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Moving To Spain

Spanish Tax Residency

When moving to Spain, buying property, investing or running a business, you must consider Spanish tax rules. You will pay Spanish tax on any property you own and other assets or investments in the country.

The amount of Spanish tax is determined by whether you are classed as a Spanish Tax Resident or non-resident,  so it is essential to establish your tax residence in Spain.

Our Experts in Spain Residency

Spanish Tax Residency Rules​

You are classified as a Spanish tax resident if the following apply:

  • You spend more than 183 days in a calendar year in Spanish territory
  • Your centre of financial or vital interests is located in Spain
  • Your spouse and/or underage children reside in Spain

Becoming a Spanish Tax Resident

As a Spanish tax resident you should pay attention to the following taxes:

  1. Income Tax (IRPF)
    As a Spanish tax resident, you must declare your worldwide income under the Impuesto sobre la Renta de las Personas Físicas (IRPF). Taxable income includes employment earnings, business profits, and certain investment returns, with progressive rates applied to total annual income. For further details, visit the website of the Spanish Tax Office (AEAT).
  2. Capital Gains Tax
    Spanish Tax residents are liable to Capital gains (e.g., from selling real estate or shares) are generally taxed at progressive rates ranging from 19% to 28%, depending on the amount of the gain. See the Spanish Tax Office (AEAT) page for more information on calculating and paying capital gains tax.

  3. Wealth Tax (Impuesto sobre el Patrimonio)
    Spanish tax residents pay Wealth Tax on their global assets, such as real estate and investments, with rates usually between 0.2% and 3.5%, depending on regional regulations and deductions. Please review the details of this tax on the Spanish Tax Office (AEAT)page.

  4. Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones)                                                                                                  Inheritance and gift tax obligations in Spain depend on the region and the relationship between donor and beneficiary. Rates, allowances, and exemptions can vary significantly. Refer to the Spanish Tax Office (AEAT) page for up-to-date information.

  5. Solidarity Tax on Large Fortunes (Impuesto Temporal de Solidaridad a las Grandes Fortunas)
    This temporary tax applies to Spanish Tax residents with net wealth exceeding €3 million. The tax rates follow a progressive scale and may vary by region, complementing existing wealth tax obligations. Please consult the Spanish Tax Office (AEAT) page for the latest guidance.

Spanish income tax and non-residence rules must be considered carefully when buying property or investing in Spain.

Spanish Non-Resident Tax​

As a non-resident for Spanish Tax you mus be aware of the following taxes:

  • I.B.I (Impuesto Sobre Bienes Inmuebles) Tax—Similar to UK council tax, this annual payment to the local town hall or SUMA office is based on the rateable value of the property, also known as the Valor Catastral. The tax rate is dependent on the region but ranges between 0.4 and 1.1% of the Cadastral rateable value.
  • NRIT – Non-Resident Income Tax is a form of ‘benefit in kind’ annual tax collected at the end of each year, even if you do not rent out your property. If you sell your property, the Spanish authorities will review your record to ensure that NRIIT payments are current. If not, the tax office will take the outstanding amount from the 3% that is withheld by the buyer and paid into the tax office on completion of the sale of the property.
  • NRIT—Non-Resident Income Tax is also applicable if your property is rented out on either a long or short-term let. It is due quarterly, even if the property is not rented out during that period.
  • Non-Resident Wealth Tax is chargeable on your assets and investments in Spain, even if you are non-resident.
  • If you are a non-resident owning property in Spain, Solidarity Tax on Large Fortunes (Impuesto Temporal de Solidaridad a las Grandes Fortunas) may apply if your net wealth in Spain exceeds  €3 million. The tax rates follow a progressive scale and may vary by region, complementing existing wealth tax obligations. Please consult the Spanish Tax Office (AEAT) page for the latest guidance.
  • Capital Gains Tax – you must pay capital gains tax for any properties, investments or other assets in Spain. The current capital gains tax rate for non-residents is 19% for 2020.
  • Inheritance Tax – Must be considered if you own property in Spain

Spanish Non-Resident Tax Calculator

There are free Spanish Non-Resident Tax Calculators online, but please be wary about relying on them to calculate the tax you think you need to pay. There are many complex variables regarding your tax residency status, the type of income you receive, the type of property you own, etc., so the results from these calculators can be inaccurate. The fact that you used an online calculator will not help you if Spanish tax officials issue you a fine for an inaccurate tax declaration.

For peace of mind and to avoid any nasty surprises, it is always worth getting professional advice on your Spanish residency status and the taxes due. Tax and legal professionals may also be able to suggest tax mitigation steps that can help you legitimately reduce your tax bill.

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