Tag Archive for: Personal taxes

What is a Gestoria?

In Spain, the word “Gestoria” or “Gestor” is someone who you go to for difficulties with Spanish bookkeeping, accounting or taxes. Whenever you have any problem or are stuck in financial or administrative difficulties, people advise you to go to Gestor, but what is a Gestor?

On one hand, a Gestoria helps companies, mainly, because it is an administrative link between the public administration and society. On the other hand, a Gestoria can provide functions for a private person. In short, the gestor performed actions in the interests of another person.

What is its primary role?

The role of Gestoria is to interface between the administration and the public. Generally, you don’t need an interface in most countries, but having a Gestor is quite necessary if you are living in Spain. Here is a primary function performed by a Gestor in Spain:

  1. Promotion of administrative procedures carried out on behalf of a third party. It would encompass the filing of tax returns.
  2. It offers administrative support in various areas such as tax management, accounting management, or labor management. The agency serves as a support and guidance for a person or a company to adapt its accounting to a particular territory.
  3. Ability to issue individual certificates or public deeds that is valid for future general procedures. Often these companies have the public authority or permission to create documents or certificates of general validity.
  4. The collaboration of an external administrative manager is often essential for the efficient management of a company, as is the case with SMEs or Startups.

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Gestoria In Spain

What differentiates a Gestoria from a consultancy?

One way to know the functions of a Gestor is by comparing it with a consultancy. It is common to confuse as both concepts have some common factor. A Gestoria deals with broad aspects of the administrative management of a company. On the other hand, consultancies have their role limited to tax, accounting, and labor advice. However, Gestoria offers a broader service of procedures:

  • Tax procedures such as filing taxes in the Public Tax Administration
  • Management of accounting and billing of a business
  • Management for the constitution of a company
  • Processing of grants and subsidies, both public and private
  • Legal and official representation between the company or self-employed and the public administration
  • Management and processing of self-employed registrations and cancellations
  • Help and processing for the acquisition of a billing program and even its subsequent management
  • Labor procedures such as the registration and termination of workers, hiring, firing and payroll management, and other practices with Social Security

What can a SublimeSpain do for my company?

SublimeSpain will help you with the processing of public deeds, all kinds of certificates, property transfer taxes and documented legal acts, import and export of vehicles, registrations, transport cards, and registry reports, among many others. Considered in a grouped manner, the agency provides the following services to companies:

  1. Tax procedures: The agency keeps the company’s accounting in terms of policies as relevant as the withholdings to be applied.
  2. Study processing: the processing of subsidies and studies requires considerable paperwork to entrust to the gestoria.
  3. Labor procedures: The preparation of payroll is the most common service; it includes registration processing, forecasting expenses, and workers’ cancellation.
  4. Business management: The agency can offer management solutions adapted to the company’s needs, which will cover different services.
  5. Certificates: The processing of very various certificates is another of the tasks carried out by agencies.
  6. Creation of companies: The consultancy can facilitate the procedures to create anonymous and limited companies by delegating all the paperwork.

SublimeSpain can also perform other services such as procedures related to inheritances, licenses, or various administration certificates, immigration, and even traffic fines.

Why SublimeSpain?

The SublimeSpain administrative managers are professionals who graduated in Law, Economics, Business, Politics and Management, and Business Administration. At SublimeSpain, you will connect with a professional team of business lawyers. Here you will get advice on the creation of a company, as well as on business management.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Get taxes done more quickly and efficiently with our tax services in Spain, contact SublimeSpain.

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Tax in Spain for Residents: Everything You Need to Know

If you are a tax resident of Spain, there are certain tax rules that apply to you. In this blog post, we will go over the different types of taxes that you must pay if you are a resident for tax purposes in Spain. Keep reading for more information.

Tax Non-Residency vs Tax Residency in Spain

According to Spanish law, you will be considered a tax resident if you spend more than 183 days in the country per year. This is different from many other countries, which typically use a 12-month period for tax residency purposes.

It’s important to note that the 183 days don’t have to be consecutive. So, even if you only live in Spain for part of the year, you could still be considered a tax resident. This is something to keep in mind if you’re planning to work or start a business in Spain.

Other reasons you may be considered a tax resident in Spain are:

  • Having economic interests in the country. In other words, you realize your main professional activity in Spain.
  • Having a marriage in Spain or having children or a spouse living in Spain.

Being a tax resident has significant consequences. For example, tax residents will be subject to Spanish taxes on their worldwide income. While non-residents are only taxed on their income in Spain.

Difference between tax residency and residency permits

Tax residency and residency permits are two completely different things. Tax residency is determined by a number of factors, including where you live, work, and have assets. Residency permits, on the other hand, are issued by the government and grant you the right to live and work in a country. In order to obtain a residency permit, you usually need to meet certain requirements, such as having a job or being enrolled in a school. While tax residency can be complex, residency permits are typically quite simple: if you have one, you can stay; if you don’t, you need to leave.

How does the Spanish Tax System work for tax residents?

The three important things to keep in mind when filing taxes as a Spanish resident are:

  • File your taxes on time. For example, Spanish tax law requires that taxpayers file their income taxes by April 30th of each year.
  • Keep accurate records of your income and expenses. The Spanish tax authorities can request documentation at any time.
  • Be aware of the various deductions, benefits, and double taxation treaties. This way you don’t overpay.

How to file your Spanish taxes as a tax resident?

Spanish residents who want to file their taxes will need to follow a few simple steps.

  1. Gather all of the necessary documentation. These include statements, tax numbers, certificates and any other relevant financial information.
  2. Fill out the relevant tax forms at the Spanish Tax Authorities. The form will ask for basic personal information, as well as information about income and deductions. Once the form is complete, Spanish residents can submit it online.
  3. Pay or receive any taxes that are owed. Spanish residents can expect to receive a refund if they have paid more taxes than they owe.
  4. Use the validation service on the Agencia Tributaria website. Check that your tax return is complete and accurate.

If your taxes seem complicated, you can also choose to have a professional prepare your taxes for you. This is very common in Spain.

Types of taxes in Spain for Residents

There are several different types of taxes in Spain, and if tax residents need to pay these taxes depends on their personal circumstances. Typical taxes for tax residents are:

  • Income tax: Paid by anyone who earns money from employment, self-employment, investments or renting out property
  • Wealth tax: Paid by residents on the size of their worldwide assets
  • Value-added tax (VAT): Paid on all goods and services bought in Spain
  • Inheritance tax: Paid by residents over the worldwide assets they inherit
  • Property tax: Levied on owners of buildings or land

As you can see, there are a variety of taxes in Spain, and the amount that each person pays will depend on their individual situation. Below we go through each individual tax.

Income tax in Spain for Residents

The main tax you will pay is the Spanish income tax. Spain has a progressive income tax system, meaning that the more you earn, the higher percentage of tax you pay. Income tax is called IRPF in Spain. Residents of Spain are taxed on their worldwide income, regardless of where it is earned. The income tax is split into two types to calculate it.

General taxable base

The general taxable income base is the income on which all taxpayers must pay taxes at the progressive income tax rates. This includes items such:

  • Employment
  • Self-employment
  • Pensions
  • Investments
  • Rental property
  • Capital gains

The income tax depends on the autonomous region where you live. The general income tax rates for residents of Spain are as follows:

  • Up to 12,450 euros – 19%
  • 12,451-20,200 euros – 24%
  • 20,201-35,200 euros – 30%
  • 35,201-60,000 euros – 37%
  • Over 60,000 euros – 45%

Income tax from employment is will have their taxes deducted at the source by their employer. These are known as ‘retenciones’. The amount of tax you pay will depend on your income and your personal circumstances. When you file your annual tax return, you may be entitled to a refund if you have paid too much tax during the year.

Income tax on savings

Savings taxable income is basically composed of the interests of any financial products that you may have, such as:

  • Bank deposits
  • Savings accounts
  • Investment funds
  • Life insurance policies
  • Dividends from shares

This income is taxed separately from the general income tax base. The tax rates for savings taxable income are as follows:

  • Up to 6,000 euros – 19%
  • 6,001-50,000 euros – 21%
  • 50,000-200,000 euros – 23%
  • Over 200,001 euros – 26%

As a non-tax resident, you will be taxed at a rate of 24% on any income you earn in Spain. This significantly lowers then the income tax for tax residents. If you are a tax resident and would like to pay this non-tax resident rate, you can apply for the Special Tax Regime for Expats (also known as the Beckham Law).

Social security for tax residents in Spain

According to the Spanish government, all tax residents in Spain are entitled to social security coverage. This coverage includes a number of different benefits, such as healthcare, unemployment benefits, and pensions. In order to qualify for social security coverage, you must be registered with the Spanish Social Security system.

You can do this by applying for a Foreign Tax Number (NIE) at your local Spanish consulate or embassy. Once you have a Foreign Tax Number, you will need to register for social security with the Spanish government. You can do this online or in-person at your local Social Security office. Once you are registered, you will need to make contributions to the Social Security system in order to receive benefits. The amount of your contribution will depend on your income and employment status.

If you are self-employed you will need to make monthly contributions, and if you are employed your employer will make the contributions on your behalf. The amount of your contribution will depend on your income.

Deductions of income tax for tax residents

If you are a tax resident in Spain you can deduct a number of items from your taxable income. These include:

  • Charitable donations
  • Social security contributions
  • Energy efficiency
  • Investments in companies
  • Deductions for political parties
  • Maternity deductions

Depending on the autonomous region, the amount you can deduct and what you can deduct may vary.

If you are not a tax resident you can’t deduct any of the items from your taxable income.

Wealth tax in Spain

In Spain, the government imposes a wealth tax on tax residents with a net worth above €700,000. However, this may vary in the region. The tax is assessed on the value of assets including real estate, cash, investments savings, art, and jewellery. The tax rates for wealth tax in Spain are as follows:

  • Up to €700,000 – 0%
  • €700,001 to €2 million – 1.5%
  • Over €2 million – 2.5%

Inheritance tax

Inheritance tax in Spain is levied on the beneficiaries of an estate when someone dies. It is levied on the assets of the deceased person in Spain. The amount of tax that is due depends on the relationship between the beneficiary and the deceased, as well as the value of the estate. For example, a spouse or child would generally owe less tax than a more distant relative or friend. In addition, the tax rate is progressive, meaning that larger estates and people with more wealth are taxed at a higher rate than smaller ones. The calculation of inheritance tax can be quite complex.

The Spanish government also offers a number of exemptions and deductions that can reduce the amount of tax owed. For example, there is an exemption for inheritance between spouses, and certain charitable donations are also deductible. Spanish inheritance law is different from that of other countries, so it is important to seek professional advice if you are inheriting an estate in Spain.

VAT Tax

Value-added tax (VAT) is a type of tax that is applied to the sale of goods and services. In Spain, VAT is known as Impuesto sobre el Valor Añadido (IVA). The standard rate of IVA in Spain is 21%, although there are reduced rates for certain items, such as food (10%) and accommodation (4%).

Most businesses in Spain are required to charge IVA on their products and services, and therefore you will need to pay it whether you are a resident or non-resident.

Double treaty conventions

The Double Tax Treaties in Spain are agreements between Spain and another country, which aim to avoid the same income being taxed twice. For this purpose, the treaties establish the rules according to which the income will be taxed in each of the countries. These rules establish that, in general, the income obtained in a country by a resident of the other will only be taxed in that first country.

In this way, it is arranged that, for example, a Spaniard who obtains income from France is not taxed both in France and in Spain for said income.

The Treaties also regulate other aspects such as, for example, when a company carries out activities in several countries. These regulations seek to prevent tax evasion and promote investment between the countries concerned.

Property Tax in Spain: Read Our Overview

Property tax in Spain is the taxation on real estate, and it is a very common Spanish tax. You will have to pay multiple taxes on your property, and in Spain, all property owners are required to pay these taxes.

You must apply for a NIE (Número de Identificación de Extranjero) to pay these taxes, which is your Spanish tax identification number. When purchasing a home in Spain, you must also have this number. This number identifies you with the Spanish authorities and is required to pay taxes.

Property taxes in Spain for non-residents

You are subject to income tax (including capital gains tax), annual property tax, wealth tax, and stamp duty if you reside in Spain as a non-resident.

Spanish income tax

The income tax for non-residents is limited to income from Spain only. A non-resident is always taxed at a flat 19% when you are from Europe and at 24% if from somewhere else.

When renting out a property in Spain, you will have to pay rental income tax. Non-residents only have to pay income tax over the income they get within Spain only.

Next to this, when you sell your property, you will have to pay capital gains tax on it. You do this via the income tax declaration form as well. In this way, the capital gains tax includes your income tax.

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Annual property tax

When you are not renting out your property in Spain and using it for personal uses, you will also have to pay a tax based on the percentage of the value of your property. This is called the IBI tax. Next to the IBI tax, you will have to pay another tax that is the IRNR (Impuestos sobre la Renta de No Residentes).

IBI tax on property in Spain

The “Impuesto sobre Bienes Inmuebles,” or IBI, is the annual property tax in Spanish. The tax rises every year based on inflation. The tax rate for each year is between 0.4 per cent and 1.4 per cent of the property’s cadastral value.

The cadastral value is the Spanish authorities’ value for your property, and your real estate lawyer will be able to provide it. You can object to increases in the cadastral value, so you won’t have to pay more at the Spanish tax office, but you will have to provide good reasons for it.

The municipality’s annual real estate tax is a local property tax, and IBI tax rates increase every year depending on inflation. Remember that the cadastral value for the same size of properties in the same area can vary dramatically.

The IBI also takes into account your cadastral reference number, which identifies your property at the cadastral office, in addition to the assessed value of your home (cadastral value). This may be crucial when purchasing and selling properties because the physical description on the title deed does not match that on paper.

In general, the IBI bill will be sent to you, or you can pay it online. Your local tax office (SUMA) will handle the payments of the IBI.

IRNR tax on property in Spain

This tax is for non-residents that own property in Spain. The government created it under the assumption that non-resident property owners somehow profit from having a holiday home in Spain, even though they don’t rent it out.

Even if the owner does not receive any income or rent from their home, the property is taxed 1.1% or 2% profit on the property’s cadastral value. The amount of taxes varies on whether or not this cadastral value has been updated (1.1%) or not (2%). The tax is reported via the Modelo 210.

Wealth tax

The wealth tax in Spain is an annual tax on the wealth over a certain threshold that you own in Spain. This includes your Spanish property and other assets such as cash, cars, artwork etc.

The tax is levied on the market value of your total assets each year. As this amount increases every year, so will the resulting taxes owed to the Spanish government. You will have to pay wealth tax when your assets in Spain are over 700,000 euros.

Property tax in Spain for non residents

Property taxes for residents

You are subject to income tax, capital gains tax, annual property tax, and wealth tax if you are a resident.

Spanish income tax

When you get a Spanish rental income from your property or properties in Spain. You will of course be obligated to pay tax. Residents of Spain will always have to pay the rental income tax in Spain.

The percentage to pay ranges from 15% for low-income individuals and 30% or 40% for those with high income.

When you rent out your property, you will have to pay taxes on your rental income, and this rental income tax is called notional rental.

Annual property tax

In Spain, there is an annual property tax. The annual property tax is derived from the cadastral value of the property. The tax is called the IBI, “Impuesto sobre Bienes Inmuebles”. The tax increases every year depending on inflation.

The annual tax rate is 0.4 per cent to 1.4 per cent of the property’s cadastral valuation. The yearly tax is set by the municipality and can vary a lot.

Wealth tax

As a resident in Spain, you will have to pay wealth tax on your worldwide assets. The wealth tax is a progressive tax rate.

You will have to pay wealth tax over the value of assets above 700.000 euros, and you don’t have to pay wealth tax on the first 300.000 euros of your home property.

The wealth tax is a tax put by the autonomous regions, and it differs from region to region.

The wealth tax can be complex to pay, especially for foreigners. It is recommended that you hire a Spanish accountant.

property taxes in Spain

Property tax when purchasing new properties

When you purchase a new property in Spain, you will have to pay Stamp tax and VAT.

The Stamp Duty

The stamp duty is a fee that any person or entity that buys a new property needs to pay. The Spanish government sets this fee. The stamp duty is 1.5% of the sale of the property, and they are charged on top of the property price.

VAT

On top of the stamp duty, a 10% value-added tax (IVA in Spanish) is levied on the purchase price. While this seems higher than the tax on resale properties (ITP), this tax can be deducted from other expenses when buying property under a business.

Actos Juridicos Documentados (AJD)

The notorious mortgage tax or AJD (Actos Juridicos Documentados) is one of the taxes you must pay in Spain. This tax is known to vary by region, with a minimum of 1% and a maximum of 1.5%.

The percentage is determined on the basis of the “Responsabilidad Hipotecario,” which means “mortgage responsibility”. The mortgage responsibility is what the bank would owe if the person failed to pay for a period. It is an average of what it costs if they go to court and how much money the bank may need.

This is generally equivalent to between 150 and 200 per cent of the mortgage amount.

property tax in spain

Property tax in Spain when purchasing resale properties

When ​you purchase a resale property in Spain, there are two taxes that you need to pay: the ITP and the AJD

The Impuesto de Transmisiones Patrimoniales (ITP)

The only tax imposed on real estate resale is transfer tax (Impuesto de Transmisiones Patrimoniales/ITP in Spanish). The autonomous regions set ITP. The amount owed is determined on a sliding scale depending on the property’s price. In general, ITP adds between 8% and 11% to the cost of buying a property.

Actos Juridicos Documentados (AJD)

As mentioned before you will have to pay the AJD. which is 1 to 1.5 per cent of the mortgage responsibility.

Property tax Spain

Selling a property in Spain

Because the Spanish Tax Agency (Hacienda) may check your records at the time of property sale, you can’t avoid paying property tax in Spain.

3% deposit for capital gainst tax

The Spanish Tax Authorities will require a 3% deposit within 3 months of the time of sale. The deposit is a guarantee against capital gains tax, income tax, and wealth tax in the previous four years, as well as a guarantee against your tax debt on capital gains. When you have paid your taxes and the 3% was not needed, then you get them back at your next Spanish tax return. At the time of sale, you will have to submit the sales agreement in order to pay this real estate tax.

Capital gains tax

When selling the property, you will have to pay capital gains tax. The capital gains tax for residents is:

  • 19%: for the first 6.000€ obtained as a profit
  • 21%: From 6.000€ to 50.000€
  • 23%: From 50.000€ onwards
  • 26%: From €200.000+

Fee’s

Many of the fee’s associated with the selling of property in Spain, are often paid by the buyer. However, you can expect:

  • Estate agent fee (around 4.5% of the sales price)
  • Bank transfer fee’s
  • Legal and financial fee’s (around 800 euro)

Property tax in Spain

How to pay Spanish property taxes

For a non-resident, the best solution is to pay the tax by direct debit. The bank will provide you with a form authorizing the bank to pay the tax, and a copy of the document will be deposited with the local council. This will ensure that taxes are paid at the right time, just like other utility bills owned by you.

You will receive a letter from the municipality about your local taxes, while your annual income tax should be done on your annual personal income tax return.

The Spanish tax authorities are strict about the late payment of taxes, and any delay will result in penalties or fines, which can be very expensive. Next to this, your property must be adequately registered with the Spanish tax authorities for them not to claim that you are avoiding property taxes as well.

Frequently asked questions

Below you can find some frequently asked questions about Property tax in Spain.ert

Are there any other taxes I might have to deal with when selling or buying a property?

Yes, for example, you might encounter inheritance tax (succession tax), council tax, or other municipal tax. There are many taxes involved with buying and selling property in Spain, and it is advised to hire a tax advisor when dealing with the Spanish tax system.

Can you help me when I want to buy and let properties in Spain?

Yes, we offer a wide range of services for businesses such as company formation, accounting services, and property buying guidance. Get in touch with our team if you need any help or have any questions about buying and letting properties in Spain.

Get help with your property taxes

You need to pay any taxes when owning a property in Spain. If you want to be fully up-to-date with your tax payments, you should hire a Spanish tax advisor. Next to this, it is also recommended to hire a real estate lawyer when buying a property in Spain. If you want our help, you can contact us at contact@SublimeSpain.com.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Get taxes done more quickly and efficiently with our tax services in Spain

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NIE Number Spain: Everything You Need to Know

If you are a foreigner coming to live or stay in Spain for the first time, you will be surprised at how much paperwork is necessary. One of the most important documents is called the NIE which stands for Número de Identificación de Extranjero. It’s an identification number that every person who lives in Spain must have. In this post, we’ll explain what a NIE Number is, how to get one, and other things you need to know.

What is the NIE Number?

The NIE number in spain is a foreign identification number that is issued by the National Police of Spain (Policía Nacional de España). It is a unique tax identification number that you need for legal or tax activity in Spain as a foreigner.

For what situations do you need a NIE number in Spain?

You will need a NIE for many situations in Spain. Below you can find the most common cases, but if you are not sure whether you need it or how to obtain one, do not hesitate to contact us. We can help you with any legal process.

And many other legal, social, and investment activities.

The NIE number for starting a company

Everyone who will be a director or stockholder in the company must have an NIE as a result of the Fraud Prevention Act when creating a firm.

The NIE number to buy property

When you want to buy a holiday home in Spain you must have a NIE. Even if you won’t be there more then 3 months a year. You will also need the NIE number of the seller. It is recommended to get in touch with a Spanish property lawyer if you are buying a property in Spain.

The NIE number to get a driving license

You must have an NIE number if you want your driver’s license renewed, want to apply for a drivers’ license, or if you need to be tested in order to obtain a licence.

NIE number for buying a house in Spain

At what time do you need a Spanish NIE number?

To stay in Spain for less than three months, EU citizens only need to have their valid passport or identity document. If the stay is longer than three months, the citizen must request Spanish NIE Number at the Foreigners Office of the Police Station.

As a foreigner in Spain, you must obtain an NIE if you have economic, professional, or social interests. Because the NIE is a tax identification number for the Spanish Tax Agency, in this case, it doesn’t matter how long you stay in the country.

The two types of NIE certificates you can have in Spain

There are two types of NIE certificates in Spain. The NIE card and the NIE number. Which NIE number certificate you need, depends on the activities you have in Spain.

NIE NUMBER

The NIE number is written on a A4 paper. It is useful for non-residents that need a tax number for financial and legal activities such as purchasing property, investing, or setting up a business. This number is not a proof of residency.

TIE card (NIE card / residency permit)

The TIE card (Tarjeta de Identidad de Extranjero) is a blue residency certificate the size of a creditcard. It replaced the old green A4 residency document in mid-2020.

This card contains the NIE number on it. It is an identification ID as well in Spain, however It cannot be used for identification purposes in any other country besides Spain. It is required for stays exceeding 3 months. It contains your first name and last name, photo, the NIE number, your address, date awarded, birthplace, and a chip with your personal data.

NIE card (TIE-card) Spanish NIE Number

What is the necessary documentation to get a NIE?

The Spanish government requires people who want to obtain the NIE that they will be registered inside Central Registry of Foreigners. To get registered you need to provide the following documentation:

  • An official NIE application form filled out properly
  • Passport photos
  • Passport / ID and a photocopy

Make sure you have all the proper documentation filled out. For example, you will need to state why you need the NIE. This could be for financial, professional or social affairs.

Getting a NIE appointment can be very difficult, it can take up to 10 weeks for some locations to get an appointment. The procedure is very strictly official, if your documentation is not in order, the procedure will be halted immediately and you will need another appointment.

Spanish consulate or police station

Where can I get my NIE?

While residing or touring in Spain, you can submit your NIE applications to a Spanish National Police station (Comisaria de Policía para Extranjeros) or immigration authority (Oficina de Extranjeros). You will need to have an appointment.

You can also acquire an NIE number at the Spanish embassy / Spanish Consulate in your country.

If you don’t want to go through the hassle of requesting your NIE, as your Spanish lawyer, we can also request it for you, and send it to you when we have received it.

Nie number fast

How long does it take to get a NIE?

The process of applying for the NIE has become much more difficult in recent years. Whereas before 2004, even a broker may simply submit an application for the NIE document on behalf of the clients and encounter little resistance. Now the applicant must give an original and sworn translated notarial Power of Attorney to a broker or other intermediary like a lawyer.

A police officer will then thoroughly examine all documentation. If even one document or attachment is missing, a new appointment needs to be made, which as stated before can take up to ten weeks again.

The waiting period at some police stations is even so lengthy that making an appointment is (temporarily) impossible, in this case the appointment system is blocked.

We can get you your NIE number in Spain

If you want to get your NIE number fast, and your immigration taken care of, consult SublimeSpain. We are here to provide help in arranging your Foreigner Identity Number (NIE). Our team of professional lawyers provides guidance on how to get your NIE within a few days. We know the legal process of NIE, so trust SublimeSpain and consult us today.

Getting your NIE online

The NIE form 790 is available on the internet. The form is in Spanish and can easily be completed online. Once this NIE application has been filed, you will receive a reply with the date and time of your appointment at the Spanish National Police station. You must make sure to show up on time or else you might miss your interview and have to wait 90 more days before reapplying again.

Where can I get the traditional paper NIE form?

Some police stations may want a traditional paper NIE form version. You can get this document from a national police station dealing with foreign documentation.

The necessary documentation for a traditional paper NIE form:

  • Fill out an application for the NIE (EX 15 form)
  • You will need a passport as well as one photocopy
  • Two passport photos

FAQ about the Spanish Number

Frequently asked questions

Below we listed some frequently asked questions about the NIE number

Is the NIE document an ID document?

The NIE is not a document that proves your citizenship. As a result, in addition to your NIE, you must carry a corresponding identity document (passport, identity card, etc.) from your nation at all times.

How long does it take to get a NIE?

It takes at least 3 weeks to get your N.I.E. or certificate when applying through this Consulate General.

What does the NIE look like?

The NIE is made up of three parts: a ‘X’ or ‘Y,’ or ‘Z’ followed by seven digits, and then another letter (dígito de control).

Foreigners who applied for an NIE before July 15, 2008 received an X as the first letter, while those who applied after that date received a Y or Z.

How does the NIE application process go?

The NIE application process begins by making an appointment online. When you come to the office, applicants will need to provide their passport or id card and sign the application form. The documentation will then be reviewed and if everything is in order, you will receive your NIE number.

Is the NIE the same as a residency card?.

The NIE number is not a residency card, it does not state where you are a resident or citizen of. The NIE number is used by the Spanish government to process yearly income tax payments.

Do I need a NIE number as a Non Resident?

Some companies ask for a NIE number as a Non Resident. However, the Spanish tax authorities always require a NIE number from NON RESIDENT individuals or companies that have any taxable income within Spain, a company, or maintain bank accounts with a Spanish financial institution. If you have any legal or tax activities in Spain, it in many cases required.

Do I need a NIE as a residence?

Yes, when you have a Spanish residence card (VISA), you will also need a NIE number.

How can I replace a lost NIE card (TIE) or NIE number?

If you have lost your NIE card or NIE number and need a new one, you can request another appointment with the Spanish Consulate, or local National police station dealing with foreign affairs. You can make another appointment online and request the letter for the number again. Your personal NIE number will be the same as before.

To get a replacement for your NIE card (TIE), you will need to fill out another application form, and provide your passport or id card and two photos again.

How to get your NIE fast?

In order to get your NIE fast, you have to prepare the needed documentation and submit it at the Spanish embassy in your country. SublimeSpain can also help you with that.

How does the Spanish Government use the NIE Number?

The Spanish Government uses the NIE number to assess and process yearly tax payments such as income tax in Spain (IRPF) and the annual wealth tax in Spain (Patrimonio). The NIE number doesn’t deduct taxes, but you can use it to file your tax returns during the same time period.

How do I renew my NIE?

The Spanish NIE number does not expire, this number will stay the same for your identification purpose. however the NIE card (or TIE) does expire. The expiration date of the NIE card, is on the card itself. When it expires, you need to start the renew process.

You do this by demonstrating that the reason why you got the NIE card initially is still true at the time of renewal.

Where is the application processed?

When you apply in Spain, the Provincial Immigration Office (Oficina de Extranjería) in the province you applied in will will process the application.

When you applied abroad, the Spanish embassy or consular section in the country will process the application.

How did getting a NIE change during Covid?

When All face-to-face procedures have been required to be scheduled a visit (cita previa) since COVID-19 began. On the official Spanish-language website, you can schedule the cita previa.

What is the difference between a NIF number and a NIE number?

While the Spanish NIF number (Numero de Identificaco Fiscal) is for Spanish nationals (Spanish passport holders), the Spanish NIE number (Número de Identidad de Extranjero) is for foreigners in Spain, whether EU, or non EU citizens and residence, or non residence holders.

For Spanish nationals, the NIF number is on the DNI (Documento Nacional de Identidad), which functions as the Spanish ID card.

As a foreigner, you can also need a NIF /CIF number. When you are starting a company in Spain, you need a NIF number as well.

Getting the NIE number

Conclusion

The NIE (Número de Identidad de Extranjero) is a foreigner’s identification number for tax and legal purposes in Spain. It does not function as a personal identification card. For example, you need it to pay taxes, buying and selling motor vehicles.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommended seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Common Spanish Modelo’s: Numbers, Meaning, and Uses

If you already have an existing business in Spain, or you already live in Spain, you might be familiar with some the modelo’s. These are forms you have to fill in, and they are mandatory by the Spanish tax authorities. At SublimeSpain, we have professionals specialized in every one of the forms, including the more unique and complicated tax forms.

This article provides more information on the more common forms and information returns. It gives an idea of what you will be dealing with with the Agencia Tributaria. The information is incomplete. Contact us if you would like us to take care of your situation. We offer a variety of services.

Individual and Resident Category

Below you can find some information when you are a non-resident or resident in Spain.

Modelo 30

Form 030. Tax register of parties liable for tax Payments-Declaration of registration, change of address, and variation in personal data in the tax register. Form 030 is provided for parties to register as a fiscal resident with the Tax Office and liable for tax payment, private individuals, or communicate any changes in your data or to indicate an address for notifications if you wish to receive them on another than your fiscal address. Spanish citizens or non-residents can use form 30 to request a tax identification number (NIF).

Modelo 100

Form 100. Personal Income Tax. Annual tax return. The Tax Agency is responsible for issuing form 100 and resident of Spain needs to complete this form as income tax statement within their first year. Also, completing this form means you agree to the Spanish Revenue, and in compliance with HMRC, you are resident in Spain for Spanish tax.

Form 123 (Annual equivalent of M193)

Form 123. Withholdings and payments on account for Personal Income Tax, Corporate Tax, and Non-Resident Income Tax (permanent establishments). Residents of Spain must file form 123 to provide information on certain income from movable capital for tax purposes.

Modelo 145

Form 145 is required by Tax Agency form to record information on personal income tax through which taxpayers inform their payer—including their employer, about their tax and family status. It is also used to define the income tax withholding percentage applied to their wages.

Modelo 151

Form 151. Income Tax Return for individual National Tax Administration Agencies. This form enables online filing, or pre-filing of Income Tax for individuals under the special regime applicable to workers relocated to Spain.

Modelo 210

Form 210. Non-resident imputed income tax and rental tax. Non-residents in Spain are required to pay a percentage of their income and property owned by the state. The current rate for EU members for this tax is 19% and 24% for non-EU members.

Modelo 714

Form 714. Assets or Wealth Tax Declaration of Spain. It includes the necessary information related to the properties owned by the taxpayer and a Statement of Assets by anyone who owns properties that exceed a net value of €700,000. The first seven hundred thousand euros is a nil rate band, and the excess is taxed following a sliding scale. Nationally this scale is 0.2% – 2.5% of net assets.

Modelo 720

Form 720. Declaration of Assets and Rights Held Abroad. All citizens and non-residence of Spain are required to complete form 720 for assets owned in another country. The 720 form is essential, and the information provided is necessary for fraud detection purposes only. Also, it outlines, if any, and what assets are owned and could be subject to significant fines for failure to complete it.

Business Category

Below you can find some Modelo’s you might need when you are dealing with corporations.

Modelo 111

Form 111. Withholding tax (IRPF) due for the company’s employees and any invoices received withholding tax retained. It is a quarterly requirement to complete general invoices from economic activities incomes, notaries, capital gains from forestry development, and self-employed people (autónomos).

Modelo 115

Form 115. Withholdings and payment on account. Income or yields from the leasing or sub-letting of urban buildings. It is completed and submits quarterly by a self-employed person who rents a property with the withholding included in the invoice.

Modelo 165

Form 165. Informative return of individual certificates issued to partners or participants of newly or recently incorporated organizations. As developed in section 1 of article 69 of the Regulation on Personal Income Tax, it sets out how the new informative tax return must be presented.

Modelo 190

Form 190. Information Return. Withholdings and payment on account. Work income and income from economic activities, prizes, and certain capital gains and income allocations. It must be completed annually, including information about the workers and professionals with their names, surnames, ID, perceptions, and withholdings. It is an informative statement and summary form of withholdings for professionals and workers.

Modelo 200 / 202

Form 200. IS. Tax Return for Consolidated Groups. Corporation tax and non-resident income tax. Payment or refund documents. Businesses have to pay taxes simultaneously to (national treasury and regional treasury) and file self-assessment for corporation tax and non-resident income tax (permanent establishments and organizations under the income allocation system incorporated abroad with terms approved by these in the Spanish territory.

Modelo 232

Form 232. Informative return on related-party transactions and transactions and situations relating to countries or territories classified as tax havens. Obligation to expressly report transactions with related persons or entities and information on trades and conditions relating to countries or territories classified as tax havens.

Modelo 303

Form 303. VAT. Self-assessment. Complete filing of the self-assessment for value-added tax, which should be submitted quarterly if you develop any activity subject to VAT. It can be paid or deducted in certain situations.

Modelo 322

Form 322. VAT. Groups of organizations. Individual form. Monthly self-assessment. A complete filing of the monthly self-assessments for value-added tax corresponding to groups of organizations, a personal record.

Modelo 347

Form 347. Information Return. Annual information return on transactions with third parties. Formalities Information and Assistance. It is required to be completed annually with details on the statement of operations with third parties. Deals worth more than € 3005.06 with the reoccurring party will need to submit this form.

Modelo 349

Form 349. Information Return of intracommunity transactions. It is completed with a disclosure statement. Businesses are required to file the capitulatory return of intracommunity transactions during the corresponding period.

Form 353

Form 353. VAT. Group of entities. It is an aggregated and Monthly self-assessment form that is required to be completed by the parent company on Value Added Tax, through which the payment of the tax debt or refund or the request for compensation is made.

Modelo 368

Tax Form 368. Declaration-settlement of the special VAT regimes applicable to telecommunications, broadcast or television, and electronic services. It is completed quarterly and required for companies dedicated to sales of digital services or registered in a one-stop mini-shop for online sales to EU countries.

Modelo 390

Form 390. VAT. Annual summary tax return. It is required to summarize all transactions related to VAT collected, deducted, and paid by your business during the year. Spanish autónomos and small companies are mandatory to file as there is no payment involved.

Self-Employed Category

Below you can find some Modelo’s you might need when being self-employed.

Modelo 36/37

Forms 036 and 037. Tax register of business persons, professionals, and withholders – Tax register declaration of registration, modification, removal, and simplified tax register declaration. The individuals who should be included in the register for business people, experts, and withholders ought to submit declarations using 036 or 037. A record ought to likewise be offered for adjustments or expulsion from the register.

Modelo 130/131

Form 130. IRPF (Personal Income Tax). Companies and professionals are taxed under the direct evaluation system. Installments. It is mandatory to be filed by individuals who carry out economic activities including agricultural, livestock farming, forestry, and fishery under the direct evaluation system, standard or simplified modality in Personal Income Tax.

Modelo 303 (390)

Form 303. VAT. Self-assessment. It is required to be filed as a VAT return form by all self-employed people in Spain. Every quarter, form 303 is completed to declare their earnings and pay tax.

Real Estate Category

Below you can find some information when you are dealing with real estate in Spain.

Modelo 180

Form 180. Information Return. Withholdings and payment on account. Income from urban building leasing. Annual summary. To be completed yearly as an overview of Personal Income Tax, Corporate Income Tax, and Non-residents Income Tax for incomes acquired from leasing or subletting buildings.

Modelo 211

Form 211. IRNR. It is mandatory and completed for Non-residents’ income tax and withholding in property purchases from non-residents without permanent establishment.

Modelo 296

Form 296. Information Return. Withholdings and payment on account for non-resident income tax (without permanent establishment). The tax form 216 is completed annually by Non-Resident Income Tax (IRNR), which must be paid by companies or individuals who receive some income in Spain, but do not reside in the national territory.

Inheritance Category

Below you can find some information when you are dealing with inheritance in Spain.

Modelo 182

Form 182. Information Return. It contains information about donations and contributions received. Further, it is required to file the right to a deduction in income tax, corporation tax, or non-resident income tax.

Modelo 650

Form 650. Inheritance and Gift Tax. Self-assessment inheritance tax return. If you own assets in Spain, you should plan for your demise, requiring you to file form 650 within 30 and pay inheritance tax. Filing and pre-filing can be done online.

Get support with filling in your Modelo’s in Spain

If you would like us to help you fill in your Modelo’s in Spain, then contact us. We have a team of expert and local tax administration experts ready to assist you. We can take care of it for a fixed fee.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommended seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

Taxes in Spain: A Complete Overview for Expats

As in most developed economies, Spain supports its welfare and social services system thanks to taxes. Spanish residents, non-residents, and citizens enjoy numerous social programs that taxpayers pay for through various taxes. The Spanish tax system pays for the health and education system, social assistance to low-income people, unemployment insurance, commonly called “unemployment pay”, the retirement pension system, citizen security, and other public services.

The Spanish tax rates that residents and non-residents pay are different, and understanding precisely the difference will allow you to manage your savings and income more efficiently. You can distinguish taxes by direct taxes and indirect taxes.

The main direct taxes in Spain

Direct tax is an income or property tax paid directly to the government by the taxpayer. Among the direct taxes in Spain are:

  • Personal income tax: the personal income tax is taxed based on the taxpayer’s income. If you are a tax non-resident, the government will only tax Spanish income.
  • Corporate income tax (IS): Companies need to pay a corporate income tax (a business tax).
  • Wealth tax: The local Spanish tax office levies taxes on people’s wealth. However, some autonomous regions in the country completely discount it. If the government taxes your wealth, you need to pay tax on your assets minus the debts.
  • Inheritance and gift tax: When a succession happens, and you receive an amount of money, you will have to pay inheritance tax over this income.

The main indirect taxes in Spain

An indirect tax levied on transactions (sales) of goods and services. Among the indirect taxes in Spain are:

  • Value Added Tax (IVA): The value-added tax is the most important indirect tax, and it taxes the consumption of goods and services by individuals and companies. It is well known because it affects us all in our day-to-day life, and it is very little loved since it makes products more expensive, an issue that hinders the competitiveness of the seller and the purchasing power of the buyer. Some products have a lower IVA to minimise this negative impact, as they are considered essential products. There are three types of IVA at 21%, 10%, and 4%.
  • ITPAJD: Three groups fall under these taxes, which are asset transfers (related to property tax), corporate transactions (related to the incorporation of companies), and documented legal acts (related to notarising commercial and administrative documents).

Get taxes done more quickly and efficiently with our tax services in Spain

Learn more

Are you a tax resident or a tax non-resident?

It is essential to determine if you are a tax resident or non-resident in Spain. Whether you are a resident for tax purposes or not will determine the height of the taxes you will have to pay.

You will be regarded as a tax resident if you fulfil one of the three following conditions.

  • When you are a resident of Spain for more than 183 days each calendar year, from January to December (the days need not be consecutive to count).
  • When you have a dominant professional tie to the country, which means you do a job or have employment in Spain. This scenario is typical for someone who works for a Spanish company for part of the year but spends most of his time travelling and meeting clients worldwide.
  • Your spouse or children reside in Spain.

This distinction only applies to tax concerns and has nothing to do with the residence permit, allowing you to reside in the nation lawfully. This implies that you may have a residence permit in Spain, but you could be classified as a non-resident for tax purposes if you do not fulfil the criteria.

Taxes in Spain and Residents in Spain

The personal income tax (IRPF) for tax residents in Spain

The personal income tax (PIT) for Spanish tax residents, also known as the Impuesto sobre la Renta de las Personas Físicas (IRPF), is generally on their worldwide income regardless of the earning location. The PIT is a progressive income tax. Who makes more will pay more.

The calculation for income tax for tax residents is with the general income (Renta General) and savings income (Renta del Ahorro). The personal income includes:

  • Payroll and benefits.
  • Gains on assets via another party, such as lottery winnings.
  • Interest and other revenue generated.
  • Dividends and other income from company investments.
  • Revenue generated from capitalisation transactions and life and disability income insurance.
  • Capital gains from transfers of assets.

The progressive income tax for tax-residents in Spain

Below you can find an idea of the progressive income tax for tax residents in Spain. You should always calculate the actual personal income tax rates by looking at the autonomous region in Spain where you are a tax resident.

Taxable base (up to) Tax liability Excess of taxable base (up to) Tax rate
€0 €0 €12,450 19%
€12,450 €2,365.50 €7,750 24%
€20,200 €4,225.50 €15,000 30%
€35,200 €8,725.50 €24,800 37%
€60,000 €17,901.50 €240,000 45%
€300,000 €125,901.50 Remainder 47%

Income tax brackets differ a lot in the different autonomous regions. For example, Madrid has a lower income tax compared to Catalonia.

The income tax has deductions

The Spanish income tax has several deductions. These deductions will help you to pay fewer income taxes in Spain. Make sure you know which of these exemptions apply to you, and get the help of a tax advisor if you are not sure. That way, you don’t pay more Spanish income tax than necessary. Some of these allowances are:

A tax resident in Spain will get an allowance based on their age. This tax allowance will increase as people age.

  • under the age of 65: €5,550
  • age 65: €6,700
  • age 75: €8,100

In addition, the tax resident has a deduction for each dependent child. If you have children under 25 living with you, you can claim an additional allowance of:

  • €2,400 for the first child
  • €2,700 for the second
  • €4,000 for the third
  • €4,500 for the fourth
  • An additional allowance of €2,800 for each child under three years

There are also income tax deductions in Spain for:

  • Payments into the Spanish social security system and pensions
  • Charity donations
  • Certain costs for purchasing and renovating a home
  • Dependents who are disabled to a certain degree.

There is no PIT on wage income earned by tax residents in Spain but who perform their business activities entirely outside the country. However, there is a maximum limit of up to 60,100 euro’s. In general, you can apply this if:

  • The work is physically outside Spain.
  • The work is for a non-resident Spanish company or entity.
  • In the nation where the employee performs the work, a similar or identical tax as the Spanish PIT is used. The country where the services is not a tax haven. The government has a tax treaty to avoid double taxation, with an exchange of information clause.

Income tax in Spain for non-residents

In the same way that the resident population in Spain is subject to personal income tax, non-residents need to pay the Non-Resident Income Tax, also known as the Impuesto sobre la Renta de No Residentes (IRNR). This declaration, which depends on the type of income and country of residence, applies tax rates between 19% or 24%. This includes income obtained in Spain through economic activities, income from real estate capital, possession of a second residence, and pensions.

In some cases, you must pay taxes derived from activities in Spain and in your country of residence. Spain has signed double taxation agreements with several countries, the list of which is published by the Tax Agency, and this double taxation agreement will determine where you will pay taxes.

In addition to the IRNR, other taxes for non-residents can be the Real Estate Tax (IBI), the Tax on Patrimonial Transmissions (ITP), and the Wealth Tax (IP) of the assets that are in Spain and have a value of above 700,000 euros.

Non-resident tax will be due if you are not a fiscal resident but have a property or other assets in Spain that generate income. This non-resident tax is on your assets and firms in which you are a shareholder.

This Spanish tax will be levied at 24% if you are a non-EU citizen and 19% if you are from the European Union.

Rental income taxes in Spain

Taxes on rental income in Spain

If you profit from renting properties in Spain, you need to pay taxes on this income.

Non-residents are subject to the flat non-resident Income Tax (IRNR, Impuesto sobre la Renta de personas No Residentes) which is a flat tax rate of 19%. If you are not from the EU or EAA countries, the flat tax rate is 24%.

You can find more information about the rental income tax in Spain in our article.
Wealth taxes in Spain

Wealth tax in Spain

The Spanish wealth tax, often known as the ‘Impuesto sobre el Patrimonio,’ is a yearly levy on people and families in Spain with substantial assets.

Wealth tax for a tax resident in Spain

The wealth tax for tax residents in Spain takes all the person’s assets into account, and you can calculate by subtracting a person’s assets minus their debts. Tax residents will generally pay wealth tax in Spain on their worldwide assets.

In general, you will pay taxes on wealth valued above €700,000. But this can vary from region to region. For example, Catalonian residents will pay tax on assets above €500,000, while people in Madrid are don’t pay wealth tax at all.

The national progressive wealth tax in Spain

The national wealth tax in Spain is for residents who reside in an autonomous region that has not set a wealth tax rate, which is:

Taxable base Full fee Rest base payable Applicable rate
0,00 € 0,00 € 167.129,45 € 0,2 %
167.129,45 € 334,26 € 167.123,43 € 0,3 %
334.252,88 € 835,63 € 334.246,87 € 0,5 %
668.499,75 € 2.506,86 € 668.499,76 € 0,9 %
1.336.999,51 € 8.523,36 € 1.336.999,50 € 1,3 %
2.673.999,01 € 25.904,35 € 2.673.999,02 € 1,7 %
5.347.998,03 € 71.362,33 € 5.347.998,03 € 2,1 %
10.695.996,06 € 183.670,29 € Onwards 3,5 %

Wealth tax deductions

  • Primary home in Spain (up to 300,000 EURO)
  • General household contents (except any items listed above)
  • Pension rights
  • A range of small business assets and family company holdings
  • Bonds for Life Assurance

Wealth tax for non-residents in Spain

If you’re living in Spain as a non-resident for tax purposes, you will pay tax on your assets within the country that are valued at over €700,000. This means that if all the rest of your possessions are located outside of Spain, they are not subject to wealth tax.

Non-residents pay wealth tax on a national level. Non-resident wealth tax rates have increased since prior years, ranging from 0.2% to 3.5%. The top tax bracket begins at around 10 million euros.

Look at our article on Spanish wealth tax if you would like to learn more about it. We can also answer your questions on Spanish wealth tax through consultation.

Inheritance taxes in Spain

Inheritance and Gift Tax in Spain

When a succession happens and people receive an amount of money, this is considered by the tax agency as obtaining an income, so it fits perfectly into the name of direct taxes. The most common case in which inheritance tax is applied is when an inheritance is received. The most important points are:

  • Because there is no concept of a person’s “estate” in Spain, all beneficiaries are charged inheritance tax in some manner or another.
  • The Spanish inheritance law states that two-thirds of your belongings will be given to your children automatically upon your death.
  • If the assets are outside of Spain and the beneficiary is not a resident in Spain, no tax is applicable.
  • There are also local inheritance taxes, as well as state inheritance taxes. If no regional guidelines apply, the Spanish Civil Code takes precedence.

Inheritance tax rate in Spain

Inheritance Percentage
Up to €7,993: 7.65%
€7,993 – €31,956 7.65 to 10.2%
€31,956 – €79,881 10.2 to 15.3%
€79,881 – €239,389 15.3 to 21.25%
€239,389 – €398,778 25.5%
€398,778 – €797,555 29.75%
€797,555+ 34%

Capital gains taxes in Spain

Capital gains tax in Spain

Capital Gains Tax in Spain is a tax that people must pay when they sell, transfer or redeem any type of financial asset. Typically, the Capital Gains Tax concerns people that are selling a property for profit. Capital gains tax will apply if you sell an investment at a higher price than you originally bought it for.

Assets that are liable for Capital gains tax

This tax is not only levied on the sale of real estate alone, as it can also apply to the sale of financial assets. Other items that are included are:

  • Stocks
  • Collectables
  • Bonds
  • Buildings, lands, houses and flats
  • Precious metals, Jewelry

Now that you know for which assets you must pay capital gains tax let’s look at the rate.

Capital gains tax for residents

According to Spanish tax laws, if you’re a resident, you are applied a scale between 19% and 23% and can get tax relief if you have lived in the property for at least three years before selling it. You will pay:

  • 19% for the first 6.000€ obtained as a profit.
  • 21% between profits from 6.000€ to 50.000€.
  • 23% on your profits that are 50.000€ and up.

Capital gains tax for non-residents

You’ll pay capital gains tax on your income from the sale of your property. The capital gains tax for non-residents from EU/EEA countries is 19%, for non-residents from other nations it’s 24%.

There are no exemptions for non-residents, except for one. Non-residents of Spain are eligible for a capital gains tax exemption if they are lawfully residing in any other European Union nation with a tax agreement with Spain. They will also benefit if they meet the condition for main home exemption.

If you would like help with your taxes when selling property, our capital gains tax in Spain article can help provide it. Furthermore, you can contact us for tailored legal guidance when buying or selling property in Spain.

Plusvalia Tax

The Plusvalia tax is a property tax levied by the Spanish government on the increase in the value of urban land. The goal of this tax is to tax the increase in the value of the land, whether there is a property on it or not. This tax is similar to the capital gains tax; only it is paid to the municipality.

The Plusvalia tax is payable when the transfer of ownership of the property is transferred via the Land Registry. This can happen when selling the property, donating the property, or inheriting the property. The amount of Plusvalia tax you have to pay depends on three factors, including the municipality where the land is located, the number of years you have owned the land, and the base (which is the value increase of the property). When you sell your home for a loss, the tax isn’t charged. You may pay the tax at your local town hall, tax office, or online.

The tax is calculated by multiplying the base (real or nominal capital gain) with a coefficient set by the government. The real capital gain is the difference between the purchase price of the land and the selling price of the land in the land registry. The nominal capital gain reflects the real property market, which means the real capital gain.

Property transfer tax

There is a variety of property taxes when buying a property in Spain. Property transfer tax in Spain is a tax imposed on any person buying a property from another person in Spain. The rate varies from autonomous region to autonomous region.

A property transfer tax must be paid if the home is regarded as a second or subsequent transfer in Spain. In the case of a new home, you don’t have to pay a transfer tax. The tax is usually between 6%-10%, and commonly the buyer will pay for it. It is a replacement for the VAT.

There is also stamp duty imposed by the region. This tax is a percentage of the purchase price, and you must pay it when buying real estate. Currently, the stamp duty is between 0.75% and 1.5%.
VAT taxes in Spain

VAT taxes in Spain

The value added tax (VAT) or impuesto sobre el valor añadido (IVA) is the most common indirect tax. It taxes the consumption of goods and services by individuals and companies.

It is well known because it affects us all in our day-to-day life, and it is very little loved since it makes products more expensive, an issue that hinders the competitiveness of the seller and the purchasing power of the buyer.

In general, the IVA in Spain is 21%. However, because some products are more essential than others, Spain also has lower rates for essential products which are 10% and 4%.

  • General: 21% on general goods and services
  • Reducido: 10% on items such as agricultural supplies, mineral water, lemonade, fruit juice, passenger transport, hotel, and restaurants services, and alike.
  • Super Reducido: 4% on items such as essential food, medicine, caregiver services, books, magazines, newspapers.

In our article dedicated to VAT in Spain, we discuss more how to calculate VAT, the rules surrounding VAT, and VAT refunds.
Corporate income taxes in Spain

Corporate income taxes in Spain

The general corporate income tax in Spain is 25%. For the first two years of business, the rate for newly-formed firms is 15%. The most common limited company entity is the Limited Company (SL). There are some exemptions for certain companies:

  • Listed collective investment institutions, including real estate investment funds, have a corporate tax rate of 1%.
  • Certain cooperatives will have a corporate tax rate of 20%.
  • Entities engaging in oil and gas research and activities will have a corporate tax rate of 30%.
  • Listed corporations for investment in the real estate market will have a corporate tax rate of 19%.

How to pay taxes in Spain

To pay taxes, you will need to get a NIE. A NIE number is a Número de Identificación de Extranjero. It is a unique tax identifier assigned to foreign nationals in Spain. You may obtain this number through the local Foreigner’s Office (“Oficina de Extranjeros”) or a police station. You must do so within 30 days of your arrival in Spain. Then, to declare your responsibility to pay Spanish tax for the first time, you must fill out Form 30 (Modelo 30). When you have your NIE you can register with the “Agencia Tributaria”, and start filing your taxes.

Special expat tax rule: The Beckham Law

Non-resident individuals in Spain who move to the country and acquire their tax residence there become residents for tax purposes. However, if they meet certain requirements, there is a special tax regime that they can take advantage of, known as the ‘Beckham Law‘ or ‘Beckham Clause’.

This specific regime allows these residents for tax purposes to pay taxes according to the regulations of non-residents during their first six years. In practice, this means paying a fixed rate of 24% instead of a progressive one that can go up to 45% if it exceeds 600,000 euros per year.

The ‘Beckham Law’, which tax deduction can also apply to administrators of companies incorporated in Spain that do not own more than 25% of the company, is generally used “for employees who move to Spain under a new employment contract or with one already existing.”

Although the Beckham law is the most commonly used path to save taxes, another alternative can help you become a non-resident for tax purposes. It may be the right strategy if you don’t meet the requirements of the Beckham regime. We refer to those cases where your employer is not in Spain, but you live permanently in Spanish territory as a foreigner.

Beckham tax exemption in Spain

Spanish double taxation treaties

Spain has signed treaties with about a hundred countries to avoid double taxation. These treaties aim to prevent both countries from taxing your income or capital gains, where you can claim the credit against your Spanish tax liability for taxes paid abroad.

There are many cases in which individuals don’t have to pay tax on their foreign-earned income, and there are only some conditions you need to meet. Where conditions are met, foreign tax paid on income not taxable in Spain may be credited against Spanish tax.

For example, suppose you are a US citizen and pay US tax on your worldwide income, including interest earned on investments made with savings while living in Spain. In that case, you can claim credit for the US taxes paid against any eventual Spanish liability. The Spanish tax credit is usually limited to the amount of Spanish tax owed on the total taxable income of an individual. For this rule to work, you must be a non-resident for tax purposes.

In addition to the above, nationals from some countries sign special agreements with Spain to benefit from a special reduction in their Spanish taxes.

Tax Refund

How to get your tax refund depends on what type of residential status you have.

Resident for tax purposes:

Tax residents can get a tax refund by filing their annual income tax returns.

Non-resident individuals:

Non-residents can get taxes paid in Spain reimbursed. To do so, they must file a tax return and meet some requirements.

Want to hire a professional tax-deducted service?

Now you know what the central taxes are paid in Spain, both direct or indirect. If you are thinking of starting a business or already have one, you are very likely not optimising your taxes to the maximum and are paying more. So, consult with an accountant service in Spain, and consider Spain Desk. Here, you can get guidance from professionals and your taxes efficiently in Spain.

For more information on the Spanish tax system, you can visit the Ministry of Finance and Public Administration.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

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Wealth Tax in Spain in 2021: What Do You Need to Know

The Spanish wealth tax, otherwise known as ‘Impuesto sobre el Patrimonio,’ is an annual tax placed on wealthier individuals and families in Spain. While this form of taxation doesn’t necessarily apply to most people, it can significantly impact those with substantial wealth and even deter many from ever moving to this beautiful country. However, strategic and careful planning coupled with professional guidance will assist you in minimizing your wealth tax liability and, ultimately, fulfil your ambitions of living in Spain.

Residency considerations related to wealth tax

An essential distinction in Spain related to the wealth tax is between residents and non-residents. At the same time, both residents and non-residents need to pay wealth tax. In general, non-residents will have to pay less than residents.

You are a resident in Spain for tax purposes if you spend more than 183 days per year in Spain (6 months). On the other side, only spending 182 days or fewer in the country will classify you as a non-resident for tax purposes in Spain. In this way, having a residency permit does not automatically make you a tax resident in Spain.

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Non-residents in Spain and wealth tax

If you’re living in Spain as a non-resident for tax purposes, you’ll only be taxed on your assets within the country that is valued at over €700,000. This means that if all the rest of your possessions are located outside of Spain, they are not subject to wealth tax. Situations, where you will be a non-resident and have to pay wealth tax, are:

  • When you are a married couple, you can claim an allowance of €1,400,000 against all included joint assets.
  • If you inherit wealth above €700,000 from Spain, you will have to pay inheritance tax, and you will have to start paying wealth tax.
  • In general, when you have a double nationality, you will not have to pay wealth tax over all your assets when you are located abroad for more than 183 days of the year.

Exemptions for non-resident wealth tax in Spain

For non-residents, there is only an individual deduction of €700,000 on the Spanish wealth tax.

Residents in Spain and Wealth tax

If you are living in Spain as a resident for tax purposes, you will be taxed on your worldwide assets that are valued at over €700.000. This means that on top of your assets located in Spain, the value of all your assets will be included for wealth taxation purposes in Spain, which can lead to a significant overall tax increase. Situations where you will have to start paying wealth tax as a tax resident are:

Exemptions for tax residents in Spain

There is a range of exemptions, and you can also claim a personal tax-free allowance that varies based on the region you live. Some exemptions include:

  • Individual deductions on the national level are €700,000. However, autonomous regions can have a different rate. For example, the deduction in Catalonia is only €500,000.
  • Married couples are entitled to individual deductions on their share of the main home owned, provided joint name ownership.
  • You can get an allowance of up to €300,000 against the value of your primary home.

Therefore, in some cases, the homeownership and individual deductions combined allow married couples to have a total tax-free allowance of up to €2,000,000.

Bear in mind that tax treaties may be enacted with other countries if taxed elsewhere. For example, double taxation treaties are in place with the United States, Canada, and various countries throughout Europe.

Wealth Tax in Spain

Exact percentages of wealth tax in Spain

Wealth tax in Spain is a progressive tax in Spain. The more value your assets have, the more you will pay. The different autonomous regions have various wealth taxes in place, and some don’t have any. In general, wealth tax in Spain is between 0.2% and 2.5%. Below is more information.

The national progressive wealth tax is:

The national wealth tax in Spain is for non-residents and residents who reside in an autonomous region that has not set a wealth tax rate. Wealth tax rates for non-residents have increased since previous years and range anywhere between 0.2% and 3.5%. The top percentage bracket starts at around 10 million euros.

Wealth Tax Table

The autonomous regions have different wealth tax between:

Spanish residents are taxed based on their fiscal residency location within the country. While the percentages listed for non-residents are also the national standard for residents, some Spanish Autonomous Regions have set their percentages and tax brackets.

Andalucia, Balearic Islands, Cataluña, Murcia, Valenciana, and Madrid all have specified different wealth tax rates, varying between:

Andalucia 0.2% – 2.5%
Balearic Islands 0.28% – 3.45%
Cataluña 0.21% – 2.75%
Murcia 0.24% – 3%
Valenciana 0.25% – 3.5%
Madrid 0%
Canary Isles National default rates apply.

Spanish wealth tax

Avoiding wealth tax in Spain

There are ways you might be able to “avoid” Spanish wealth tax. However, they do come with some caution. They need to be correctly and legally executed for the assets to be exempt.

1. Bonds for Life Assurance

When the policyholder of the life assurance bonds, has waived his right to redemption, and an irrevocable beneficiary has been named. The policyholder can’t exercise the right of redemption.

When the policyholder can’t access the assets, it’s not part of its assets, and therefore, they don’t have to pay wealth tax. According to Spanish courts, the minimum period of waiving rights through the policy is three years (V2516-17, V3070-17, V0993-18).

2. Pensions

In Spain, pensions and their assets are not subject to wealth tax. The person receiving the pension can’t use it, so it’s not considered part of their assets.

3. Shareholding

Shareholders in companies with the following characteristics:

  • The firm is a trading business.
  • There is ownership of at least 5% of the company’s share capital or 20%, excluding shares held by a spouse or other family members.
  • You manage the firm’s operations.
  • You receive a wage for these jobs at least half of your total net earnings.

4. Giving money away

By giving money away, you can take it out of your estate. Often it is given to children or grandchildren to avoid estate taxation.

5. Share money between your spouse

When you transfer assets to your spouse, you can take them out of your estate.

6. Other potentially exempt assets

Household effects, businesses meeting certain standards, intellectual property rights, and business assets that are used for the taxpayer’s major source of income are all examples of special classes that could be considered exemptions.

Of course, you should always seek expert advice before taking significant steps like those mentioned above. Always keep in mind that the rules of taxation change over time, so make sure you check them frequently.

Wealth tax Spain

Key assets included in the Spanish Wealth tax

There is a range of specified inclusions to the Spanish wealth tax. While there may be some things that require special clarification. These are the essential items to consider that are covered under the Spanish wealth tax:

  • Real estate properties
  • Artwork and antiquities
  • Vehicles, boats, planes, etc.
  • Insurances, deposits, and temporary income
  • Luxury items – e.g. expensive jewellery, expensive coats, racing cars

Key assets exempted from the wealth tax in Spain

  • Primary home in Spain (up to 300,000 EURO)
  • General household contents (except any items listed above)
  • Pension rights
  • A range of small business assets and family company holdings

Other deductibles include any loans taken out on the condition that they weren’t used to invest in any of the assets considered exempt from the wealth tax.

Wealth tax and the 60% Rule

Spanish residents have a rule that stipulates an individual’s cumulative wealth and income tax cannot exceed 60% of their total taxable income.

So wealth tax + income tax cannot be higher than 60% of your taxable income.

For example, if an individual has a taxable income of 100,000 Euros (savings or general), then their wealth tax + income tax cannot exceed 60,000 Euros.

However, it’s essential to remember that you must pay a 20% minimum of the total original wealth tax calculation. So you will never be fully exempt from wealth tax. In this way, it is wise to take as little income as possible.

The payment of the wealth tax

Provided you have any wealth tax liabilities, you’re required to complete the wealth tax forms at the end of each year (31st of December), with the final amount payable between May and June.

It is also determined if you are a non-resident or resident.

For married couples considering filing joint income tax returns, you’ll need to calculate your wealth tax on an individual basis and then add it together with your total income tax due as a couple.

 

Tax rates

Professional advisory on wealth tax

Need assistance with Spanish taxation? Reach out to our team of Spanish wealth tax experts for relevant guidance, meticulous planning, and filing management. We will handle your case strictly confidential and get you a second opinion. You can contact us at contact@SublimeSpain.com.

At SublimeSpain, we’ll work closely with you to provide a custom service specifically based on your needs. Not only do we have a wealth of experience with tax strategies and tax planning solutions, but we also have a verified track record navigating the legal and tax system for expatriates and foreign investors.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

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Beckham Law Spain for Expats: Benefit, Conditions, Filing

The Beckham law creates opportunities for expats to save money. It is also know as the Special Expats’ Tax Regime (“SETR”) or Régimen Especial para Trabajadores Desplazados. Knowing the rules to take advantage of this law allows you to keep more money in your pocket when filing taxes. In this article, we will discuss what it is, what conditions their are, as well as how to file a tax return under these guidelines.

What is the Beckham law in Spain?

The Royal Decree 687/2005, popularly known as the Beckham Law is a special expats tax regime. It enables foreigners that are approved by the relevant Spanish tax authorities to pay a 24% flat rate for income earned in the country.

Expats who fall under this regime are not treated as tax residents whose worldwide income is taxed as an progressive tax rate of 19% up to 45%.

Normally when you move to Spain to work, you become a tax resident and are subject to the normal rate for Spanish citizens. However, with the Beckham law, instead of being taxed at the resident income tax rate, you can pay it as a non-resident.

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Beckham Law Spain

Types of residencies in Spain

To grasp a better understanding of what the Beckham law implies we discuss the different types of residencies and taxes for foreign workers in Spain.

Residents in Spain

A resident in Spain is someone that lives in Spain on a permanent basis. This means that their principal interests are situated in the country, not outside of it.

As mentioned before, there are several conditions that can lead someone to become a tax resident and thus be subject to the flat rate set for Spanish residents:

  • You live in Spain more than 183 days during the tax year (which runs from January 1 through December 31).
  • You live in Spain less than 183 days, but your spouse and children or those of your legal dependents stay outside Spain at least 183 days during the tax year. If you are present in Spain for more than 183 days, but this is not the case with your family members, you will be a resident for tax purposes.
  • Your center of economic interest is situated in Spain. This means that the main part of your economic activities and interests is carried out inside Spain, regardless of your physical presence or activity abroad.

Normal tax implications for residents of Spain

Residents of Spain are subject to the same Spanish income taxes as Spanish citizens, this tax is known as the Spanish Personal Income Tax (PIT), or Impuesto sobre la Renta de las Personas Físicas (IRPF).

This tax is levied on all income and capital gains, whether foreign or domestic. The tax is a progressive tax on income and capital gains with a tax bracket that starts at 19% and goes up to the top marginal rate of 47%.

Beckham tax spain

Non-Residents in Spain

A non-resident in Spain is a person who is not resident in Spain. The law states that you are considered to be a non-resident in Spain if one of the following conditions applies:

  1. You live outside the Spanish territory more than 183 days during the tax year (which runs from January 1 through December 31).
  2. You live in the Spanish territory less than 183 days, but your spouse and children or those of your legal dependents stay outside Spain at least 183 days during the tax year. In this case, those family members are also considered as non-residents.
  3. Your center of economic interest is situated outside Spain. This means that the main part of your economic activities and interests is carried out outside Spain, rather than in a country other than Spain.

Normal tax implications for non-resident of Spain

Non-residents in Spain are only required to pay income tax on their earnings from Spain. It is also known as the Non-resident income tax (NRIT) or Impuesto sobre la Renta de No Residentes (IRNR). In general, the flat tax rate for non-residents is 24%. For citizens from the EU/EAA the rate is 19%. They will be charged a flat and set rate.

Residents with Beckham law tax residence

When you are a resident in Spain, and you get approved for the Beckham law you will be considered as non-resident in Spain. This means that your worldwide income is not subject to Spanish tax, but only what you earn in Spain.In other words,

  • You can spend more then 183 days in Spain without having to pay taxes on your worldwide income.
  • You will only be paying taxes on your income in Spain
  • You won’t pay the progressive tax and instead a flat 24% up to 600.000 Euro. When this is exceeds you will pay a fixed 45%

As you can read, this Spanish income tax law is very attractive to foreign nationals who will need to work more then 183 days in Spain. With the Beckham law in Spain the tax burden can be significantly lowered.

Non-resident-tax

What are the conditions for the Beckham Law?

In order to apply the Beckham Law, the person should not have been a resident in Spain during the 10-year tax period before the year they are settling in the country. Also, the applicant must be moving to Spain for work reasons. For this reason, you are required to have an employment contract where the employer is a Spanish company.

Other criteria that need to be met by expats that want to apply are:

  • To qualify, the applicant must be a first-time resident of Spain.
  • The applicant must have moved to Spain to take up a work contract.
  • Employment responsibilities must be carried out in Spain, but if they are required to perform part of their duties outside of Spain, the proportion of their income derived from these sources cannot exceed 15 percent.
  • Within 6 months of beginning the employment contract, the application must be submitted.
  • The agreement is valid for a total of 6 years.
  • All capital gains made in Spanish territory are taxed at a rate of 35%.

If you wish to be a director in a Spanish company, then you must have equity in no more than 25% of the company.

Applying for the Beckham Law

When it comes to the application process, the application must be submitted within 6 months starting from the date of the inscription in Social Security as an employee for the Spanish company. As a result, applications after the 6 months are promptly declined.

The application process starts by first filling out and sending the Modelo 149, which informs the Spanish tax agency of the intention to benefit from the tax regime. Candidates need a passport, NIE number and Social security number.

Model 151

After applying via the Modelo 149, and getting accepted, the person must then do their tax declarations by filling out and presenting Modelo 151.

Beckham-Spain

Other taxes and the Beckham law

Next to paying lower income tax, other taxes also need to be payed Spain. Below we discuss the taxes and how the Beckham law effects them.

Capital gains

Capital gains are not exempt under the Beckham law. Dividend gains, including profits earned from sales of movable and immovable assets (property), are charged at a fixed rate of 19%. As a non-resident, you are liable to pay income tax in Spain for any capital gains earned from outside Spain. Capital gains earned from outside Spain must be still paid to the corresponding nation per their taxation rules.

Wealth tax

When you fall under the Beckham law you will only have to pay wealth tax on your assets located in Spain. If you would fall under the PIT, then you would have to pay taxes on your worldwide assets.

The wealth tax is a tax payed on the net value of your assets such as real estate, stocks, accounts and life insurance.

Local taxes

A resident under the Beckham Law must pay local taxes. For example when you own property in Spain, you might have to pay local property taxes.

Help from experts paying your income tax

If you are looking to move to Spain, then we can help you with Tax advice in Spain. will help you decide what works for you based on your personal objectives, and current Spanish compliant requirements. If you qualify for the Beckham law, we will guide you through the entire process and describe all the steps you should consider to make more informed decisions.

Where did the Beckham law come from?

British Footballer David Beckham was one of the first foreigners to benefit from the decree, hence the popular name “Beckham Law”. He was taxed as a non-resident when he famously played for Real Madrid in Spain.

The Beckham Law is, without doubt, a significant tax benefit in terms of tax savings. It has benefited a diverse group of people including athletes, foreign entrepreneurs and wealthy expats. Essentially, it enables non-resident foreigners to make significant investments in Spain while being liable to pay less tax than a resident would pay. The special tax regime is ideal for foreigners who become Spanish tax resident because of an assignment to Spain.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

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Non-Resident in Spain: Tax And Other Information

If you are planning on relocating or buying a property in Spain, you may be faced with the decision of whether or not you want to be a non-resident in Spain. If so, there are several things that will need to be taken care of in advance.

This article explores what it means if a person is considered a non-resident taxpayer in Spain and how this affects their taxes. It also provides information about the various types of income that will have different tax rates applied.

What is a non-resident in Spain?

You are a non-resident if you live in the country for less than 182 days. For example, a tourist first will be a non-resident because they have a non-permanent aim in mind.

Even if you have a residency permit, such as a short-stay visa. You will still be considered as a non-resident when you are staying less than 182 days.

It is possible for a non-resident to own property, open a bank account, and get income from Spain. This does not make them a resident in Spain.

People visiting in Spain will automatically be deemed non-resident taxpayers the day they arrive in the country. This is important to note, as it can have a direct bearing on how much you will be taxed for certain instances such as real estate purchases and inheritance.

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Tax in Spain for non-resident ex-pats

There are two types of taxes in Spain that will need to be paid by those who are staying in Spain as non-resident. These are income earned from work or from passive income, such as income from a rental property for example.

In terms of the first category, the rates may vary depending on how much you earn and whether you have Spanish residency.

Some of the advantages of living in Spain as a non-resident:

  • There is no inheritance tax in Spain for non-residents. This also applies to properties that were purchased before moving abroad.
  • You do not have to pay social security contributions to the state, though this does not apply if you are self-employed and just want to buy private health care.
  • The only tax that you will need to pay will be on any property that is owned in Spain. If you do not reside in the country, this can be quite low and means that there is no increase in property taxes each year.
  • If you leave your primary residence empty for two years or more, you will not be charged any taxes on it. However, you must keep the property up to date in terms of maintenance and renovations.
  • If an individual is under 65 years old and has resided abroad for more than 10 years (or is over 65), they are able to claim Spanish residency, which will provide them with a number of benefits.

Non-resident tax in Spain

In general, non-resident taxpayers pay a rate of 24 per cent on income earned in Spanish territory or obtained from Spanish sources and a rate of 19% on capital gains and financial investment earnings derived from Spanish sources. Various other sorts of income are subject to different rates.

Non-resident individuals who are tax residents in a country/jurisdiction of the EU or of the EEA and have an effective exchange of tax information with that nation/territory are taxed at a rate of 19%.

Capital gains tax for non-residents in Spain

Non-residents from outside the European Union (EU) are required to pay a 24% fixed capital gains tax rate. However, if the nonresidents are from a European country, their capital gains tax is lowered to just 19%.

Compared to the capital gains for residents which is 19 per cent for the first €6,000 profit, 21 per cent for profit between €6,000 and €50,000, and 23 per cent for any profit above €50,000.

Jewellery, stocks, collectables, bonds, property, precious metals, lands are subject to capital gains tax.

Non-resident tax rates for income that is earned in Spain

Certain rules apply to those who are living outside of the country and earning an income through employment or other means. This includes dividends, rental property, etc.

Those who do not live in Spain but own properties within the country will be taxed under non-resident taxation

Spanish Wealth tax for non-residents

Non-residents who own properties in Spain will have to pay wealth tax. This holds true even if the property is not being used as a primary residence.

The wealth tax rate in Spain is between 0% and 3.5% depending on the region you are registerd in.

Frequently Asked questions on non tax residency

Below you can find some of the commonly asked questions on non-tax residency and their answers.

Who can help me file my tax return?

It is recommended that you work with a tax advisor if you are filing taxes in Spain for the first time or have any concerns about the process. As every country has its own rules and regulations regarding personal income, it can be quite confusing for non-residents to get an understanding of the process.

What are the tax consequences when choosing between being a resident and a non-resident taxpayer in Spain?

The main difference between these two types of taxpayers is that one will be taxed more heavily than the other. It usually depends on your status as a resident or a non-resident, though there are some exceptions to this rule.

What is the tax year in Spain?

Residents of Spain pay taxes on a calendar-year basis, with January 1 to December 31 as the tax year. Between April 6 and June 30 of the following year, eligible residents must submit tax forms to the Agencia Tributaria. In Spain, there are no further extensions to filing income tax returns.

What do I need to pay taxes in Spain?

To pay taxes in Spain you will need a NIE number and a fiscal number. You must also have a Spanish bank account to pay taxes in.

What happens if I don’t pay my taxes on time?

The Agencia Tributaria will charge late payment interest to those who do not file their income tax returns by the given deadline. There is also a penalty of up to 10% for those who fail to make any payment within two months after the due date for filing your return.

How much is the capital gains tax for non-residents in Spain?

Non residents pay 19% on capital gains and financial investment earnings derived from Spanish sources.

When do i have to pay income tax in Spain?

The deadline for submitting the Spanish income tax returns to the Agencia Tributaria is between April 6 and June 30 of the following year. There are no further extensions.

Do I have to pay wealth tax in Spain as a non-resident?

No, wealth tax is only applicable to those who are residents of Spain.

Do I have to pay tax on my rental income as a non-resident?

Non-residents are required to pay a tax of 24.75% on rental income. You cannot reduce 50% as in the case of resident owners. If you are a resident, you must include your rental income with your other income when making your annual Spanish tax return.

Do I have to pay Spanish social security while living abroad?

Only if you live in Spain for 183 days or more then you will be subject to Spanish social security laws.

Are pensions paid by Spanish social security to non-Spanish residents who do not have an agreement with the country taxable?

Non-resident individuals that retire in Spain and who receive retirement pensions or other types of pensions are subject to non-resident income tax.

Do I need to pay taxes on my worldwide income as a non-resident in Spain

No, you are only required to pay taxes on income earned in Spain.

Which income tax form do I need to declare as a non-resident?

It is necessary to submit Form 210.

A word from SublimeSpain

In this article, we have discussed the non-resident tax in Spain. If you would like to have professional tax advice, contact us at contact@SublimeSpain.com and get more information on how we can help you.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

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Popular Banks in Spain

Spain is home to some of the biggest banks in the world. These banks play a vital role in the country’s economy, providing financing for businesses and individuals alike. In this blog, we will take a look at the five largest banks in Spain.

Spain has a long history of banking, with the first recorded bank appearing in 1846. Since then, the country’s banking sector has grown to become one of the largest in Europe. Currently, there are more than 100 banks operating in Spain, with a combined asset base of over €1 trillion.

These banks play a vital role in the Spanish economy, providing financing for businesses and individuals alike. They also play an important role in promoting economic growth and stability. Spanish banks have been significantly affected by the global financial crisis in 2008 and the ensuing European debt crisis. However, they have slowly begun to recover and are once again playing a key role in supporting the Spanish economy.

What can banks in Spain do for you?

When it comes to finding the right bank for your needs, Spanish banks offer a wide range of options and services. From traditional banking products like checking and savings accounts to more specialized services like investment products, mortgage financing, Spanish banks can provide the financial support you need. In addition, many Spanish banks offer online and mobile banking services, making it easy to manage your finances on the go.

With so much to offer, it’s no wonder that Spanish banks are a popular choice for both individuals and businesses. So whether you’re looking to open a Spanish bank account or more comprehensive financial services such as corporate and investment banking, Spanish banks are worth considering.

Choosing the right bank for your needs

There are a few things to consider when choosing a bank in Spain.

First, think about what type of products and services you need. Do you need a basic checking account or are you looking for more specialized services like investment products or mortgage financing? Once you know what you need, start comparing banks. Consider things like the fees they charge, the level of customer service they provide, and the convenience of their online and mobile banking services.

It’s also a good idea to check out what other customers are saying about a particular bank before you make a decision. Reading online reviews can give you a good sense of a bank’s reputation and whether or not they’re likely to meet your needs.

Once you’ve chosen a bank, be sure to take the time to open an account and get started with their services. With the right bank in Spain, you can enjoy all the benefits of modern banking with ease.

Most popular banks in Spain

Below you can find our pick of the most popular banks in Spain, based on assets, visibility, service level, and the number of branches.

1. Banco Santander

Banco Santander is the most popular bank in Spain and the largest bank in Spain in terms of lending, assets and deposits. Meanwhile, it has around 200 million employees, and 135 million customers. Banco Santander operates in the Americas, Asia, and Europe. Its primary markets include the United Kingdom, United States of America, Argentina, Germany, Mexico, Brazil, Portugal, Chile, and Poland.

Banco Santander Group has a big network of 13,277 branches throughout the world. Furthermore, it started operations in China and established offices in Uruguay and Puerto Rico.

2. Banco Bilbao Vizcaya Argentaria, SA (BBVA)

BBVA bank is the second largest bank in Spain. In 1999, It was merged from Banco Bilbao Vizcaya (BBV) and Argentaria. Nowadays, it serves 75.7 million customers, almost in 30 different countries. However, Banco Bilbao Vizcaya Argentaria, SA position is vital, especially in Latin America.

3. CaixaBank

CaixaBank is the third largest and most popular bank in Spain, and its headquarters is in Valencia. Also, it has a leading retail banking business in Portugal, with more than 2 million BPI clients. CaixaBank has9,335 ATMs, 15.7 million customers and 5,033 branches nationwide. CaixaBank was relatively founded in 2011, and its main shareholder is CriteriaCaixa.

4. Banco de Sabadell

Banco de Sabadell is the fourth largest bank in Spain that is located in Alicante. In 1881, this bank came into being by a group of 127 businessmen. Nowadays, serves 11 million customers, over 26,000 employees, and a network of 2,455 branches. Last year, Banco de Sabadell company had a market capitalization of $ 5.9 billion.

5. Bankia

Bankia is the fifth-largest bank in Spain. It has 2,200 ATMs, with a network of 2,300 branches, and serves 8.1 million customers. In 2010, Bankia was founded after seven savings banks in Spain were merged into the Institutional Protection System such as Caja Canarias, CaixaLaietana, Caja Madrid, Caja Avila, Caja Segovia, Caja Rioja, and Bancaja,

Meanwhile, Bankia offers banking insurance, real estate services, commercial banking, asset management, and online banking.

6. Bankinter

Bankinter is the sixth-largest bank in Spain, and definitely part of the most popular banks in Spain. It is considered as being one of the most profitable and leading banks in Spain. Bankinter provides corporate and personal services like insurance products, private banking, and mutual funds.

In 1965, It was established by a joint venture between Bank of America and Santander. In 1972, entered the Madrid Stock Exchange as an independent banker. Bankinter loan portfolio reaches 54.8 billion euros with total assets of 76.3 billion euros. Furthermore, it has 400 financial agents with 445 branches in Spain.

7. KutxaBank

KutxaBank is the seven largest bank in Spain located in the Basque Autonomous Community. It offers the services of debit and credit cards, savings accounts, checking, auto insurance, life insurance, online banking, retirement products, and many other services.

In 2012, KutxaBank was officially formed as a merger of Basque financial institutions, such as GipuzkoaDonostiaKutxa, Bilbao Bizkaia Kutxa and Caja Vital Kutxa.

8. Unicaja Banco

It is the eighth largest bank in Spain. In 2011, Unicaja Banco SA registered and built its leading positions in Leone, Andalusia, and Castile. It serves 3 a million customers nationwide with approximately 1,180 branches.

Unicaja Banco is headquartered in Malaga. It offers different services such as asset management, retirement plans, savings accounts, personal and commercial loans, investment products, and brokerage services.

9. Ibercaja Banco

It is the ninth-largest bank in Spain. Ibercaja Banco headquartered is in Zaragoza, it has 5,600 employees who provide a wide range of personal and commercial banking services. Ibercaja Banco has 1,475 ATMs and more than 1,150 branches throughout Spain.

The main domestic market for Ibercaja Banco is Aragon, which includes the three provinces of Huesca, Zaragoza and Teruel, the autonomous community of Rioja, the municipality of Guadalajara, and Burgos and Badajoz.

10. Abanca

It is the tenth bank in Spain, as it is a large financial institution founded in 2011. Its headquarters is located in Betanzos, municipality of the Autonomous Community of Galicia, province of A Coruña. It is a subsidiary of Abanca Holding Financiero SA, which currently employs about 4,700 people. Abanca has more than 620 local branches and offices in France, Germany, Great Britain, Venezuela, Brazil, Panama, and Mexico.

Spanish Banking System

The Spanish banking system is a network of banks and financial institutions that provide services to the Spanish economy. The system is regulated by the Bank of Spain, which is the central bank of the country. There are a number of different types of banks in Spain, including commercial banks, investment banks, and savings banks. Commercial banks are the largest type of bank in Spain and offer a wide range of services, including loans, mortgages, and credit products.

Investment banks are focused on providing financing for businesses and projects. Savings banks are typically smaller institutions that offer savings accounts and deposit products. In addition to these traditional types of banks, there are also a number of online-only banks that operate in Spain. These banks offer a variety of products and services, including personal loans and credit cards.

A word from SublimeSpain

Indeed, choosing the right bank in Spain is not an easy task, since all settlements in the modern world take place through banks, it is important to have a bank that is there for you. We hope we have shown you a few ideas by giving you 10 popular banks in Spain. If you want any financial help or want to open an account with the help of financial experts, consult SublimeSpain.

Income Tax in Spain in 2021: The Essential Guide

On the one hand, personal income tax in Spain is a complicated and, at times, confusing and lengthy process. On the other hand, understanding personal income taxes and your liability is crucial to avoid severe fines. Income tax is one of the most common taxes in Spain. This is an introductory guide to begin navigating what the personal income tax is, the rates, due dates, and penalties.

What is personal income tax?

Personal income tax in Spain or Impuesto de Renta sobre las Personas Físicas (IRPF) is a direct tax on an individuals personal income. It is not the same as corporate income tax. Spanish personal income taxes are divided between the state and the autonomous regions. Although the state has created simplified tax thresholds, the rates and tax bands will vary depending on the autonomous region you’re located in.

To get started, you’re required to apply for a tax identification number known as an NIE number. Citizens of the EU usually need to apply for this number after three months of residency in the country, while citizens from countries outside the EU will generally receive their application with their Spanish residency.

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Who pays income tax in Spain?

Even if you’re not a legal resident of Spain, you could still be considered a tax resident. You must file your income tax returns in the country if you meet any of the following requirements:

  • Have spent more than 183 calendar days per year within the country.
    It’s important to note that short absences will be considered a part of this number unless you have proof of your tax residence in another country.
  • You have a spouse or dependents who are tax residents of Spain.
  • If you have a business or economic interests located within the country. For example, if you are starting a business in Spain, you will pay income tax in Spain.

Additionally, if you have a Spanish address, licence plate, phone number, bank account, or have used the healthcare system you could also be considered a tax resident unless you can prove otherwise.

Spanish tax for residents

For those employed by Spanish resident companies, the employer is required to withhold an amount of your taxable income to essentially pre-pay your tax returns. The deductions from your paycheck are an estimate of what will be paid at the end of the tax year. Authorities will then deduct these amounts from your final tax bill and refund any excess amounts paid.

In addition, tax residents of Spain are also obligated to declare any assets held outside of the country through the Modelo 720. This includes bank accounts in your name (or that you manage), insurance, real estate, and more.

Tax in Spain for non-residents

Non-residents of Spain are also taxed on income earned in the country. Typically this is a 24% flat rate on work income and 19% on capital gains and investment income earned in Spain. Next to this, it is important to note that tax returns for non-residents must be filed on an individual basis and not submitted jointly with a spouse.

Earnings subject to income tax in Spain

There are several different sources that Spanish tax residents are required to pay income taxes from. Two types of taxable income need to be taken into consideration when filing your taxes are the general taxable income (renta general) and savings income (renta del ahorro).

Taxes on general income

Spanish tax residents are liable to pay taxes on all worldwide income aside from savings income. This is inclusive of your salary, pension, rent, gambling winnings, etc.

Two parts make up the Income Tax in Spain, a national and regional tax. Generally, the percentages are the same; however, they may vary slightly depending on the region you’re located in. The progressive income tax table is as follows:

Table Income Tax for Tax-residents in Spain

Taxes on savings and investments

If you are a Spanish tax resident, you will also be taxed on your worldwide savings and investments. This includes the following:

  • Interest gained on savings
  • Dividends and income gained from holding interests in companies
  • Any income from life and disability policies
  • Income from annuities
  • Capital gains made from the disposal or transfer of assets

The tax thresholds for savings and investment income are:

  • Up to €6,000: 19%
  • From €6,000 to €50,000: 21%
  • From €50,000 to €200,000: 23%
  • Over €200,000: 26%

Taxes on rental income

In addition to the previously mentioned income taxes, you are also liable to pay a tax on rental income in Spain. Any rental payments earned from a Spanish property are subject to a 19% rental income tax for both residents and non-residents from EU or EAA countries. If you are a non-resident not from the EU or EAA countries the flat tax rate is 24%. However, there are a number of deductibles on this tax, including expenses such as house insurance, local property tax, and repairs and management costs. This also includes a yearly 3% depreciation of the property.

Deductions and allowances

Spanish tax residents can enjoy a range of deductions and allowances on their personal income taxes. A standard allowance is granted for anyone under the age of 65 (€5,550), 65 and up (€6,700), and 75 and up (€8,100).

Additionally, if you have dependent children age 25 and under living with you, the following allowances are granted:

  • €2,400 for the first child
  • €2,700 for the second
  • €4,000 for the third
  • €4,500 for the fourth
  • €2,800 as an additional allowance for each child under the age of three

Furthermore, you can typically claim tax deductions for the following:

  • Payments made into the Spanish social security system
  • Pension contributions in Spain
  • Buying or renovating your home in the country
  • Joint tax filings
  • Charitable donations

Income Tax Deadlines

In Spain, the personal income tax year coincides with the calendar year. Therefore, the deadline to file your tax return for the previous year is the 30th of June.

Late Submission Penalties

Penalties for late income tax returns are judged on a case-by-case basis but generally include a fine for late submission and additional interest charges. However, you can usually expect something similar to the following interest rates for each timeframe past the due date:

  • 3 months or less overdue: 5%
  • 3-6 months overdue: 10%
  • 6-12 months overdue: 15%
  • A year or more overdue: 20%

An interest of 5% is typically charged on top of these amounts for payments that are more than one year overdue. In addition to these interest rates, the fine for late submission is €100 for nil returns. However, if the Tax Office prompts the return, the fine will increase to €200.

Next to this, it’s worth noting that in situations where the return is not made voluntarily, the following penalties will apply in addition to the previously mentioned fines and interest rates:

  • Minor infraction: 50% of the tax due
  • Serious infraction: 50–100% of the tax due
  • Severe infraction: 100–150% of the tax due

How to file your Spanish tax returns

Everyone is obligated to file a Spanish income tax return in the first year of their tax residency in the country. The forms can be submitted online and require your digital identification certificate.

From the second year of tax residency onwards, it’s only necessary for you to file your tax return if you are earning over €22,000 as your employer will have already deducted the taxable amount. It’s important to note that this only applies if you have only one source of income.

Personal Income Tax Advice

If you need professional advice navigating your personal income tax returns in Spain, then contact us at SublimeSpain. Our team of qualified tax and legal experts can offer specialized guidance and assistance to ensure your tax returns are filed correctly and on time.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered as professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

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Rental Income Tax in Spain: Types, Deductibles, and Rates

In this article, we will discuss the rental income tax in Spain. Among the taxes in Spain, rental income tax is a widespread Spanish income tax. Read this post for an overview about the types of rental income tax and the different rates.

What is the Rental Income Tax

You will have to deal with this tax when renting out your property. The tax can be divided into VAT tax and income tax. Depending on the situation, you will have to pay VAT tax or not. The income you create will be taxed similarly to other income taxes (such as personal income tax and corporate income tax).

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Do I need to pay VAT on rental income?

Whether you need to pay VAT tax or not depends on what type of property you are renting out, and to whom you are renting the property.

When don’t you need to pay VAT tax on your rental income?

When a renter will use your property exclusively for living, you don’t add VAT tax to your invoicing. For example, if you are renting out an apparent or house to be used as a residence for a family, the rental income is not VAT taxed. This applies to lettings with living spaces only, which include apartments, houses, rooms in shared flats or houses, and any separate living quarter.

When do you need to pay VAT tax on rental income?

When you are renting out to a business or self-employed person to execute their economic activity, you need to pay VAT tax and add VAT tax on your invoicing. For example, when you are letting to a bakery, a pub, a hair salon or a restaurant. The same applies to lettings with non-living spaces, such as retail space, business areas and any other premise accessible only from the street.

Next to this, when you are renting out a storage place, you will also have to pay VAT tax on the rental. For example, when you are renting out a parking space or stockroom.

Rental income taxes in Spain

Rental income tax for individuals

Rental income tax for tax residents and non-residents in Spain are different. The difference is in the tax rates, rental property tax deductions, and the frequency of declaring your rental. However, both residents and non-residents must make the tax declaration in Spain over all the income from rent.

Rental income tax in Spain for Non-Residents

Non-residents are subject to the flat non-resident Income Tax (IRNR, Impuesto Sobre la Renta de personas No Residentes), a flat tax rate of 19% if you reside in the EU or EAA countries. If you are not from the EU or EAA countries, the flat tax rate is 24%.

Rental income tax in Spain for Tax Residents

The tax for tax residents on rental income is called IRPF (Impuesto sobre la Renta de Personas Físicas). It is a tax levied on the income obtained during a year from natural persons residing in Spain, no matter if they are Spanish. It is also a progressive and direct tax.

The rental income tax for tax residents is on a progressive rate of 19% to 47%. When you generate more income, you will pay more tax. The property owner pays the rental income tax, not the renter. The rental income tax for tax residents is different than for non-residents.

Tax for landlords Spain

Rental income tax for self-employed and companies

When you rent out business premises to a company or self-employed to carry out economic activities. You are obligated to pay VAT tax, and must register at the government as an Autonomo or company.

Rental income tax in Spain for self-employed

When you want to use a property management service, agent, lawyer or accountant for your property, it is wise to register as a self-employed (Autónomo) in Spain. Because when you are an Autónomo, your venture will pay the Autónomo tax, and being taxed as an Autónomo means you can deduct the VAT tax from renting your property.

Rental income tax in Spain for limited liability companies

When you plan a riskier venture or make more than 65.000 euro’s revenue from your Spanish properties, the Spanish limited company becomes attractive for its protective and cost benefits. For example, when people plan to build or make significant investments in Spain, they often form an SL company in Spain. Of course, with a Spanish limited liability company, you will be able to deduct the same property rental costs as an Autónomo.

Property rental income tax Spain

Personal income tax tranches for tax residents in Spain

Below you can find the personal income rates for tax residents. You will be considered a tax resident when you reside longer than 185 days in Spain.

Income Taxes Trenches 2021 Total
Up to 12.450 euros 19,0 %
From 12.450 euros to 20.200 euros 24,0 %
From 20.200 euros to 35.200 euros 30,0 %
From 35.200 euros to 60.000 euros 37,0 %
From 60.000 euros to 300.000 euros 45,0 %
From 300.000 euros and on 47,0 %

Applying the marginal rate directly, a person who earned 65,000 euros would pay 45% of that income in taxes: 29,250 euros. Fortunately, the 2021 income tax table is progressive, and this is what you would pay:

  • First IRPF tranche: A person pays 19% of 12,450 euros – 2,365.5 euros
  • Second IRPF tranche: The person pays 24% of 7,750 euros (the difference between the first and second bracket) – 1,860 euros.
  • Third IRPF tranche: The person pays 30% of 15,000 euros (the difference between the second and third tranche) – 4,500 euros.
  • Fourth IRPF tranche: The person pays 37% of 24,800 euros (the difference between the third and fourth tranche) – 9,176 euros.
  • Fifth IRPF tranche: The person pays 45% of 5,000 euros (the difference between the fourth and fifth tranche) – 2,250 euros.
  • Sixth IRPF tranche: The person pays 47% of the difference between the fifth and sixth tranche, that is, the amount that exceeds those 300,000 euros (in this case, it would not apply).

Interestingly, the final percentage paid by personal income taxpayers is a division of two tax tranches. The first one is the state tax, which goes to the Government, and the second one is the autonomous tax, which the independent communities receive.

In addition, you must take other aspects such as the family situation into account, which includes: being married or single, having children under 25 years old, children under three years old, living with people over 65 years old, etc.

Situations to consider Number of descendants
0 1 2 or more
Single, widowed, divorced or legally separated taxpayer. – 15.947 € 17.100 €
A taxpayer whose spouse does not obtain income exceeding 1,500 euros per year, excluding exemptions. 15.456 € 16.481 € 17.634 €
Other situations 14.000 € 14.516 € 15.093 €

Getting Rental income tax as a property owner

Deductibles from rental income tax

According to the Spanish tax authorities, EU members and EEA citizens can deduct the following expenses from their rental income tax. You can deduct costs from the rent because they are used for the rental property to create income.

  • Administration and accounting costs: costs enquired to pay Spanish tax and properly follow Spanish tax laws.
  • Notary and Lawyer costs: e.g. for formalizing rental contracts drafting contracts, or tenant eviction.
  • Real estate agent fees or key holder fees
  • Water, electricity, laundry, cleaning, and utility costs
  • Security services: e.g. gated communities
  • Mortgage interests and unpaid rents: Note that rental income is the amount of rent receivable (not received). You can deduct due rents until six months have passed from the first debt collection action or if the tenant is legally insolvent.
  • Depreciation of the property at 3%: You can deduct the depreciation of 3% of buildings or the cadastral value. The cost of buildings is frequently unknown as the purchase deed does not usually separate the two. In this case, the building’s proportion is taken from the cadastral value. Failing this (e.g. non-Spanish property), the tax office will accept that buildings represent a reasonable proportion, perhaps 2/3rds of the total cost.
  • Interest on loans taken out to finance acquisition, improvements, and property maintenance.
  • Maintenance, repairs, and renewals: The property’s expansion or improvements are not deductible.
  • Non-state taxes and surcharges related to the property: This category covers costs like IBI and charges for the trash, and it includes any fines.
  • Insurance policies (e.g. for fire, civil liability, fire etc.)
  • Primary maintenance and reparation costs

Like other Spanish tax deductions, you must justify all deductible costs with relevant documentary evidence. They are valid only if you have the invoice, and quotations are not valid documents. If you have an accountant in Spain, you can send them your invoices, and they will take care of the rest.

Spanish property rental income tax

Double taxation agreements and rental income tax

The Double Taxation Agreement is an agreement that might have been signed by Spain and your country of residence (or state where you need to pay tax). The Spanish tax authorities make these double taxation agreements to check and regulate where residents and non-residents will have to pay tax.

According to what is established in the OECD Convention model, the gross income generated through Spanish property must be taxed in Spain, regardless of the taxpayer’s tax residence.

Personal Income Tax Categories

The income tax consists of different income taxes, and you will need to consider all incomes when making your personal tax declaration.

  • Rental income tax: As the name already says, they are income obtained from tangible elements, such as leases of premises or subleases.
  • Payroll taxes: The most important one for the majority of the inhabitants is the income from salaries. Despite its name, this part does not include all income from work but only those earned as an employee of a company, and it excludes self-earned income.
  • Capital gains taxes: Income generated from selling a property is capital gains income. e.g. the income can be from selling a house, a plot of land, or commercial space.
  • Dividend taxes: Dividends or profits from participating in a business.
  • Business income tax. This last one comes from doing business on your account. Business activity, in turn, is defined as an activity that includes work and capital together and is aimed at making money.

For each part of the tax base, costs related to this activity can be deducted.

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Examples of personal rental income tax calculations

Below you can find a few examples of rental income tax calculations.

Example 1: rental income tax rate in Spain for residents

In the following example, we consider the case of a resident in Spain with a taxable base net of 30,000 euros and no reductions that the regulations take into consideration as personal and family circumstances (a single). As we see in the table, the following types and sections would be applied:

  • 19% to the first 12,450 euros
  • For the next 7,750 euros (from 12,450 euros to 20,200 euros) we would apply a 24%
  • And to the next 9,800 euros, until reaching 30,000 euros of the salary in the example, we would apply a 30%

In this case, the landlord with a gross of 30,000 euros per year would end up with a net of 24,393 euros per year, which divided by 12 payments gives an effective payroll, of 2,032 euros per month.

Example 2: rental income tax rate in Spain for non-EU/EEA residents

Using the same example as above, a person who has an annual rental income of 15,000 €, and expenses of 3,600 €, will pay the following tax on their rental income in Spain:

  • Total rental income: 15,000 €
  • Deductible expenses: 3,600 €
  • Tax base: 11,400 €
  • Tax rate: 24%
  • Total due: 2,736 € (11,400 € * 0.24)

Example 3: rental income deductions

Assuming you have a rental property that generates an annual rental income of €15,000. If the community expenses are €2,000 per annum and repair and improvement costs amount to €1,600 per annum, the tax on your rental income in Spain will be calculated as:

  • Total rental income: 15,000 €
  • Deductible expenses: 3,600 €
  • Tax base: 11,400 € (15,000 – 3,600)
  • Tax rate: 19%
  • Total due: 2,166 € (11,400 * 0.19)

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income tax return for rental income

Frequently asked questions on Rental income tax in Spain

Below you can find the answers to some frequently asked questions about rental income tax in Spain.

Is the Personal Income Tax the same throughout the Spanish territory?

Partially, while the national Spanish tax office has put forward national income tax rates, there are still differences between the regions because they can set their tax rates. Next to the rental income tax rates, there are specific differences in terms of tax deductions. It is best to contact an accountant in Spain who knows the tax implications of the local property tax.

How to declare rental income?

The frequency of declaring your rental depends on your status as a Resident or Non-resident. For residents as we know, the Spanish tax on rental income declaration takes place on annual basis, nevertheless, for non-residents, the declaration has to be submitted every three months based on a set calendar, as follows:

  • April 20th: Declaration for incomes obtained in January, February, and March.
  • July 20th: Declaration for incomes obtained in April, May, and June.
  • October 20th: Declaration for incomes obtained in July, August, and September.
  • January 20th: Declaration for incomes obtained in October, November, and December.

What happens if I pay late?

The deadlines are very clear in the previous question. If you pay just one day late, the Tax Office will send you a penalty for:

  • 5%: payment made within three months of the deadline
  • 10%: if more than three months pass, but less than 6
  • 15%: between 6 and 12 months
  • 20%: plus interest if you pay more than one year late

So why does Spain have a rental tax?

The main purpose is to respond to the principle established by the Spanish Constitution that all Spanish Citizens must contribute to the support of public expenditures. On the other hand, it tries to favour those people who are in a more precarious situation. Thus, it aims to contribute to a more efficient economy by promoting or taxing certain activities.

How many income taxes are there?

In this article, we will focus on the rental income for individuals. However, there are two income taxes: the Personal Income Tax is levied on the income of individuals, while the Corporation Tax is levied on that of limited entities. In some exceptional cases, there are legal persons and other entities that do not pay Personal Income Tax or Corporation Tax, but it is the natural or legal persons involved in that entity who declare the income obtained based on their participation in that legal entity. There is also a tax on Tax on Economic Activities (IAE) in Spain, which is paid under certain circumstances.

Next to rental income tax, individuals that own property in Spain might have a tax liability in the form of wealth tax. Individuals that own more than 700.000 euros worth of assets in Spain, will have to pay this wealth tax.

tax for non residents

A word from SublimeSpain

In conclusion, Spanish rental income tax is one of the most common of Spanish property taxes. The Tax Office charges everyone who gets income in the Spanish territory regardless of whether they are a Spanish resident or not. Depending on how you are registered and the money you make you will either pay income tax, vat tax, tax on economic activities, wealth tax or taxes on your property. We strongly recommend hiring a tax advisor or accountant if you are planning to rent out your property. For a fixed fee, you can take care of all the government forms that are required in Spain. Contact us for a quote today.

Disclaimer: Information on this page may be incomplete or outdated. Under no circumstances should the information listed be considered professional legal advice. We highly recommend seeking guidance from a legal expert if you lack extensive knowledge or experience dealing with any of the procedures outlined in these articles.

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