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Tax Residency in Spain: Resident and Non-resident Income Tax

Tax residency in Spain

If you decide to relocate and officially live and work in Spain then know that you will be liable to pay taxes here on your income and additionally will need to file a Spanish tax return.

Whether or not you pay taxes in Spain on your worldwide income or just on your Spanish based income will depend on your residency status.

Official residents in Spain will be taxed on their worldwide income, whilst non-residents will only pay taxes on their Spanish income (usually at a flat rate, unlike the resident tax which is calculated on a progressive scale although tax deductions are possible). The general flat income tax rate for non-residents is 24%, or 19% if you are a citizen of an EU/EEA state.

Note that the Spanish tax year runs from 1 January to 31 December.

How do I become a tax resident in Spain?

You will become a resident in Spain for tax purposes if you meet one of the following requirements:

  1. You spend more than 183 days in Spain a year. These days don’t necessarily have to be consecutive!
  2. Your “center of vital interests” is in Spain, in other words, the base of your economic or professional activities is here.
  3. You have a family in Spain. For example, if you have minor children that attend Spanish school then the tax authorities will assume you are a habitual resident here, or a spouse from whom you are legally separated, unless proven otherwise

Although tax rates in Spain are not uniform across the country, for simplicity purposes below are the basic Spanish tax rates applied to employment income. In reality, your total liable tax will be a calculation of the state’s general tax rates plus the relevant regional tax rates.

Spain’s tax rates in 2019 were as follows:

  • Up to €12,450: 19%
  • €12,450–€20,200: 24%
  • €20,200–€35,200: 30%
  • €35,200–€60,000: 37%
  • More than €60,000: 45%

Income tax applicable to residents in Spain

If you have been residing in Spain for over 183 days of the calendar year or have your main vital interests in Spain then you will be liable to submit a Spanish tax return and pay Spanish income tax on your worldwide income if:

  • Your annual salary income in over €22,000
  • You run your own business and are self employed
  • You have a rental income of over €1,000 annually
  • Your capital gains and savings add up to over €1,600 a year
  • You have never declared tax residency in Spain before and this is the first time.

As for worldwide assets, any over €50,000 must be declared via the Modelo 720 form.

The amount remaining after applying any deductions for Spanish social security contributions, pension, personal allowance and professional costs is your total taxable income with progressive rates.

Income tax applicable to non-residents

If you spend less than 183 days a year in Spain or do not have your main vital interests here, then you will not be considered resident for tax purposes.

If you are classified as a non-resident in Spain for tax purposes but you own urban real estate in this country then you will need to pay annual non-resident income tax in addition to local taxes such as property tax and rubbish.

Therefore as a general rule if you own a property in Spain you will be taxed a 1,1 % (2% in certain cases) of the value of the official rateable value or valor catastral of the home, with the resulting amount being imputed as income.

If you own a property in Spain as a non-resident and rent it out, you must pay tax on the gross rent (or net rent in case of EU citizens) every quarter.

Also bear in mind that whether or not you are an EU resident will influence the amount of tax payable.

Spanish non-resident income tax for the previous year can be paid at any point during the following year with the cut-off date being 31st December, however we strongly recommend paying it well in advance in case of any complications. Late fees and penalties will be applied the next year if you fail to pay on time!

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