Tax & Accounting in Spain

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What you need to know about Tax Law in Spain

• When do I become a tax resident in Spain?

  Spain considers you a tax resident if you spend more than 183 days of each tax/calendar year in Spain, or if you have your main centre of vital or economic interests in Spain. In particular, Spain presumes, unless you can prove the contrary, that you have your centre of vital interests in Spain if your spouse and/or underage children live here.

  However, if at the same time you are considered a tax resident in your home country by the national tax rules of your country, we would need to refer to the criteria established by the Double Taxation Treaties, to see which country prevails.

• Can I have a residence permit in Spain and remain a tax resident in the USA?

  Very few types of Spanish residence permits (e.g. Golden visa) allow you to renew your residence even if you haven’t lived in Spain for more than 183 days per year. However, most regular residence permits oblige you to spend more than 6 months per year in Spain to qualify for renewal. It will also be necessary to look at the Double Taxation Treaty between Spain and your country to see the residence criteria. In such cases it is always advisable to talk to a tax expert in both countries to make sure that you are complying with your tax obligations in both states.

• What is the so-called Beckham law in Spain?

  The so-called Beckham law in Spain is a special tax regime that allows foreigners who move to Spain to pay tax at a flat rate as non-residents (24%) as opposed to the resident income tax rate (progressive 19-47%). The flat rate applies only to the income earned in Spain, 24% on up to €600,000, and 47% on income above that.

• Do I qualify for Beckham law in Spain?

  The Start-Up Law of December 2022 introduced significant improvements to who can qualify for it, so you can apply for it if you fall into one of the following categories:

  • Employees who relocate to Spain to work for a Spanish company
  • Company directors regardless of their share in the company capital as long as the company does not qualify as a patrimonial holding. In cases of patrimonial holding companies the director must hold less that 25% of the share capital
  • Entrepreneurs that move to Spain on an “entrepreneur visa” of 14/2013 International Mobility Act.
  • Digital nomads with employment contracts abroad.
  • Highly qualified professionals that provide services to companies that are considered start-ups, or carry out training or R&D&I activities, provided 40% of their total income come from such activities.
  • Family members of the above (spouse and descendants)

• Who needs to pay a Wealth Tax in Spain?

  The Wealth Tax in Spain is a regional tax, so each region has liberty to decide whether to apply it or not, and in which conditions. It applies to taxpayers individually on their personal wealth, not on their annual income or transactions. This is calculated on the basis of the value of all the taxpayer’s assets. In most cases, the following rules apply:

  • Exemption of €300,000 for the taxpayer’s main residence.
  • Exemption minimum of €700,000 for both resident and non-resident taxpayers.
  • Obligation to file a tax return for taxpayers whose Income Tax return is to pay, or, if the total value of the assets exceeds 2 mln €.

  However, the national government in 2022 decided to introduce a temporary National Wealth Tax, which basically charges those taxpayers that did not pay the Wealth Tax regionally. This measure is a temporary one (for 2022 and 2023 tax years initially).

• Who needs to pay a Large Fortune Tax in Spain?

  In 2022, the Spanish government introduced a new temporary tax (for 2022 and 2023 tax years initially) on taxpayers whose net worth exceeds €3.7m. Tax residents will be taxed on their worldwide assets, and non-resident taxpayers whose net worth exceeds €3 million will be taxed on their Spanish assets only. Tax rates range from 1.7% to 3.5%.

• What taxes do I need to pay in Spain as a non-resident property owner?

  Each real estate owner in Spain needs to pay a municipal Land Tax (IBI – Impuesto de Bienes Inmuebles). It is calculated by local Tax Offices based on the cadastral value of your property and is usually paid by all owners as they receive the forms prepared by the local Town Halls. However, some people may miss paying their Non-Resident Income Tax, which is due on the national level. When you own real estate in Spain as a non-resident, it is implied that you have a property at your disposal, so even if you don’t rent it, it is deemed that you receive a so-called “implied income”, and you will be taxed on it. It is usually a very small amount, but if you don’t file the tax forms on time you can receive a fine and have to pay it with an interest. Our tax adviser can help you file all the forms on time.

• All my income comes from the UK, do I need to pay taxes in Spain?

  If you spend more than 183 days per calendar year in Spain you can be considered a tax resident, and will need to file your income tax forms in Spain on your worldwide income. The good news is that the UK – Spain double taxation treaty will prevent you being taxed twice on the same income. Your tax advisers can calculate what you need to pay in each country.