Every foreigner who is planning to move to Spain for permanent residence or wants to buy property in Spain is wondering in which country and how to pay taxes?
It is important to distinguish between two resident statuses: tax residency and immigration (resident for immigration).
The status of immigration resident gives the right to reside in Spain (in other words, it is obtaining a residence permit or permanent residence).
However, having a Spanish residence permit does not automatically make you a tax resident of Spain.
Definitions of Spanish tax residence
According to Spanish tax law, an individual is considered a Spanish tax resident if he meets one of the following conditions:
• Actual stay in the country for a certain amount of time.
A Spanish tax resident must reside in Spain for more than 183 days during a calendar year. These days are not necessarily counted sequentially. Therefore, you need to be very careful about your days in Spain.
• Having a business or place of work in Spain
• If your spouse or children reside permanently in Spain and are financially dependent on you.
What is the difference between tax resident and non-resident status in Spain?
⇒ Once you become a tax resident in Spain, you will pay tax on all your income from sources worldwide.
⇒ Non-residents will only be taxed on income received from Spanish sources.
Please note that all regions of Spain are autonomous in their legislation, which may differ in each region, especially with regard to taxation and tax rates.
Each Autonomous Community of Spain has the right to set its own minimum amount not subject to taxation or its own exemptions for property tax, wealth tax or gift tax.
Thus, tax obligations may differ from one autonomous region to another.
Taxes in Spain for non-resident foreigners
For example, if you have real estate in Spain and you are not considered a tax resident, this does not mean that you do not need to pay taxes.
A foreigner who is not a Spanish tax resident still pays taxes in Spain, but only on income earned in that country.
Special filing deadlines apply to non-residents, and generally non-residents must file income tax returns and pay taxes quarterly (depending on region).
• Income tax (non-residents’ income tax – NRIT) received in Spain for non-residents is charged at a flat rate of 24%.
For residents of other EU member states or European Economic Area (EEA) countries with which there is an effective exchange of tax information, the rate is 19%.
• Non-resident owner of Spanish real estate worth more than 700,000 euros is required to pay a progressive wealth tax from 0.2% to 3.5%.
• Annual property tax in Spain is paid by both residents and non-residents of Spain. The tax ranges from 0.3% to 1.1% of the cadastral value of the property.
• Dividends – 19%.
• Royalty – 24%.
• Non-residents are also required to pay Spanish capital gains tax on profits realized from the sale of any Spanish property.
Taxes in Spain for residents
If you are a Spanish tax resident, you are subject to tax on all your worldwide income, regardless of where it is based.
Individuals who are tax residents of Spain are required to report to the tax authorities the following assets and rights located outside Spain:
• Assets in any bank accounts in which the individual is the owner, authorized person or beneficiary.
• Shares, securities
• Real estate or rights to real estate.
• Life insurance policies.
Basic taxes for residents of Spain
• Income tax in Spain (personal income tax) is calculated on a progressive scale from 19% to 47%.
– up to 12,450 euros – 19%
— from 12,451 to 20,200 euros – 24%
– from 20,201 to 35,200 euros – 30%
– from 35,201 to 60,000 euros – 37%
– from 60,000 to 300,000 euros – 45%
– for incomes over 300,000 euros – 47%
• Spanish capital gains tax (also income from savings)
– up to 6000 euros – 19%
– from 6,000 to 50,000 euros – 21%
– from 50,000 to 200,000 euros – 23%
– income over 200,000 euros – 26%
• Social contributions
The general contribution rate is 6.35% for employees (depending on the type of contract), and 29.90% for employers + variable rates apply for industrial accidents.
• Wealth tax in Spain.
Also depends on the autonomous community in which you live. At the state level, a tax-free benefit of 700,000 euros has been established. Applicable wealth tax rates range from 0.2% to 3.5%.
• Gift and inheritance tax
The tax liability will depend on many factors (relationship between the taxpayer and the donor, degree of relationship, etc.).
General tax rate from 7.65% to 34%.
• Payments and fees when purchasing real estate
— Primary real estate market. The fee for transferring real estate into ownership is 10% and stamp duty is from 0.5% to 1.5%.
– Secondary market. Real estate transfer tax from 6% to 10%.
• Annual property tax in Spain
Depending on the cadastral value and location:
— Property located in rural areas from 0.3% to 0.9%.
— Urban real estate from 0.4% to 1.1%.
• Tax on pensions – at a progressive rate from 8% to 40%.
⇒ In addition to the main taxes in Spain, the following may be levied: motor vehicle tax; tax on construction, installation and construction work; local government tax; special tax on gaming income; waste removal fees, etc.
