Different types of taxes apply in Spain, including income tax. Find all related information in this article.
All foreigners having spent more than 183 days in Spain during a fiscal year are considered as residents. Hence, they have to pay income tax. Workers earning wages in Spain are also deemed to be fiscal residents, even if they have not formally registered with the Registro Central de Extranjeros. So if you have decided to settle and work in Spain, you are advised to inquire if there is any non-double taxation agreement between Spain and your home country. The Spanish Tax Department, that is the Agencia Tributaria might help.
Given that Spain consists of 17 autonomous communities, tax rates may differ from one region to another.
Good to know:
Tax year starts at as the 1st January and ends on the 31st December.
Income tax rate in Spain generally varies between 24.75% à 52%. In fact, it is deducted at a progressive rate according to your salary. You are required to fill a tax declaration before the 30th of June whereby the “Campana de Rentas” begins. Spain residents may be eligible to some benefits or deductions according to their personal situation, that is, if they have children and if they have to pay transport fees, etc.
Good to know:
Residents have to pay tax according to their global income while non-residents are taxed only on their Spanish-source income at a fixed rate.
Note that residents are required to declare all their assets, including their local or foreign bank accounts, as well as property.
Independent workers have to pay their income tax and make their social contribution themselves. Hence, it is recommended that they hire an accountant or a tax adviser to assist them with related procedures. Tax rates for independent workers vary between 18% and 43 %.
Non-residents in Spain also have to pay property tax at a rate of 7% on purchasing a property in the country. Other taxes such as wealth tax, capital gains tax and inheritance tax also exist in Spain.
Note that your resident or non-resident identification number will be required during all tax related formalities.
Value added tax (VAT), known as Impuesto sobre el Valor Añadido (IVA) in Spain, is deducted at different rates:
- 21% on non-essential products and services
- 10% on products and services such as eye and dental care, hair dressing and funeral services
- 4% on basic items such as milk, bread, cheese, fruits and vegetables, cereals and eggs.
Note that VAT does not apply in the Canary Island. Instead, a local tax which is known as the Impuesto General Indirecto de Canarias, that is the General Indirect Tax, applies on goods and services.
If you need more information about taxes in Spain, feel free to ask your questions on the Spain forum.