Tax and accounting
Frequently asked questions about taxes and accounting
Yes. Inheritance tax is applicable in Spain on all assets included in your estate. What is more, inheritance tax does not form part of the double tax treaties between Spain and many countries, including the UK. Unilateral tax relief should be requested in the country of tax residence.
Spanish law clearly defines how your estate should be divided and what proportion must pass to your relatives (e.g. spouse, children and other family members). The law generally applies to anyone who has assets in Spain
Are there any exemptions to the General rule where you become a tax resident after living in Spain for 183 days? How does the Golden Visa exemption to the 183-day rule actually work?
There is just one exception: the Spanish Golden Visa. This visa does not require you to be in Spain for a minimum period every year for you to renew or maintain your permit. The only requirement for renewing the Golden Visa is to visit Spain at least once during the visa period and maintain the original visa conditions.
What if my close relatives are living in Spain, but I’m not? Am I then classed as a tax resident in Spain?
Usually yes. Under Spanish tax regulations, if your spouse (not legally separated) and dependant children (i.e under 18) habitually reside in Spain, you are also assumed to live there. This is because Spanish law automatically presumes that your habitual place of residence is the same as your spouse and dependent.
To rebut this presumption you need to prove otherwise.
What happens if I want to classify as a Spanish tax resident, but I cannot stay in Spain for longer than183 days?
In addition to the 183-days general rule, other circumstances can be taken into account when deciding your tax residency. For example, if Spanish authorities consider that your centre of vital interest (any place where your personal and economic relations are the closest) is in Spain, you may be classified as a Spanish tax resident.
Another situation that could arise is when you don’t have any registered tax residency. In this case, no matter how many days you do live in Spain, you will be classified as a Spanish tax resident.
No, a residence permit does not automatically imply tax residency. The general rule is that you must have stayed in Spain for at least 183 days in order to qualify as a tax resident. However, to maintain and renew all permits (with the exception of the Golden Visa), you need to be in Spain for at least 183 days a year.
There is no single answer to this question. Deciding whether to become a tax resident in Spain depends on your own circumstances, and those of your family. You also need to consider your financial situation, the type of residence or any tax rule applying to you in Spain.
While some businesses are exempt from VAT, the vast majority need to pay this. Unlike in some other countries, there is no threshold when VAT kicks in; rather, it is applicable on all profits. VAT is generally charged at 21%, although companies in some industries can pay a lower level of either 4% or 10%.
You will need to register to pay tax in Spain with the Spanish tax authority, whether you are a resident or non-resident. First, you’ll need your Foreigner’s Identity Card (NIE) number, which you can get through the local Foreigner’s Office (Oficina de Extranjeros) or police station within 30 days of arrival in Spain. Fill out Modelo 30 to register your obligation to pay Spanish tax as a resident or non-resident for the first time, or to change your details.
Tax base rate is 24% of a 2% of the catastral value for non EU citizens, and 19% of a 2% of the catastral value for EU citizens. Should you fail to pay this tax, you might be charged and penalized by the Spanish Tax Agency if you try to sell your property.
Apply for the Beckham Law. The Beckham Law is a special tax regime that is applied to foreigners who come to Spain due to work reasons. Basically, you can avoid paying a progressive income tax that can rise up to 45%, and pay a flat fee of 24% instead. So, as you can see, this creates important tax savings for you.
If a person resides more than 182 days in any calendar year in Spain, then that person will be deemed a resident in Spain for tax purposes. Individuals spending less than this period, will be deemed non-resident for tax purposes.
In general, non-resident taxpayers are taxed at the rate of 24 percent on income obtained in Spanish territory or which arises from Spanish sources, and at the rate of 19 percent on capital gains and financial investment income arising from Spanish sources. Specific rates apply to certain other type of income.
The first step in setting up a limited company is to obtain a certificate to verify that the company name you want to use is not already taken. This is called a no-name coincidence certificate and is available from The Mercantile Registry (RMC). You can do this by yourself through the RMC website. This step takes about three days before you receive the answer from the RMC by courier.
If you want to set up a limited company in Spain, there is a defined path to follow; the process works like this:
- Ensure you have a foreigner’s tax identification number (NIE)
- Register the company name with the Mercantile Registry (Registro Mercantil Central or RMC)
- Get a company tax identification number (CIF)
- Open a business bank account
- Sign the deed of incorporation
- Register the company
- Register for social security
To open a branch in Spain you need to provide the following documents:
- Certificate of good standing of the parent company (head office)
- Board / Sharehoders resolution to open a branch in Spain
- Power of Attorney in favor of our firm to act on your behalf
Essentially, anyone can become a freelancer or self-employed in Spain. Being an autónomo allows you to carry out your profession or run your own business as if it were a company, but at a much lower cost and with less administration. For these reasons, Spain has attracted many entrepreneurs over the decades and continues to do so.
The Tax Authorities and the Spanish notary will need a proof of existence of the foreign investor. The preferred document for this purpose is a notarial affidavit (with the correct wording). If not an excerpt of a Public body, like the Chamber of Commerce, the Mercantile Registrar or the Companies House could be used. However, based on our experience, we strongly recommend the notarial affidavit.
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