Are you a foreigner who lives and works in Spanish territory? So, you need to familiarize yourself with the taxes in Spain. Remember that ignorance of tax regulations does not exempt you from its compliance!
Am I obliged to pay taxes in Spain?
Foreigners are required to pay taxes in Spain in the following cases:
- Residents: if you reside in Spanish territory for more than 183 days a year (not necessarily consecutive), you must pay taxes in Spain on world income that exceeds certain limits.
- Non-residents: if you reside in Spanish territory for less than 183 days a year, your tax liabilities are limited to income and real estate in Spain.
It is important to bear in mind that Spain has signed multiple double taxation agreements to avoid duplication in the payment of taxes. Some of these agreements are those of the United States, Australia and the United Kingdom.
Spanish taxes you should know
The Personal Income Tax (IRPF) has a state part (the same for the whole country) and a territorial part (different for each of the autonomous communities). This is the basic tax level required for all tax residents.
The Wealth Tax, the Financial Transaction Tax (ITF) and the Digital Services Tax (DST) are some of the most important Spanish property taxes. Only people and companies with highly relevant levels of world wealth are subject to them.
Other taxes in Spain are VAT and Corporation Tax (both correspond exclusively for corporates). For its part, the Inheritance and Donations Tax only applies to individuals.
How to pay Spanish taxes?
Registration: the first step to pay taxes in Spain
Whether you are a resident or not, the first thing you should do to pay Spanish taxes is to fill out form 30 to register with the Spanish Tax Agency (AEAT). To carry out this procedure, you must obtain the foreigner identification number (NIE) at the police station within 30 days of your arrival in Spain.
Filing your tax return
The tax return is taxed on the income obtained during the Spanish fiscal year (which runs from January 1 to December 31 of the previous year).
The tax return must be submitted in the first year of tax residence in any case. The following years you will only have to do it when you exceed the following estimated limits in annual calculation:
- € 8,000 of global income (if you have more than € 1,600 of bank interest or investments).
- € 1,000 of rental income
- € 22,000 salary
To file the personal income tax return, you must fill in form 100 (residents) or, where appropriate, forms 149/150 (non-residents). You can do it online using the digital identification certificate.
If you are an expatriate US citizen in Spain, you must continue presenting your tax return with the IRS. However, you can carry out this management from Spanish territory.
What is the tax rate you have to pay?
- If you are a resident of Spain, you will be subject to a variable tax rate that will depend on your place of residence and income level.
- Non-residents pay an income tax rate of 24% (EU citizens) and 19% (EEA members). In addition, there are other percentages for specific income (eg: pensions are taxed with progressive rates between 8 and 40%).
- Are you a foreigner who has come to Spain to work under the conditions of the so-called “Beckham law“? Then, you can benefit from a tax rate of 47% for income over € 600,000 and 3% for interest over € 200,000.
The tax system in Spain is enormously complex for both Spaniards and foreigners. Consequently, it is highly recommended to seek professional advice from a tax advisor.