News: Non-resident tax in Spain: all you need to know

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Non-resident tax in Spain: all you need to know
Written by Inmo Investments - 9 Aug 2017

Non residents taxes in Spain explained
Staying on the right side of the law

If you live in Spain, or own a property here, it´s important to know what your obligations are with regards to paying Spanish taxes.

Even if you own property in another country, or spend a significant amount of time outside of Spain, you could still be liable to submit a tax declaration to the Spanish authorities.

The collection of taxes in Spain is administered by a department of the Spanish government called the Agencia Tributaria. They decide who has to pay, and they are responsible for the calculation of tax due and collecting tax payments.

Personal income tax in Spain is called Impuesto de Renta sobre las Personas Fisicas, often abbreviated to IRPF.

Do I need to submit a Spanish tax return?

According to Spanish law, you can be considered fiscally resident for the purposes of tax in Spain, even though you may not have completed the legal process of applying for residency in Spain (your residencia).

If you stay in Spain to live or work for more than 183 days in a calendar year, or your core economic interests lie within the country, you will be considered to be resident in Spain for the purposes of taxation. You will be required to make an annual tax declaration (Declaración de La Renta) and pay tax on your entire income - no matter where in the world the income originates.

Your income should include pension payments or rental income, interest received from savings, dividends paid on shareholdings, income from freelance work, and capital gains made from the sale of another property or any other asset.

Pensions or income from abroad where tax has already been deducted at source before payment do not need to be declared, unless this total income exceeds 22.000€.

If you intend to trade as a self-employed business in Spain, the tax system is slightly more complex and we would advise you to contact us and make an appointment to speak with one of our tax advisors.

When is the Spanish tax year?

The fiscal tax year in Spain starts on 1st January and ends on 31st December. Spanish tax returns can be submitted between 5th April until 30th June, so as an example, income for 1st January to 31st December this year (2017) will need to be declared between 5th April and 30th next year (2018).

It is also worth noting that if tax is due to be paid, this must be paid to the Spanish tax authorities before the end of June for the previous year´s income.

How much tax will I have to pay?

Spain operates a progressive income tax system, so the more you earn, the higher your rate of deduction. The top tier for paying tax is 45% but affects only those tax payers with an annual income of 60.000€ or more.

Income tax rates for 2017 (2016 year)

Tax bracket Annual income Tax rate
1 up to 12.450€ 19%
2 12.450€ - 20.200€ 24%
3 20.200€ - 35.200€ 30%
4 35.200€ - 60.000€ 37%
5 60.000€ + 45%

Deductions and tax allowances for 2017

Like many other countries in the EU, Spain offers tax free allowances that can be deducted from the gross income before the calculation of taxes.

In addition, dividend payments or capital gains received up to a value of 1.500€ are tax free and do not count toward your total income.

Tax on rental income is charged at a flat rate of 19% for EU residents, and usual rental expenditure such as mortgage interest payments, council tax, utility costs, and community fees are 100% tax deductable.

For married couples, it is possible to make a joint tax declaration (referred to as a Declaración Conjunta), which adds a further tax free allowance of 3.400€ for a spouse.

The Spanish tax system also offers allowances for low income families with children or parents in their care, and incapacity allowances for people with disabilities or limited mobility. If you think you might qualify for additional tax allowances, make an appointment to speak with us directly.

Tax free allowances for 2017 (2016 year)

Type Age Amount
Individual up to 65 years 5.550€
Pensioner 65 - 75 years 6.700€
Pensioner 75 years + 8.100€

Get reliable professional advice

For your own peace of mind we recommend that you make an annual tax declaration in Spain. It will not only help you to prove your fiscal residency (which can save you money), but making an annual declaration to the Spanish tax authorities helps you avoid a steep penalty, or even having your bank account frozen.

As a company, we do not believe that anybody should be morally obligated to pay more tax than the law requires, and with professional advice from the Inmo Investments team, you will soon feel as at home in Spain as you have felt anywhere else in the world. Speak with us today and find out how we can help you.

Further reading ...
> Agencia Tributaria taxpayer´s calender
> Europa: Income taxes abroad, Spain



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