As is true in any country, Spanish tax is a complex matter and in almost all cases, you should use the services of an expert tax advisor. However, it’s useful to understand the main aspects and know the basics to ensure compliance. This guide to Spanish tax lists the things we should think are the most important.
Spanish Tax Resident
In common with most countries, Spanish legislation rules that you are tax resident (and liable for taxes) if you live in the country for at least 183 days a year. You are also deemed resident if your main professional activity is in Spain – for example, if you work in Spain, run a business or are self-employed there.
In addition, if your dependents (spouse and children) live in Spain, you are also deemed tax resident.
Spanish Tax Year
The tax year in Spain is the calendar year and runs from January 1st to December 31st. Filing dates vary depending on the tax return.
Double Tax Treaties
Spain has double taxation treaties with a long list of countries including the UK and Ireland. These treaties ensure that you do not pay tax on the same income twice (in two countries). See a list of countries that have a double-taxation agreement with Spain.
Foreign Assets for Spanish Tax Residents
If you’re tax resident in Spain and own assets in countries other than Spain worth over €50,000, you must declare them in Spain. Examples of assets include property, shares and bank deposits and funds.
You must declare the assets owned in the previous tax year by March 31st of the following year. For example, assets you owned outside Spain during 2020 must be declared by March 31st 2021.
Need expert advice? Find out how we can help you with Spanish tax.
Income Tax for Residents
Spanish tax residents are liable for tax on general income and income from savings. Note that you are liable for income tax on income from your worldwide assets.
Tax on general income is applied on a sliding scale from 19% to 45%. Tax on income from savings (e.g. interest and dividends) is levied also on a sliding scale, but from 19% to 23%.
‘Beckham Law’ Exception
Under the provisions of the so-called Beckham Law, it’s possible to live and work in Spain yet be considered non-tax resident by the Spanish authorities. Find out more.
Annual Income Tax Returns for Residents
You must file your annual tax for the previous year between April 1st and June 20th. So, for example, you submit your tax return for 2020 between April 1st and June 20th 2021.
Income Tax Allowances
Spanish legislation allows for personal allowances plus those for dependents (older and younger) as follows (2021 figures):
Personal allowance – €5,500. If you are over 65, you have €1,150 extra and if you are over 75, you can apply an additional €1,400. So, if you are 76, your total personal allowance would be €8,050.
Dependents allowance – you can apply varying amounts for dependent spouse and children as well as older relatives (over 65) or relatives with disabilities.
Read the full list of allowances.
Deductions – there are also numerous tax deductions, some of which depend on the autonomous region you live in. For example, Andalusia has some different tax deductions from the Canary Islands.
Income Tax for Non-Residents
If you are not tax resident in Spain but own assets in the country, you are liable for income tax on those. For example, on rental income from a property you let or interest earned from a deposit in a Spanish bank account.
Non-resident income tax in Spain is levied at a flat rate of 19% if you’re a national from an EEA country or at 24% if you’re from a non-EEA country (including the UK since January 1st 2021).
Professional Advice From the Experts
Tax matters are invariably complex and even more so if you don’t speak fluent Spanish. We therefore recommend that you always take advice from a professional. This will ensure you are fully compliant with tax laws in Spain and will probably save you money in taxes!
Get in touch for a free consultation with our team now.
Maria Luisa Castro
What is the deadline for non residents tax payment…is it 31 March or is it 31 December?
Deadline for filing Non Resident TAx depends on the type of income, as follows:
Income derived from transfers of real estate: within three months once the period of one month has elapsed from the date of transfer of the real estate.
Income imputed from urban real estate: the calendar year following the accrual date (December 31 of each year). In the case of electronic filing, the payment of the tax debt can be domiciled from January 1 to December 23.
Rest of income:
Self-assessments with results to be paid: the filing and payment deadline will be the first twenty calendar days of the months of April, July, October and January, in relation to the income whose accrual date is included in the previous calendar quarter. In the case of electronic filing, the payment of the tax debt can be domiciled from April 1 to April 15, July, October and January, respectively.
Zero installment self-assessments: the submission deadline will be from January 1 to 20 of the year following the accrual of declared income.
Self-assessments with results to be returned: they may be submitted as of February 1 of the year following the accrual of the declared income and within a period of four years from the end of the declaration period and income of the withholding. This period will be applicable to all self-assessments, regardless of whether the refund derives from the internal regulation or from an Agreement to avoid double taxation, even in those cases in which an Order for the development of the Agreement sets a shorter period. The term for the presentation of the self-assessment will be understood to have concluded on the date of its presentation.