Individual Income Tax, IRPF (as spanish fiscal resident)
Spain’s fiscal/tax year is the natural calendar year. Income taxes in Spain should be paid between May 1 and June 30 for the previous year’s income. With a DNI or NIE, you can apply for a Número de Identidad Fiscal (NIF) in order to pay your taxes in Spain.
You can download Official software for filling your tax return; program PADRE. http://www.aeat.es/AEAT.internet/renta2011/padre.shtml
Tax residents in Spain will pay income taxes in Spain for their worldwide income.
You become tax resident if:
- you live in Spain over 183 days in each calendar year
- you have their main financial interests in Spain
- your spouse/husband o underage children are resident/s in Spain.
However, in many cases you only need to file a tax return in Spain when you make more than €22,000 per year, receive a rental income of more than €1,000 and/or receive a capital gains and savings income of more than €1,600/€1.000.
Personal allowances for Spanish income tax purposes are €5,151, which increases to €6,069 for persons over age 65 and €6,273 for persons over age 75. In addition, €3.400 when your husband or wife has income for less than €8.000.
Child allowances for Spanish income tax purposes are: €1,836 for the first child, €2,040 for the second child, €3,672 for the third child and €4,182 for additional children. In addition, Spain has a maternity allowance of €2,244 for each child under three years old.
Earned income above these allowances is taxed in the range 24,75%-51%
Income in Spain is roughly defined as:
- Wages and salaries, either as a salaried employee or as a businessperson
- Pension benefits
- Dividends, yields, interest, royalties and capital gains
- Rental Income
- Capital Gains
- In-kind benefits
Special Expat Income Tax Regime in Spain
This tax rate for expats could be advantageous to avoid paying the upper levels of the rates outlined above.
The system is a flat rate of 24,75% up to €600.000 income (salaries and wages) thought a withholding tax and no payment at the end of fiscal year of a tax return.
In order to qualify, the expatriate must meet following:
- Expats must not have been a resident in Spain at any previous time during the 10 years before their current work or position in Spain.
- Their position must be under a legal employment contract with a Spanish company or through secondment employment, or with a non-resident company holiding a permanent establishment (i.e. a branch) in Spain.
- The work must be performed in Spain, although some flexibility is allowed. Work may be partially performed outside Spain if the salary for work abroad does not exceed 15% of the total salary for the year. If the working contract provides that the individual performs functions in another group company, this limit goes up to 30%.
- The expat’s income must be subject to Spanish IRNR (Non-Resident Income Tax). What means a withholding tax at 24,75%
If you qualify, this means you’ll be subject to a special flat tax rate for expatriates at 24,75%% for all Spanish income sources, and you will be taxed as a non-resident regarding all income, capital gains and wealth taxes.
Note: You’ll have to make the decision within six months from the start date of your social security registration. The period of time you can claim this expat tax rate starts from the first year when the expat has spent more than 183 days in Spain and continues for a total of five years or more.
Property/Real Estate Taxes in Spain
The average cost of property in Spain is €100,000 – €250,000. To conduct real estate transactions in Spain, you must obtain a NIE number – a foreigner identification number for tax pourposes.
When you buy property, you will pay a transfer tax of 7% (when you buy from individual a resale property), or VAT at a rate of 10% (when you buy from real estate company a new property).
The stamp duty tax is levied on the sale price declared on the public notarized deed; it varies by autonomous community between 0.1% and 1%. But is 0% when you buy a resale property.
The wealth tax rate ranges from 0.2% to 2.5% of the value of the property/wealth every year. For residents and non residents the first €700,000 is tax exempt. The tax exemption increases to the first €300,000 if it is a primary residence.
The local property tax/council tax is set by the municipal authorities, usually around 0,2%-0.5%.
The land appreciation tax is levied each time a property changes hands and increases in value; this rate is set by the municipal authorities, (approx 0.5% per year ownership).
When you sell property, the capital gains tax rate is 19%-21% (21%-27% increased crisis tax 2012-2013). However, there are tax breaks available.
Inheritance tax is not a fixed rate. It depends on a number of factors, including the wealth of the beneficiary, not just the benefactor.
The income tax on rental income as NON fiscal resident is 24.75% you will still be taxed even if you don’t rent out the home (tax return model 210 declared yearly).
Rental income should be declared quarterly (tax return model 210).
Hello, I am presently an international civil servant working at the United Nations in Geneva. I am considering retiring in Spain (Mallorca) in a few years. Will I have to pay taxes on my United Nations Pension? Thank you for your kind reply.
Yours sincerely,
Marianne
Yes, you will. The exemption is only applicable while you are working at the UN.
Hello, would you please share the articles of the Spanish Law on non-taxation of UN salary (I am still working for the UN). Thank you!
It is regulated in the Convention on the Privileges and Immunities of the United Nations, which Spain, as many other countries, joined. Section 18. b) states that “officials of the United Nations shall be exempt from taxation on the salaries and emoluments paid to them by the United Nations”.
Hello Adil,
You can download from this link from Spanish Boletin Oficial del Estado https://www.boe.es/diario_boe/txt.php?id=BOE-A-1974-1673
Hi. I am Engish and retired – 67 years old. I am a permanent resident in my own apartment which I own for 18 years now. I do not rent my apartment out to other people and do not make any income from my apartment.
My bank told me that as I pay tax on my pension in the UK and not under the spanish tax system that I would have to pay a spanish tax 210 based on the value of my apartment. Is this true???? They also said that if I were to have my pension taxed by the spanish system and not in the UK , then I would be exempt from this 210 tax.
Can you advise me please.
Many thanks
Michael Kelly
Dear Michael,
If you are tax resident in UK, that´s right: you pay taxes for your pension in UK, and as non resident in Spain you should pay non-resident tax for your apartment in Spain.
If your permanent domicile is in Spain, you should pay taxes for your UK pensión in Spain, and inform UK for this situation so they will not whithhold on your pension. And in Spain for your permanent resident, as Spanish tax resident, you are exempt of Estate tax.
Hello Javier
Thank you for the website, it`s very informative. I´m about to go to the hacienda to sort out my mother´s tax for the first time. She has very advanced dimentia and I take care of all her affairs. I have power of attorney in the UK but it is not valid here. All her money is in the UK and she doesn´t have a bank account here. Are these to factors going to be a problem, are they going to let me deal with her affairs and are they going to let me pay the tax from her bank account in the UK or my bank account here?
Thanks
Power of Attorney from UK is valid in Spain as long as you get an apostille in UK for this document.
Hi. I have a 25yr endowment paying out in June 2015, again free of UK income tax. I am resident in Spain: will I need to pay [Spanish] tax on the endowment pay out I receive? Thanks for any advice.
This is, as you say, exempt for UK residents. But in Spain applies Spanish regulations not UK ones. So most probably you will be tax for difference between money paid out and money paid in, at savings rate.
With respect to 720, my bank changed its location last year. I filed in 2012 and nothing else has changed. Do I need to file something to indicate the change in address?
You dont need to update this until you need to fill again.
Hi Javier,
Thank you for a very helpful website.
Can you help us solve a problem?
We are resident in galicia
My husband has a pension from the health service in England and as it is paid by the government they tax this at source. Even before tax it is well below the Spanish tax threshold. he also earns a small income from renting our property in UK on which he pays tax in England. Does he have to fill in a tax form in spain declaring this rental income even though the combined total is still below the 22,000 Euro tax threshold?
Hope I have explained this ok
Thanks
maggie
Rental income from UK, is not withholded in Spain, so the limit for this kind of income is 1.000 euro. Over this limit you need to feel income tax form.
But this pension is exempt in Spain, if your husband is not Spanish.
In case your husband has Spanish citizenship, Spain will tax him on his pension.
22.000 euros limit, is only used for salaries, wages, pensions…
thank you for that Javier, we appreciate your time at what must be your busiest time of year.
Could you give us an approx total of your charges to help us fill in the relevant forms and guide us through the process as we think we need help and as we like your website we would like to do business with you. Would you prefer us to contact you directly?
Maggie walder
Margie, You can contact directly to my Mobile
Hello
In 2011 a 25 year endowment policy I had in the UK paid out. (It was free of income tax in the UK) I omitted to include the interest in the 2011 renta. Do I just include it in this years or do I have to declare it a different way?
Thanks
Just modify Renta2011 including this, and pay the difference
ok thanks