Taxes in Spain for Residents and Expats
Understanding Taxes in Spain: A Guide for Residents and Expats
General Taxes in Spain
Income Tax (IRPF)
– Residents are taxed on their worldwide income, while non-residents are only taxed on income generated within Spain.
– The income tax rates in Spain are progressive, ranging from 19% to 47%, depending on the income level, as follows:
New 2024 Income Tax Brackets
The new income tax brackets for 2024, following the increase in the minimum wage, are structured as follows:
- Income up to €12,450: 19% withholding;
- Income from €12,450 to €20,199: 24% withholding;
- Income from €20,200 to €35,199: 30% withholding;
- Income from €35,200 to €59,999: 37% withholding;
- Income from €60,000 to €299,999: 45% withholding;
- Income above €300,000: 47% withholding.
It’s important to note that these figures are an estimate combining both state and regional taxes, using the rates applicable to non-resident taxpayers in Spain as a reference.
Additionally, the taxpayer does not pay the highest withholding rate on their entire income; instead, the percentages are applied progressively, starting from the lowest bracket.
Non-Residents Tax
The Non-Resident Income Tax (NRIT) in Spain is a tax levied on individuals and entities that do not reside in Spain but have income or assets in the country. The NRIT applies to various types of income, including rental income, capital gains, and dividends.
People who spend less than 183 days a year in Spain are considered non-residents. Since they do not reside in Spain, they are not required to comply with most of the tax obligations that residents have, such as paying IRPF (the well-known Personal Income Tax). However, even if a person spends less than half the year in Spain, the tax authorities (Hacienda) may still consider them a tax resident in Spain if their legally non-separated spouse and dependent minor children are Spanish residents.
Corporate Tax
If you run a business in Spain, corporate tax applies, generally set at 25% on profits. Newly established companies may benefit from a reduced rate of 15% for the first two years.
| Type of company | Sales Turnover (€) | Tax Base (€) | Tax Rate |
|---|---|---|---|
| General | Up to 1,000,000 | – | 23% |
| General | More than 1,000,000 | – | 25% |
| Startups | Irrelevant | – | 15% |
| New Creation | Irrelevant | From 0 to 300,0000 | 15% |
| New Creation | Irrelevant | More than 300,000 | 20% |
| Asset-holding Corporate | Irrelevant | – | 25% |
| Cooperatives with preferential tax treatment | Irrelevant | – | 20% |
| Non-Profit Corporates | Irrelevant | – | 10% |
| Investment companies and funds and bank asset funds | Irrelevant | – | 1% |
| Credit Institutions | Irrelevant | – | 30% |
Value Added Tax (VAT)
Spain uses VAT (Impuesto sobre el Valor Añadido – IVA) for goods and services, with standard rates at 21%, reduced rates at 10% for certain goods, and super-reduced rates at 4% for essentials like bread and medicines.
Property Tax
– If you own property in Spain, you’ll need to pay the IBI (Impuesto sobre Bienes Inmuebles), which is an annual property tax based on the value of your property.
– Additionally, non-residents owning property may be subject to the Non-Resident Income Tax (NRIT) based on the property’s deemed rental income.
Types of ITP and AJD (Property tax) for property transfers in 2024
| Region | Property Value | ITP Rate | Additional Conditions | AJD Rate |
|---|---|---|---|---|
| Aragón and Balearic Islands | Up to €400,000 | 8% | ||
| Asturias | Up to €300,000 | 8% | 0.3% for VPO | |
| Cantabria | Less than €120,000 | 8% | ||
| Castilla y León | Up to €250,000 (portion that does not exceed) | 8% | ||
| Extremadura | Up to €360,000 | 8% (4% for VPO and purchases in towns with fewer than 3,000 inhabitants) | 0.5% for purchases in rural areas, 0.1% for mid-sized VPO | |
| Valencian Community | Up to €1,000,000 | 10% | ||
| Andalusia | Up to €150,000 (primary residence) | 6% (3.5% for large families, buyers under 35, victims of domestic violence or terrorism, purchases in depopulation risk areas) | 0.3% for primary residences up to €150,000, 0.1% for people with disabilities or large families, up to €250,000 | 0.3% for primary residences up to €150,000, 0.1% for people with disabilities or large families, up to €250,000 |
| Canary Islands | Up to €150,000 (primary residence) | 5% (1% for large families, single-parent families, people with disabilities; 0% for VPO) | ||
| Balearic Islands | Up to €270,151.20 | 2% (100% discount for buyers under 30 with income limits) | ||
| Castilla-La Mancha | Up to €180,000 (primary residence) | 5%, 4%, 3% (depending on the area) | First purchase, mortgage for more than 50% of the price; 5% for buyers under 36, people with a 65% or higher disability, large families | 0.5% for buyers under 36, people with disabilities, large or single-parent families; down to 0.25% or 0.15% in depopulation risk areas |
| Extremadura | Up to €122,000 (primary residence) | 7% (with 20% discount) | Buyers under 35, large families, people with disabilities | |
| Galicia | Up to €200,000 (primary residence) | 7% (3% for people with disabilities (65% or more), large families, buyers under 36, victims of gender violence, homes in low-population areas) | Additional assets of €30,000 per family member | 0.5% for large families, buyers under 36, people with disabilities (65% or more), victims of gender violence |
| Navarra | Up to €180,304 (primary residence) | 4% (Family unit with two or more children) | ||
| Basque Country | General | 4% (2.5% for homes up to 120 m², 1.5% in Álava in depopulation risk areas; 2.5% for large families without size limit) |
Capital Gains Tax
Profits from selling property or investments are subject to capital gains tax, with rates ranging from 19% to 26%, depending on the gains amount.
Wealth Tax
Spain also imposes a wealth tax (Impuesto sobre el Patrimonio) on individuals whose net worth exceeds certain thresholds, with rates varying from 0.2% to 3.5%.
Here you have a table breaking down the wealth tax rates in Andalusia, as example:
| Net Base | Total Quota | Rest of Net Base | Applicable Rate |
|---|---|---|---|
| 0,00 € | 0,00€ | 167.129,45 € | 0,24 % |
| 167.129,45 € | 404,45 € | 167.123,43 € | 0,36 % |
| 334.252,88 € | 1.011,11 € | 334.246,87 € | 0,61 % |
| 668.499,75 € | 3.033,30 € | 668.499,76 € | 1,09 % |
| 1.336.999,51 € | 10.313,27 € | 1.336.999,50 € | 1,57 % |
| 2.673.999,01 € | 31.344,27 € | 2.673.999,02 € | 2,06 % |
| 5.347.998,03 € | 86.348,43 € | 5.347.998,03 € | 2,54 % |
| 10.695.996,06 € | 222.241,06 € | En adelante | 3,03 % |
Important Considerations:
- It’s essential to keep accurate records and file your taxes on time to avoid penalties.
- Tax residents in Spain need to submit an annual tax declaration, typically due between April and June.
- It may be beneficial to consult with a tax professional familiar with Spanish tax laws, especially for expats navigating the system.
