This article will provide you with information on Spain’s complex tax system. For any specific queries, we recommend you seek advice from a professional specialising in this field.
Below, we present you with basic information on the main taxes and issues you will need to take into account.
The main direct personal tax for residents in Spain is income tax (IRPF, which stands for Impuesto sobre la Renta de las Personas Físicas). It is calculated on income and other personal circumstances.
A foreign national must submit their tax return, that is, their income-tax return, if they acquire a tax residence in Spain. This would basically happen if you reside here for more than 183 days within a one-year period or where the headquarters of your professional or business activity is located here for more than one year.
You will have to submit your tax return between April and June, which you can do by yourself or with help from a consultant (tax manager). The Tax Authority also offers free appointments for submitting tax returns (www.agenciatributaria.es).
Special tax system for workers who have moved to Spain
There is a special tax system for workers who have moved to Spanish territory; this was set up to attract foreign talent and with certain tax incentives. The system is popularly known as the Beckham Act, as the English football player was one of the first to benefit from it. However, having undergone various amendments, the Act excludes professional athletes.
Under this special system, taxpayers are only taxed on income they receive in Spain, and the rate applied for that is 24% on the first 600,000 euros they earn during the year they acquire residence and for the following five years. In addition, their tax liabilities to the Tax Authority are also reduced. Individuals who move to Spain under an employment contract, for example, can opt for this special system if they meet certain legal requirements, such as not having lived in Spain for the previous ten years. If you wish to opt for this system, you will have to inform the Tax Authority within six months as from the date you register with Spain’s Social Security system If you fail to do this within that time period, you will lose this advantageous opportunity.
Non-resident income tax
Non-resident income tax (IRNR, which stands for Impuesto sobre la renta de no residentes) is a tax on income received by individuals who are not tax residents in Spain.
One of the requirements for obtaining the status of tax resident in Spain is to spend more than 183 days in the country within a one-year period. That is why the IRNR also applies to newcomers who have received some income during the first 183 days of their stay in this country. The IRNR is subject to a fixed rate of 19% for residents in the European Union, Iceland and Norway and 24% for the other taxpayers.
Value added tax
Value added tax (IVA, which stands for Impuesto sobre el Valor Añadido) is a consumption tax. It is usually included in the price of most goods and services, but note that it is not included in some big purchases. IVA is usually at 21%, although some goods and services have a reduced rate or are even exempt.
City Councils receive annual property-tax (IBI, which stands for Impuesto sobre bienes inmuebles) payments from legal owners, beneficial owners and lessees of any type of landed property (flats, garages, warehouses, shops, offices etc.) If you have properties in Spain, even if you are not resident, you will have to pay the IBI on them, along with the IRNR. Where a property changes hands, the new owner will pay the IBI in the following year.
Property-transfer and stamp-duty tax
This is a tax on a wide range of transactions that are grouped under three headings: property transfers; company transactions and documented legal transactions.
It will apply to you, for example, if you purchase or sell a dwelling or enter into a lease agreement. Also if you need to draw up any notarial, commercial or administrative documents.
Owners of vehicles suitable for travelling on public roads must pay an annual tax on mechanically powered vehicles (IVTM, which stands for Impuesto sobre vehículos de tracción mecánica), commonly known as the road or vehicle tax. This tax is managed by the local authority of the municipality that the vehicle is registered with.
Registrations are managed by the Directorate-General for Traffic.
You can consult the formalities for registering vehicles and exchanging driver’s licences.
- Vehicle registration
- Exchange of driving licences
Individuals resident in Spain must pay taxes to the various public authorities: the Spanish government; the Regional government and the Municipal government.
We provide a list below of the main taxes we have explained and of the Authorities responsible for managing them:
- Property transfer and stamp duty tax
- Wealth tax
- Tourist tax
You will find further information on taxes from the various tax authorities on the following website:
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