Which taxes in Spain do I have to pay?
At Manzanares Lawyers, we understand that trying to comprehend Spanish tax laws can be a tough task – especially if you are not based in Spain or do not speak and read Spanish fluently. Whatever your circumstances may be, it is essential to understand your tax liabilities in Spain to make sure you do not run into legal trouble or financial problems as a result of failing to pay taxes that you owe in this country.
As in many countries, tax liabilities and tax rates in Spain vary depending on whether you are a resident or a non-resident. For tax purposes, you will be classed as a Spanish resident if you live in the country for more than 183 days a year – spending any less time than this in Spain will classify you as a non-resident.
Tax residents and non-tax residents have slightly different tax obligations and are liable to pay different Spanish tax rates. Non-residents may also have to contend with tax obligations in their home countries, though Spain has agreements with lots of countries to avoid double taxation.
In any case, whether you are a Spanish resident for tax purposes or considered a non-resident, it is likely that you may face some of the following taxes in Spain:
Personal Income Tax
Individuals who earn an income while living in Spain – whether actively through work or passively from other sources – may find themselves liable for IRPF (Impuesto sobre la Renta de las Personas Físicas). Anyone who earns more than 22,000€ in a year will be expected to file a tax return in Spain, while those who earn less than 14,000€ from multiple sources will be exempt from submitting a return.
This not only applies to income gained through employment or self-employment, but also income from investment returns, asset sales, savings accounts, or state benefits. This includes both state and private pension payments for expats who move to Spain in their retirement, though this passive income is taxable from 15,000€ a year if it comes from two or more sources.
The standard personal income tax rate in Spain depends on the individual’s residency status and income level. This tax is progressive for residents, starting at 19% and increasing up the scale to 47% for income over 300,000€ – while non-residents must pay a fixed rate of 24% if they are not a Spanish or EU/EEA citizen.
Non-Resident Income Tax
Residents in Spain are obligated to pay tax on their worldwide income to the Spanish authorities, including earnings, dividends, interest, royalties, capital gains, and pensions. However, non-residents only have to pay tax in Spain on these income sources within Spain – but non-residents are still responsible for filing tax returns to report this income and paying any resulting tax bill.
One of the main sources of income earned within Spain for non-residents is rental income from letting properties in Spain to earn a profit. The tax that applies in this instance is called IRNR (Impuesto sobre la Renta de No Residentes), and liable non-resident landlords must file returns and pay tax on rental earnings quarterly rather than annually. Only EU residents are able to deduct maintenance costs.
It is important to note that even if you do not rent out your property in Spain, the property itself will still be a taxable benefit in the eyes of the Spanish authorities. Therefore, you may still be taxed annually on a percentage of its cadastral value (1.1–2%) for any months with no rental earnings as an ‘imputed’ or ‘notional’ tax.
Property Tax
If you own or are planning to buy a property in Spain, you should be aware that all property owners must pay a municipal property tax to the local town hall where the property is registered – whether they live in the property or not. This annual tax is levied by local authorities or the Suma Gestión Tributaria (SUMA) agency.
Local authorities put this property tax revenue towards the maintenance of public services in the area, which the property owner is likely to benefit from. Each municipality can set their own rate for IBI (Impuesto Sobre Bienes Inmuebles), which is why it can vary from 0.4–1.3% between different regions in Spain.
IBI is not applied to the property’s market value, however – it is levied against the cadastral value of the property instead, which is often around 60–70% of its market value. This rateable value depends on factors like the property’s size, location, age, and condition, and can be updated if any changes are made to the property.
Owners who do not visit their property in Spain regularly or rent out properties in their absence should also be aware that local authorities can add an IBI surcharge for properties that have been ‘permanently unoccupied’ for at least two years. This could be up to 50%–150% of the property’s annual IBI bill.
Wealth Tax
There are several different possible taxes on wealth in Spain that could apply, depending on your income level and the total value of any taxable assets or investments that you own in Spain.
Capital Gains Tax in Spain is not a separate tax, but is integrated with IRPF. If you sell a property or asset in Spain, you will be charged tax on the difference between the price you paid when purchasing the asset and the amount you received when selling it – on a progressive scale from 19% for residents and a fixed rate of 24% for non-EU/EEA non-residents.
Inheritance Tax in Spain is applicable whether the beneficiary of an estate in Spain is a Spanish resident themselves or not. Known as ISD (Impuesto de Sucesiones y Donaciones), allowances and rates vary between regions, but the tax only applies to estates valued over 1,000,000€ in Andalucía, with a reduction of 99% available.
Wealth Tax in Spain applies to global assets for residents and assets located within Spain for non-residents – such as real estate, cash, investments, art objects, jewellery, vehicles, and luxury goods. IP (Impuesto sobre el Patrimonio) applies to net assets worth over 700,000€ at 0.2%–3.5%, though it is 0% in Andalucía.
How do I pay taxes in Spain?
Whether you are a resident in Spain or a non-resident, it is still your responsibility to make sure you are registered with the Spanish tax authorities and your local town hall in Spain, and that you are submitting tax declarations and paying any taxes due on time – be it quarterly or annually.
This can be a complicated and confusing process for non-Spanish speakers, especially those who are based outside of Spain and do not want to have to come to Spain to sort out their tax affairs in person. In cases like this, appointing a legal representative in Spain to act on your behalf can be extremely beneficial.
At Manzanares Lawyers, we can advise both residents and non-residents on taxes in Spain, providing tax management services as required with power of attorney. The clarity we can provide can be invaluable in organising your tax filing and payments, ensuring you do not miss deadlines and risk fines or further penalties.
For legal advice on your tax status in Spain and which Spanish tax rates apply to you, please contact Manzanares Abogados at your earliest convenience. Email your query to clientservices@manzanareslawyers.com or call the phone number below to reach the appropriate office for your location in Spain:
⦿ +34 952 59 50 42 (Alhaurin) ⦿ +34 952 82 41 12 (Marbella) ⦿ +34 971 30 31 32 (Ibiza)
When you reach out to Manzanares Lawyers, our team of specialists will assist you with the highest standards of customer service to resolve your Spanish tax concerns.
Spain Tax FAQs
Ideally, you should have some idea of the local and national tax laws that apply when living in Spain, whether you move to Spain permanently, stay in Spain for short periods of time on a regular basis, or will be living in the country temporarily.
Being aware of your Spanish tax obligations allows you to keep in control of your spending, and will help you to budget accordingly for your living costs so you can remain safe and comfortable throughout your day-to-day life in Spain.
However, we understand that if you are planning on living in Spain in the future, or are relatively new to the country, you may not know very much about the basic taxes you will be expected to pay based on your particular circumstances.
Here at Manzanares Lawyers, we can give you an overview of each kind of Spanish tax, so you are fully aware of the taxes that may apply to your situation and how they could affect you in the future if you do not plan for or comply with them.
There are a few variables that determine whether you are a ‘tax resident’ in Spain or not that are worth looking out for. If one or more of the following scenarios apply to you, then you may be obliged by law to pay Spanish tax:
- ⦿ Your main interests are located in Spain. This applies to people who may work overseas yet have family members, such as their spouse or children under the age of 18, who live in Spain but still depend on them financially.
- ⦿ Your primary professional activities are conducted in Spain. This means that if you are self-employed and working in the country, or if your place of employment is in Spain, you will have to pay Spanish tax on your earnings.
- ⦿ You have spent more than 183 days in Spain within a single calendar year. Regardless of whether you are formally registered as a resident or not, the Spanish authorities will consider you a tax resident if you live in Spain for longer than this.
- ⦿ You own property in Spain. Even if your main residence is outside of Spain and you only stay in your Spanish property for less than 183 days a year, and are thereby classified as a non-tax resident, you will still be liable for property-related taxes in Spain.
The short answer to this question is yes. If you earn income in Spain, own any property in Spain, or own any other assets and investments in Spain, then you will be required to pay income tax to the Spanish authorities.
You can find out more about this on our dedicated page for non-resident tax in Spain, which explains which taxes non-residents may be liable for.
If you fail to abide by Spanish tax laws and don’t pay your taxes in Spain, you will face a hefty fine with progressive interest charges on outstanding tax balances – or in some cases, the seizure of assets in Spain and even jail time for what the Agencia Tributaria considers tax evasion.
This is why it is crucial to make sure you know exactly which taxes you should be paying when you become a Spanish resident or stay in Spain part-time as an owner of Spanish property, so you can avoid getting yourself in trouble with the law.
The team of experts at Manzanares Lawyers has thorough knowledge of all Spanish tax laws and specialises in tax law in Andalucía. We can assess your situation and help you to understand any taxes you may have to pay and how to do this – so you can live a relaxed life in Spain on the right side of the law.
The Spanish tax year aligns with the calendar year, meaning it starts on 1st January and ends on 31st December. Tax returns reporting annual earnings are due to be filed – and any tax owed is due to be paid – by the end of June the following year.
Not sure whether you’re obligated to file a tax return in Spain or not? You must pro-actively file your own tax returns in Spain if you are:
- ⦿ A resident who lives in Spain more than 183 days a year
- ⦿ A first-year resident in Spain (regardless of income level)
- ⦿ An employee earning over 22,000€ a year from a single employer
- ⦿ An employee with income from multiple employers of more than 15,000€ a year
- ⦿ A contractor or self-employed person earning more than 22,000€ a year
- ⦿ An individual who earns over 1,600€ a year in interest, dividends, or capital gains
- ⦿ A person with economic interests in Spanish territory (including dependants)
- ⦿ An owner of property in Spain who earns over 1,000€ a year in rental income
The Agencia Tributaria allows online tax return submissions from April, with phone appointments available from May and in-person appointments only available in June. If you miss the deadline to submit your tax return and pay your taxes, you will be charged interest, and could receive a fine.
Taxpayers who are residents in Spain are charged progressively on their income, with six tax brackets whose rates range from 19% on lower earnings to 47% on higher earnings. While this tax can be much higher for residents, who are also taxed on global assets, residents do benefit from the following allowances:
- ⦿ Tax-free allowance (based on age)
- ⦿ Marriage allowance (for joint tax returns)
- ⦿ Child allowance (up to 4 dependent children)
- ⦿ Dependent relative allowance (based on age)
- ⦿ Disability allowance (depending on age and carer requirements)
Spanish residents can also claim deductions to reduce their taxable income, such as pension contributions, rental management costs, or charity donations.
However, these tax allowances and tax reliefs do not apply for non-residents (except for EU citizens, in some cases). Non-residents must pay the full standard rate on all eligible income – 19% for EU/EEA nationals or 24% for non-EU/EEA nationals.
However, some highly qualified foreign workers who move to Spain for employment may be able to benefit from a fixed lower rate of 24% for several years (as if they were a non-resident) under the Special Regime for Displaced Workers.
After some municipalities in Spain chose to abolish the standard wealth tax, IP (Impuesto sobre el Patrimonio), the Spanish government introduced an additional higher wealth tax as a trial in 2023, which will continue in 2024 – the Solidarity Tax on Large Fortunes.
ISGF (Impuesto Solidario a las Grandes Fortunas) applies throughout Spain to individuals whose assets exceed 3,000,000€ in value. Again, this includes assets within Spain only for non-tax residents, and global assets for tax residents.
Each municipality can choose an ISGF rate for its residents, ranging from 1.7% to 3.5%. If IP has already been charged on income over 700,000€, this can be deducted from the individual’s ISGF bill so they don’t have to pay tax twice on the same income.
In regions where the IP rate is reduced to 0%, like Andalucia and Madrid, those with assets liable for ISGF will have to pay the higher wealth tax in full.
