All foreigners that have lived in Spain for more than 183 days in Spain during a fiscal year are considered as residents and are required 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 enquire if there is a double taxation agreement between Spain and your home country. The Spanish Tax Department (aka 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:
The tax year starts on the 1st January and ends on the 31st December. Because of frequent changes being applied, you are advised to consult independent advice, for example through a gestor (tax advisor), before submitting your tax return.
Paying income tax
Income tax in Spain or IRPF (Impuesto sobre la Renta de las Personas Físicas) generally varies between 19% à 45%. In fact, it is deducted at a progressive rate according to your salary. You are required to file a tax declaration (declaración de la Renta) before the 30th of June whereby the “Campaña de Rentas” begins in April. During this time you can submit your Renta online. Spanish residents may be eligible to some benefits or deductions according to their personal situation, for example, if they have children and if they have to pay transport fees, etc.
Note that tax in Spain is calculated as from the first income received. However, there is no exemption threshold for income tax although rebates and certain deductions apply.
Income is categorised as follows:
- Employment incomeIncome from movable capital
- Income from immovable capital
- Business income
- Capital gains
- Imputed income (from residences other than the taxpayer’s primary residence).
Independent workers in Spain
Independent workers including freelancers (autónomos) have to pay their income tax and make their social contribution themselves. It is therefore recommended that they hire an accountant or tax adviser (gestor) to assist them with related procedures. Tax rates for independent workers vary between 15% and 43%.
Good to know:
As a freelancer (autónomo) you have to quarterly declare VAT (IVA) through modelo 303 and an annual summary through modelo 390. Between April and the end of June you have to submit your RENTA tax declaration.
Additional declarations may apply depending on your type of work, for example if your clients are located outside of Spain or you run your own company. You are advised to check with your gestor.
Other taxes in Spain
Non-residents in Spain also have to pay movable and immovable property tax (IVA rate ranging from 1% to 6%) on purchasing a property in the country. Other taxes such as wealth tax, capital gains tax and inheritance tax also exist in Spain. Rental income from property is categorised as investment income under Spanish tax law.
Note that your resident or non-resident identification number (NIE) will be required during all tax related formalities.
Tax return in Spain
You are required to fill in your tax return by June 30th of the following year at the latest. In case your income does not exceed 22,000 euros, you are not obliged to make a tax return. Note that income tax is deducted at source by employers, followed by some adjustment.