounting and tax advice services such as Balcells International Lawyers Group, adm, or ATA Spain, who can assist you with every phase of the process.
Filing US taxes from Spain
Despite the fact that every US citizen and Green Card holder is required to file a tax return with the IRS even when living abroad, many expatriates still fail to do so. Many are unaware of these obligations, thinking that as an expat they do not need to pay or file tax returns in the US. You do! For more information and help filing your US tax returns from Spain, contact Taxes for Expats and see our guide to taxes for American expats.
The general flat income tax rate for non-residents is 24%, or 19% 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%.
- Investment interest and dividends are taxed at 19%, although are typically lower through double taxation agreements. Interest tax is exempt for EU citizens.
- Royalties are taxed at 24%.
- Pensions are taxed at progressive rates, from 8% to 40%.
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 joined Real Madrid in 2003.
Under the regime, you are only taxed in Spain on Spanish income at a rate of 24% up to earnings of €600,000. For more than €600,000, you’ll be charged at 45%. 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 €5,550, or €6,700 from age 65, and €8,100 from age 75.
If you have children under 25 living with you, you can claim an additional allowance of:
- €2,400 for the first child
- €2,700 for the second
- €4,000 for the third
- €4,500 for the fourth
- Additional allowance of €2,800 for each child under three years
If you have a parent or grandparent living with you and your total income is less than €8,000, you can claim an allowance of €1,150 if they are over 65 and €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 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 €3,400 for the second taxpayer, in addition to a general allowance of €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) is charged as follows:
- First €6,000: 19%
- €6,000–€50,000: 21%
- €50,000+: 23%
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 has since been reintroduced.
If your wealth is more than €700,000 you will be liable for wealth tax of 0.2–2.5% on net assets, although variations exist within regions. As well as the €700,000 tax-free allowance, homeowners are allowed a further €300,000 against the value of their main residence.
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% more than residents. Now the rate is around 1–7% for all, depending on region. If you have paid the higher rate in the past (from 1 January 2011–2015), you may be entitled to a refund.
In 2017, some regions such as Andalucía updated their inheritance and gift tax policies. This resulted 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:
- General: 21% on goods and services.
- Reducido: 10% on passenger transport, toll roads, amateur sporting events, exhibitions, health products, non-basic foods, rubbish collection, pest control and wastewater treatment.
- Superreducido: 4% on essential foods, medicine, books and newspapers.
In July 2017, the Spanish tax authority implemented a new VAT policy requiring all VAT payers (chiefly freelancers) to submit all invoice data online to the Agencia Tributaria within four days of the date of issuance, and no later than the 16th day of the month following its issuance.
The general rate of corporate tax in Spain is 25%. Newly formed companies pay 15% for the first two years of business. A reduction of 10% 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 installments in April, October and December, each installment usually being 18% 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
- (Nouns) Tax in Spanish: el impuesto, el tributo, la contribución
- (Adjectives) Tax in Spanish: de impuestos, fiscal, tributario, impositivo, imponible, contributivo
- (Verbs) Tax in Spanish: tasar (assessment), gravar impuestos.
- Agencia Tributaria: the Spanish tax authority provides information on all aspects of tax in Spain for individuals and companies.