Income Tax in Spain: Am I liable to pay it?
If you are living or working in Spain, you will be liable to pay Spanish taxes on your income and assets and will need to file a Spanish tax return.
Who is a resident?
The first question to answer is who is considered a resident for tax purposes. This consideration must not be confused with the legal status of resident, which I have explained in detail y my previous post «Living and working in Spain».
Natural persons (private individuals) are considered resident in Spain for tax purposes if they remain in Spain for more than 183 days of the calendar year.
Anyone who does not find themselves in this situation will be considered a Non-Resident Income Tax payer (see our previous post «Non-Resident Income Tax: What is it and why do I have to pay it?»).
Who has to pay taxes in Spain?
As a Spanish resident, you will need to submit a Spanish tax return and pay Spanish Income Tax, at progressive scale rates, on your worldwide income if:
- your annual income from one source of employment is over 22.000 €;
- you are self-employed or run your own business;
- you receive rental income of over 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;
Among other examples.
You will have to declare all overseas assets worth more than 50.000 € (using Form 720). Your taxable income is the income left after deductions for social security contributions, pension, personal allowance, professional costs, etc.
Do I have to register for taxation in Spain?
You will need to register for tax in Spain with the Spanish Tax Authority, whether you are a resident or non-resident.
However, in recent years the police and the Foreign Office have begun registering anyone who passes through their system, which has unfortunately resulted in many foreigners being incorrectly registered. It is therefore very important to make sure what you are considered to be liable for by the Spanish Tax Office, as many have been registered as tax residents without their knowledge.
What are the rates?
Personal Income Tax is split between state and region and while the state has reduced taxes and simplified the income bands, this has not happened right across Spain. Each region sets its own tax bands and rate of income tax, so how much income tax you pay depends on where you live.
Income Tax rates
| From
(Euros) |
To
(Euros) |
State tax
% |
Regional tax
% |
Total tax
% |
| 0 | 12.450 | 9.5 | 9.5 | 19 |
| 12.450 | 20.200 | 12 | 12 | 24 |
| 20.200 | 35.200 | 15 | 15 | 30 |
| 35.200 | 60.000 | 18.5 | 18.5 | 37 |
| 60.000 + | 22.5 | 22.5 | 45 |
If you are resident in Spain you will be subject to Spanish taxation on your worldwide income.
When do I have to pay?
The end of June is the deadline every year, by which time residents must have filed their annual Income Tax return for the previous year, and you can start submitting your tax returns from the beginning of April (exact dates vary each year).
Not submitting your tax return or submitting it incorrectly can result in expensive fines, so it is important that you seek professional advice and assistance for peace of mind.
Gabriella Mary Trussler Rowland
Lawyer
4408 Ilustre Colegio de Abogados de Almería
allowances for the inheritance of the deceased’s main residence by spouses, ascendants or descendants, or collateral relations over 65 years-old. Specifically, a 100 % allowance is applied when the value of the property is under 123,000 €, which reduces 1 % each time as the property value band increases, with the minimum allowance being 95 % when the property is valued at anywhere over 242,000 €.
Will this apply to UK residents post Brexit?
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