Spanish Tax System Guide – Expat Essentials 2024

Getting to grips with the Spanish tax system should be high on your priorities. Even if you don’t work in Spain, there are still Spain taxes that may impact you as an Expat living in Spain. We’ll look at income tax, social security, inheritance tax, VAT (or IVA), property taxes, and wealth tax in Spain. We’ll also explore the exciting new Spanish tax system for entrepreneurs, remote workers, and digital nomads.

Spanish Tax System Overview

Spain collects tax at a national, regional, and local level. Each level of government covers specific economic activity areas to collect revenue.

The Agencia Española de Administración Tributaria (AEAT) administers national taxes.

Spanish Tax System Year and Calendar

The Spanish tax year follows the calendar, so your assessment is from 1 January – 31 December each year. These dates are the same for individual and corporate tax assessments.

Key Spain Tax Dates – Filings

• Modelo 720 (Global Assets) filing – 31 March
• Income tax return filings open in mid-April.
• Income tax return filings close on 30 June.

Key Spain Tax Dates – Payments

• First or full income tax payment: 30 June.
• Second income tax payment (if installments authorized): 30 October.

Becoming a Tax Resident in Spain

The Spanish tax system classifies you as either a resident or a non-resident. This classification significantly impacts the taxes you are liable to pay in Spain. The two taxes impacted are income tax and wealth tax.

The Spanish government will generally consider you as a resident for taxation (a fiscal resident) if:

• You spend more than 183 days in a calendar year in Spain. This time includes temporary departures from Spain (like a weekend away).

Or

• Spain is your main base or center of economic activity. The government could decide you are a resident if:
  • Your spouse and children live in Spain.
  • You have a home, investments, or business in Spain.
  • You work for a company in Spain.

Note: If you become a tax resident in Spain, you are taxable for the full calendar year, not just part of the year. With tax deductibility under dual tax relief, you won’t pay tax on this income in your previous tax residence country. There is an exception: if you have Beckham Law tax status (for example, under the Digital Nomad Visa), your year will be split as you are effectively taxed as a non-resident.

Can You Avoid Spanish Tax Residency?

Yes, but only in very specific circumstances. The 183-day rule is almost always dominant and takes precedence. So, don’t get your hopes too high.

However, if you can get a tax resident certificate from a country that has a tax treaty with Spain, you may be able to argue the case. You’ll need to have strong links with another country to have them issue your residency certificate. However, the certificate is only valid for one year; you’ll need to renew it annually.

Note: The Spanish tax authority won’t automatically accept any certificate and look to the 183-day rule first. USA, UK, and EU certificates are more easily accepted. Other certificates may be questioned more closely.

See Appendix 1 for Spain Double Tax Treaty (DTT) Countries

Income Tax in Spain – Impuesto De Renta Sobre Las Personas Fisicas (IRPF)

Your taxable income and income tax rates depend on three things:

1. Where you are a resident for taxation.
2. Your global income.
3. Where you live in Spain, tax rates differ between regions. Income tax rates are made up of two parts. 50% is a national tax with Spain-wide rates set by the Spanish government. The other 50% is a regional income tax, with rates set by each of the 17 autonomous regions. Regions like Andalusia and Catalonia have higher income tax rates than, for example, Madrid.

Non-Residents Income Tax (NRIT)

Fiscal non-residents only pay tax on specific income. This can include income from their own Spanish properties and some income generated in Spain.

The non-resident income tax rate is a flat rate:

• 19% (EU or EEA citizens)
• 24% (non-EU/EEA citizens)

You are unlikely to be able to claim any deductions on this income.

Capital gains and dividends are taxed at 19%, regardless of your citizenship.

Spanish Resident Personal Income Tax (IRPF)

Important: If you are a Spanish fiscal resident, you will pay Spanish tax on your global income. So, money earned in Spain or any other country is all added together. Your tax return is called la renta.

Remember, your region sets the tax rate of 50% of your overall income tax liability. So, you need to know your regional income tax rate to calculate what you owe correctly.

The national Spain income tax rates for 2024 are:

From	To	Percentage
–	12,450	19%
12,451	20,200	24%
20,201	35,200	30%
35,201	60,000	37%
60,001	300,000	45%
300,000	Plus	47%

Note: As a fiscal resident, there are many deductions you can claim depending on your circumstances. A good Spanish Tax advisor will help you identify what you can declare.

The Beckham Law

The Beckham law can be an excellent option for many Expats paying taxes in Spain.

If you have moved to Spain to work, you could pay lower tax rates for up to six years.

Important: You must apply within six months of starting your employment.

• If you qualify, you’ll pay a flat 24% tax on your annual income up to €600,000. Income over €600,000 is taxed at 45%.
• Spain will only tax you for income earned in Spain.

Note: If you have lived in Spain in the prior ten years, you may not qualify for the Beckham Law.

US Expat Taxes

Note: All US citizens must file an annual US tax return. This doesn’t mean you’ll pay double tax if you pay tax in Spain. Spain and the USA have a double tax treaty (DTT). This can be a concern for Americans moving to Spain from the USA, but it can be managed.

Check out this article on US Expat Taxes that covers this topic in detail.

Spanish Startup Law Tax System

The Spanish tax system had a significant update in 2022. This law change has awesome tax opportunities for startups, digital nomads, and remote workers. Even better, you may be able to defer your first two years’ tax.

Spanish Startup Tax

If your company qualifies as a startup, you could pay just 15% corporate tax for up to four years.

Tax for Digital Nomads and Remote Workers in Spain

Holders of the Spanish Digital Nomad Visa could get an awesome tax break. Effectively, you are taxed as a non-resident. You’ll pay a flat rate of 24% income tax. And you’ll be exempt from the Spanish Wealth tax.

Spain Social Security

Most people working in Spain must register and pay into social security. These payments fund healthcare, unemployment, pensions, and other social programs. The system is managed by Tresorería General de la Seguridad Social (TGSS).

Both employers (29.9%) and employees (6.35%) contribute payments. These rates can change depending on the contract type and the nature of the work.

The rates are different for self-employed people, with a general rate of 30.6%.

There are some possible exemptions that Expats can explore with their tax advisor.

Spain Wealth Tax – Impuesto De Patrimonio

Only Spanish tax residents are liable for this tax on your worldwide assets. Non-residents are only liable for tax on their Spanish assets. The value is as of 31 December each year.

The tax-free thresholds and tax rates vary, depending on the region where you are resident. If you are a non-tax resident, you’ll pay the national level, regardless of where you live in Spain.

Like most of the Spanish tax system, the wealth tax is progressive. This means the more assets you own, the more tax you’ll pay.

Spain Wealth Tax Percentages

Spain’s Wealth tax is only payable on assets over €700,000 (€500,000 in Cataluña and €600,000 in Valencia).

The Madrid and Andalusia regions give you a 100% rebate on this tax – you’ll pay zero if you live in these regions.

The standard national rate is from 0.2% on assets up to €167,129 to 2.5% over €10,695,996 of eligible net asset value.

Regions with different thresholds or percentages include:

• Asturias
• Baleares
• Cantabria
• Cataluña
• Extremadura
• Región de Murcia

A Modelo 720 is used to declare your non-Spanish assets.

The 60% Rule

The total of your wealth tax and income tax together can be at most 60% of your taxable income. The exception is if your final wealth tax bill is less than 20% of the original wealth tax.

Examples of Assets Included in the Wealth Tax Calculation:

• Real Estate & Property
• Savings
• Investments
• Luxury items (jewelry, boats, cars, art, etc.)

Examples of Assets Excluded From the Wealth Tax Calculation:

• Your home (up to €300,000)
• Household furnishings
• Spanish Historical Heritage Assets
• Pension rights

Value Added Tax (VAT) in Spain – Impuesto Sobre El Valor Añadido (IVA)

Spain’s consumption tax is added to most retail sales and professional services. The Canary Islands, Ceuta, and Melilla don’t have IVA; IGIC is their consumption tax.

IVA is generally itemized on any receipt, invoice, or bill.

• IVA is 21% across the country on many items, including clothing, cars, fuel, appliances, alcohol, and utilities.
• There’s a reduced 10% IVA on some items, including hotels and restaurants, leisure activities, glasses, concerts, and property purchases of new builds.
• And finally, there is 4% IVA on essential foodstuffs, medicines, school supplies, and books.

Some professional services (including medical, dental, insurance, and education) are IVA-free.

Spanish Inheritance and Gift Tax

You may need to pay inheritance tax if you inherit assets as a Spanish tax resident. It is a progressive tax starting at 7% and going up to 34% – but this does vary in some regions.

Spanish Property Taxes

Owning a property in Spain means you’ll pay property taxes. The tax is usually payable in the last quarter of the year.

Property Ownership Tax – Impuesto Sobre Bienes Inmuebles (IBI)

This is a local tax levied by the Town Hall where your property is located. The amount you pay is calculated using your property’s official value, called the valor catastral.

 This tax is payable by resident and non-resident owners alike.

The exact amount varies by municipality. Most are in the range of 04% – 1.1% of the rateable value or valor catastral.

Note: Buying and selling property attracts different taxes (including capital gains tax). Please see our Guide to Buying & Selling Property in Spain.

Refuse Collection – Exacciones Municipales

Municipalities also collect small levies for garbage collection, street maintenance, etc.

Spanish Capital Gains Tax – impuesto sobre plusvalías

You may need to pay capital gains tax on profits from the sale of assets. And this can include the sale of real estate, including your home. There is an exception (main home exemption) if you reinvest the sale proceeds of a home into a new primary residence.

While both residents and non-residents pay capital gains tax, the rates differ.

The Spanish Capital Gains tax rate for 2024 is progressive:

From	To	Percentage
0	6,000	19%
6,001	50,000	21%
50,001	200,000	23%
200,001	300,000	27%
300,001	Upwards	28%

Note: You only pay tax on the profit you make on the transaction. So, here’s a property transaction example.

• House purchase price: €200,000 (including taxes, fees, etc.).
• House sale price: €300,000 (after real estate agent fees, etc.).

Profit: €100,000 – This is the amount that attracts capital gains tax.

The easy way to manage Spanish Tax as an Expat

We really struggled to get our heads around our Spanish tax obligations when we arrived. There was a lot of conflicting advice, and we narrowly avoided a significant penalty in our second year here.

What changed? We found a Spanish tax expert who specializes in Expat taxes. There are many fantastic tax specialists in Spain, but Louis, our advisor, has four essential qualities.

1. Louis is an experienced Spanish tax law expert.
2. His practice specializes in Spanish Tax for Expats, mainly from the USA and the UK.
3. Louis and his team speak fluent English.
4. The firm is focused on giving you clear advice and proactive support.

You can book a consultation here to see if Louis would be a good fit for helping you navigate the Spanish tax system.

Spanish Tax System – FAQ

Appendix 1 – Countries That Have Double Taxation Treaties With Spain

See the Agencia Tributaria website for tax treaty details.

• Albania
• Germany
• Andorra
• Saudi Arabia
• Algeria
• Argentina
• Austria
• Australia
• Armenia
• Azerbaijan
• Belarus
• Barbados
• Belgium
• Bolivia
• Bosnia and Herzegovina
• Brazil
• Bulgaria
• Cape Verde
• Canada
• Qatar
• Czech Republic
• Chile
• China
• Cyprus
• Colombia
• South Korea
• Costa Rica
• Croatia
• Cuba
• Denmark
• Ecuador
• Egypt
• United Arab Emirates
• Slovakia
• Slovenia
• United States
• Estonia
• Philippines
• Finland
• France
• Georgia
• Greece
• Netherlands
• Hungary
• India
• Indonesia
• Iran
• Ireland
• Iceland
• Israel
• Italy
• Jamaica
• Japan
• Kazakhstan
• Kuwait
• Latvia
• Lithuania
• Luxembourg
• Macedonia
• Malaysia
• Malta
• Morocco
• Mexico
• Moldova
• Nigeria
• Norway
• New Zealand
• Oman
• Pakistan
• Panama
• Poland
• Portugal
• United Kingdom
• Dominican Republic
• Romania
• Russian Federation
• El Salvador
• Senegal
• Serbia
• Singapore
• South Africa
• Sweden
• Switzerland
• Thailand
• Trinidad and Tobago
• Tunisia
• Turkey
• States of the former Soviet Union (except Russia)
• Uruguay
• Uzbekistan
• Venezuela
• Vietnam