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Taxes in Spain

- Updated: 15/09/2011
Taxes in Spain

Although the Taxes in Spain are comparatively lower than in the UK , they can often be much more complex and need to be be understood if you are to remain on the right side of the law.

A Tax Consultant , Asessor or Gestor can be an invaluable resource in steering you through this minefield. He will ensure that you take optimum advantage of your current tax status and also ensure that you don't make mistakes that you may later regret. These days avoiding paying taxes in Spain is more difficult and penalties can be severe. However, despite the efforts of the authorities to curb tax dodgers, tax evasion is still in evidence and non-resident home owners are often among the worst offenders,as is paying out or being paid cash in hand thereby avoiding value added tax (IVA) and income tax. It is also preferred by many Spaniards for payment, rather than cheque or credit card, even when large sums are involved. Whilst this is a very common way of doing business it is still illegal in the eyes of the law.

The Spanish tax system is complicated , even experts have difficulty agreeing with the tax authorities. Taxes are levied by three tiers of government : the central government, autonomous regional governments and local municipalities. Government taxes are administered by the Ministry of Economy and Taxation which is based in Madrid: Assessment and tax collection centres in the capital towns of the provinces operate a five year assessment and tax collection service.

Unpaid back taxes can only be claimed for the current past five years as there is a five year statute of limitations on the collection of back taxes there are currently around 15 different taxes for which individuals are liable. The main ones are listed below.

Major Spanish Taxes

Income Tax: Payable on worldwide income if resident in Spain, or if non resident in Spain, on income arising in Spain

Business Tax: Paid by the self-employed once a year.

Capital Gains Tax: Payable on the profits made on the sale of property and other assets located in Spain.

Company Tax: Paid at a percentage of profits by partnerships and registered companies.

Wealth Tax: payable on the value of worldwide assets if resident in Spain, or if not resident in Spain, payable on the value of Spanish assets alone

Note: Note: This tax was been eliminated on 01/01/2008, but re-introduced by Royal Decree in Parliament on 16.09.2011, however the circumstances in where and how the tax is applied had been revised AND Parliament insist that this is temporary re-introduction rather that a permenant fixture.

Inheritance and Gift Tax: Payable on assets situated in Spain or assets passing to a beneficiary who is Spanish resident

Motor Vehicle Tax: Paid annually by all vehicle owners

Offshore Company Tax: Annual tax on offshore companies that don't declare the individual owner of property in Spain or the source of investment.

Property Tax: Paid by all property owners.

Rubbish Collection: Annual tax payable by all residents and non resident property owners

Social Security: Isn't strictly a tax but is payable by employees and the self employed.

Value Added Tax (IVA): Payable on a wide range of goods and services at varying rates.

It is more than likely than only a few of these taxes will apply to you , but it is still adviseable to seek professional help to fully understand them and their implications.

Taxes also arise in the form of Inheritance Tax , and on Buying & Selling Property In Spain , However , it is better to look at these as completely separate issues.

Comment on this Article

Thanks for reply.
Lynn - Thu 4th Feb 2016
Hello Gobbo. As a non resident in Spain you have to declare the incomes of the long term rentals apartments you have in Spain. You will be taxed with 25% of the total incomes.
Ms Legal - Thu 4th Feb 2016
Hello Lynn. If you are earning 11000 euros or do not need to pay for taxes.
Ms Legal - Thu 4th Feb 2016
It depends on various factors such as age, childrens age as well as other factors although the very minimum is €5550 per annum
Andy - Mon 10th Aug 2015
Nobody has got back to me regarding how much you can earn in a year without paying tax, does that mean nobody knows ?!!!?
Lynn - Sun 9th Aug 2015
Could you please tell me how much income (pension and/or wages) you can have before having to pay tax. Thanks.
Lynn - Sat 6th Jun 2015
Hola We live in the Canary islands and want to move back to the UK in April 2014.. We have 4 apartments we rent on a long let contracts. As a non resident in spain would anyone know Based on 16,000€ per annum gross .. wot would be our tax liability ? or is it better to close them down :/
Gobbo - Mon 30th Sep 2013
Ed, the monthly fees payable as an Autonomo are 255 Euro per month - PLUS the fees payable to your Asesor - PLUS your quarterly IVA return and annual business taxes. This entitles you and your dependents to state healthcare and a state pension. Costs `may´ be reduced for certain professions, if you are a young person, or if you are entitled to a `start up´ grant. You may also decide to pay a few % more to cover you for unemployment entitlement as well.
Mr Grumpy - Fri 9th Dec 2011
I'm self employed here in Spain I earn 750€ per month. I am resident & own a property here, whats the minimum I have to pay monthly to get in the system
Ed Aryea - Fri 9th Dec 2011
Angela, the Statute of Limitations covers liability for taxes unpaid before the 5 year marker, any taxes after that period are still officially liable for payment. Whether any taxes are actually due or not will depend on your residential status, the amount of interest gained, your personal circumstances etc...
Tumbit - Admin - Thu 1st Dec 2011
I have not fill in a tax return for 5 years, not having any income except interest from savings for which l am being tax at source. Will this now be squashed because of the 5 year statute of limitations of collection of back tax, if there was any due?
Angela - Thu 1st Dec 2011
Julia : If this is something that you feel strongly about and wish to persue you should speak with your local Agencia Tributaria. (Tax Office) and they will gather evidence and decide whether to take matters further.
Tumbit - Admin - Wed 31st Aug 2011
Some one I know has lived and worked in spain for 5 years but only 1 year of that has paid taxes with the autonamo. How do I report this to the Spanish tax offices ? Spains economy is a mess and people like this should be done for fraud !
Julia Finney - Wed 31st Aug 2011
AJC, this is very tricky situation and the exact answer will vary wildy depending on your exact circumstances ( Such as are you a registered fronier worker, are employed or self-employed etc...) I would recommend that you made contact with a specialist Overseas Tax Advisor as opposed to a General Spanish Asesor or UK Accountant, as they will be able to look at the wider picture and advise you how best to proceed. Somebody like Blevins Franks would be a good starting point.
Tumbit - Admin - Wed 16th Jun 2010
We are residents in Spain, but we are employed in uk. We pay tax in the uk. Our accountant in uk provides us with a statement of income, dividends and interest earned in uk and the taxes paid on all these, which we pass on to our solicitor to complete a 'declaracion de la renta'. We have never paid tax in Spain. He is now saying we should declare our income in UK (which we do) and not be residents in Spain.....but we do live here well over 183 days. Any advice ?
Ajc - Thu 3rd Jun 2010