It is important to establish your tax residence in Spain if you have an investment or property in the country as whether you are classed as resident or non-resident will determine the amounts of tax you are liable to pay. If you don’t correctly establish your resident or non-resident tax status in Spain, miscalculate the tax you have to pay or miss a deadline for filing a tax return, you could be liable for significant fines.
There are a number of free online Spanish Non-Resident Tax Calculators but please be wary about relying on them to calculate the tax you think you need to pay. As there are so many complex variables regarding your tax residency status, the type of income you receive, the type of property you own etc the results from these calculators can often be inaccurate. The fact you used an online calculator will not help you if the Spanish tax officials issue a fine for an inaccurate tax declaration.
For both your peace of mind and to avoid any nasty surprises in future, it is always worth getting professional advice on your Spanish Non-Resident Tax. Tax and legal professionals may also be able to suggest tax mitigation steps you can take that can actually help you legitimately reduce your tax bill.
The Spanish taxation system is complicated and you will probably need professional tax advice on how to pay non-resident tax in Spain in order to avoid potential fines from incorrectly declaring what taxes you think you owe.
The Spanish Government also regularly changes its tax rules, making it hard to keep on top of all the nuances of the system. Unfortunately, those that often get it wrong are expats holding assets abroad.
If you are classed as a non-resident for tax in Spain there are a number of taxes that you may be liable to pay including:
If you are thinking of buying property in Spain there are a number of ways to mitigate Non-Resident Property Tax liabilities, but obviously, this has other tax and legal implications that need to be considered. The most suitable solution will depend on your particular circumstances. Your tax residency in Spain and elsewhere, how you own the property, what type of property it is and how long you stay in Spain each year will all have a factor.
If you are a non-resident and own a property or investment, for example, a holiday home or rental, you are liable to pay taxes to the Spanish tax authorities on property you own and other assets and investments. If you do not pay the appropriate tax to the Spanish authorities your property may build up a debt against it on which interest is also due, which often leads to difficulties in selling it and your bank account could be embargoed. If you own a property in Spain but don’t rent it out, an annual tax levy of Renta Imputada de Inmuebles Urbanos will be made. This is calculated in relation to the rateable value of your property.
In general, non-resident taxpayers are taxed at a flat rate on income obtained in Spanish territory or which arises from Spanish sources, at the general rate of 24% for work income and at the rate of 19% on capital gains and financial investment income arising from Spanish sources. Specific rates apply to certain other types of income.
Spanish income tax and non-residence rules must be considered carefully when buying property or investing in Spain. Essentially there are three categories of foreign resident in Spain:
If you are buying real estate in Spain but not planning to live there, you still need to be aware of Spanish property taxes for non-residents. If you are a Spanish non-resident and sell property in Spain you will likely be liable for capital gains tax at a fixed rate of 19% for non-residents from EU/EEA countries or 24% for non-residents from other countries, including the UK.
Deductions and allowances are available but they are quite complicated and vary by region so you should consult with a Spanish tax specialist for more information.
Spanish Wills and Inheritance Tax are both important considerations for non-residents if you have Spanish property, assets and/ or investments. It is normally recommended that Spanish Non-residents draft a Spanish Will to cover assets located in Spain and a foreign Will to cover any assets in other countries.
It is important that there are no legal or tax conflicts between the application of the Spanish Will and the international Will. Spanish laws governing inheritance tax are complex, for example, in Spain there is no legal concept of a person’s ‘estate’ and all beneficiaries are liable to inheritance tax in some form or other.
It is important to note that inheritance tax is not included in the double tax treaty between the UK and Spain. Therefore, when drafting a Will, the Spanish Inheritance and Gift Tax (ISD) must be considered together with the UK’s Inheritance Tax Rules.
Del Canto Chambers’ dual-qualified, multilingual tax lawyers have handled over 500 complex cases from Europe, the Middle East, Latin America, and Asia. Discerning London-based and international clients, corporations, solicitors, and tax advisors count on our expertise.
You can more about what clients have to say, about working with Del Canto Chambers here below.
The Beckham Rule is a special Spanish tax regime for expatriates. It allows qualifying individuals to pay a flat tax rate on employment income and to be treated as non-residents for certain other tax purposes.
Any individual who moves to Spain for professional reasons and has not been tax resident in Spain during the five previous tax years may apply. This includes employees, remote workers, directors, and certain entrepreneurs.
Qualifying income is taxed at a flat rate of 24% up to €600,000. Income exceeding that threshold is taxed at 47%.
You must not have been considered a tax resident in Spain during the five tax years immediately preceding your relocation.
Your move to Spain must be for genuine employment or professional reasons, such as:
Holding an employment contract with a Spanish or foreign companyWorking remotely from Spain under a Digital Nomad Visa
Acting as a highly qualified professional or entrepreneur conducting a business activity in Spain
Serving as a director of a company, provided that—if the company is asset-holding—you hold no more than 25% of its shares
You must apply for the regime within six months of registering with the Spanish Social Security system (Seguridad Social). This deadline is strictly enforced.
The regime applies for a total of six tax years: the year you become a Spanish tax resident and the following five full years.
The regime applies for a total of six tax years: the year you become a Spanish tax resident and the following five full years.
Under the Beckham Rule, all employment and professional income is taxable in Spain, regardless of where it is earned. However, income from non-Spanish sources—such as interest, dividends, investment income, and capital gains—is not subject to Spanish tax.
You are only subject to Wealth Tax and Solidarity Tax on assets located in Spain. Foreign assets are excluded from the Spanish tax base during the six-year period.
Your spouse and dependent children under 25 (or of any age if legally disabled) may also benefit from the regime, provided they meet the requirements and file separate applications.
If you move to Spain to act as a director, you may apply regardless of your shareholding. However, if the company is an asset-holding entity, your ownership must not exceed 25%.
If you cease to be tax resident in Spain before completing the six-year period, you will automatically lose the benefits of the regime. From that point onward, you will be taxed under the general Spanish tax system, which includes progressive rates and worldwide income taxation.
Del Canto Chambers has a specialised team ready and eager to support you to apply for Spanish nationality. If you are interested in applying and would like to know if you are eligible, we would be delighted to help you.
Del Canto Chambers specialists are constantly up to date with new legislative changes and aware of any Spanish tax and legal implications. Contact our Spanish legal and tax specialists to find out the best tax planning and corporate structures in your circumstances.
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