por Gabriella Trussler | Abr 6, 2017 | Tax
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
por Gabriella Trussler | Nov 25, 2016 | Tax
The determining factor regarding what kind of Income Tax a natural o legal person pays in Spain is residence. Residents pay regular Income Tax (IRPF) or Corporation Tax (IS), and non-residents, both natural and legal persons, must pay Non-resident Income Tax (IRNR).
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 insofar as they obtain income or own real-estate in Spanish territory.
Income to be declared on real-estate in Spain
According to Spanish law, non-resident natural persons who own urban real-estate assets in Spanish territory, for their own personal use, rather than for economic activity or which are vacant, are subject to Non-Resident Income Tax for the income obtained from these buildings. To clarify, although there is no actual income received in these cases, a “fictional” income is calculated based on the value of the said property. This is not to be confused with the local Property Tax (I.B.I.), the payment of which does not exempt you from Non-Resident Income Tax.
If you are renting out your property you will have to declare the income you obtain from said rental.
Will I be notified I have to pay?
The system for collecting taxes in Spain is different to that in many other countries. Under the Spanish system you will not necessarily be reminded that you owe tax, it is your responsibility to make sure you are up to date on your tax payments.
However, this does not mean you won’t be caught for not paying your Non-Resident Income Tax. The Spanish Tax Authority is increasingly cross-referencing information to identify where there are irregularities (including monitoring electricity consumption and Land Registry records, among other measures).
A letter may be sent to your Spanish address notifying you of your obligation to pay Non-Resident Income Tax, though this is not necessarily the case and not receiving such a letter does not exempt you from your tax obligation. Even in the event that this letter is sent out, if you are not there to receive it at the time it is issued, as many who are not residing permanently in Spain may not be, then the letter will be returned to the Spanish Tax Authority.
When do I have to pay?
The 31st December is the deadline every year, by which time non-residents must have filed their annual Non-Resident Income Tax return for the previous year (e.g. deadline for 2019 tax return is 31st December 2020).
Consequences of failing to pay
The main consequence of non-payment is that the debt with the Spanish Tax Authority will be held against your property and, as a result, will have to be settled before you are able to sell your property, or before your heirs are able to inherit it.
In addition, you may have to pay late payment interest, as well as the appropriate tax sanctions, the funds in your bank account could be seized, or you could become the subject of one of the Spanish Tax Authority’s anti-fraud campaigns.
It is for all of these reasons that it is essential that non-residents seek a professional and experienced fiscal representative who is in a position to make sure your taxes are paid on time, receive notifications on your behalf, represent you to the Spanish Tax Authority, inform you of changes to Spanish tax law and answer all your queries on the matter.
Gabriella Mary Trussler Rowland
Lawyer
4408 Ilustre Colegio de Abogados de Almería
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