Fiscal and Tax Specialists

Fiscal and Tax Specialists

WILL YOU PAY TAX IN SPAIN?

Unfortunately the answer is YES you will. You’ll probably pay the same taxes as any other Spanish national. All expatriates pay taxes in Spain. The difference is defining which ones and at what rates and those differences will depend on the amount of time you spend in Spain each year. There are as in all countries many different taxes, we will be covering in this segment the two main ones SGM Abogados deal with and the ones our clients contract the most.

If you are living and working in Spain you are liable to pay taxes on your income as well as your assets. You will also need to file a Spanish tax return. Whether or not you pay Spanish taxes on your worldwide income or only your Spanish income and this will depend on your residency status.

If you are classed an official resident in Spain you will be subject to Spanish tax on your worldwide income. This will be calculated on a progressive scale.

If you are a non-resident in Spain you will only pay tax in Spain on Spanish income which also includes potential income on Spanish property even if you don’t rent out your property.

 

Non-Resident Tax

If you live in Spain for less than 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 a flat rate with no allowances or deductions. If you are a ‘non-resident’ and own a property in Spain you will need to submit a tax return and pay Spanish property taxes for non-residents or imputed income tax on your property (whether you rent it out or not) as well as local Spanish property taxes.

SGM Abogados are experts in dealing with this particular tax taking the stress off you and leaving you more time to enjoy your holiday or second homes.

Resident Tax

If you’ve been living in Spain for 183 days or more of the calendar year or you have your main work and life interests 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 employment income is more than €22,000
  • you have a foreign pension of more than 12,643€ per year
  • you’re self employed or run your own business
  • you receive a rental income of more than €1,000 per year
  • you have capital gains and a savings income of more than €1,600 a year
  • it’s your first year declaring tax residency

You’ll have to declare all assets abroad worth more than €50,000 using the form ‘Modelo 720’. Your taxable income will be the income remaining after deductions. For example for contributions to social security in Spain, pension, personal allowance, and professional costs.

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Income Tax

Personal income tax in Spain is called ‘Impuesto de Renta sobre las Personas Fisicas’ or ‘IRPF’. Spanish income taxes are split between community and region each region sets its own Spanish tax bands and rates of income tax. How much income tax you pay depends on where you live. Here are the basic employment income tax rates as of 2019

Spain’s tax rates in 2019 are as follows:

  • Up to €12,450: 19%
  • €20,200–€35,200: 30%
  • €35,200–€60,000: 37%
  • More than €60,000: 45%

In reality, your total liable tax will be a calculation of the state’s general tax rates (above) plus the relevant regional tax rates.

Taxes in Spain

.. are split between state and regional governments with each of Spain’s seventeen autonomous regions deciding on its own tax rates. In short Spanish tax rates are different 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.