What Are the Spanish Tax Laws for Foreigners?

The tax laws applied to foreigners living in Spain vary depending on their status whether they are a tax resident or not, age, economic conditions, marital status, and in which region of Spain they live. Therefore, it’s important to work with a tax consultant and examine each case separately not to fall behind on the payments or pay more than necessary.

But in the meantime, you can learn the essentials of the Spanish tax system for foreigners by reading the brief guide we’ve prepared for informational purposes.

Spanish Tax System for Expats

The Spanish tax system for expats divides foreigners living in Spain into 2 categories: resident taxpayers and non-resident taxpayers. This categorization affects the liability rates on almost all taxes. So, the very first thing you should know is your status of tax residency in Spain.

Who Are Considered Tax Residents in Spain?

Foreigners who meet any of the following conditions are considered tax residents in Spain and are taxed on their worldwide assets;

• Living more than 183 days a year in Spain,
• Earning a yearly income of more than €22,000,
• Being self-employed or owning a business in Spain,
• Owning a property in Spain and earning at least €1,000 rental income through this property,
• Having an income of more than €1,600 a year from capital gains and savings in a Spanish bank account.

Who Are Considered Non-Resident Taxpayers in Spain?

Foreigners who meet the following conditions are considered non-resident taxpayers in Spain and are taxed only on their assets in Spain;

• Living less than 183 days a year in Spain,
• Earning an income less than the figures stated above.

Tax implications for non-residents in Spain are naturally lighter. Non-resident taxpayers in Spain only have to pay tax on their income generated in Spain. Also, there is no need for them to declare their assets outside Spain.

There are mainly 6 types of taxes for foreigners living in Spain. These are income tax, inheritance and gift tax, wealth tax, capital gains tax, value-added tax, and property tax. Tax residency status affects the liability rates of almost all types of taxes.

What Are the Most Common Tax Issues Faced By Expats in Spain?

The most common tax issues that expats face in Spain are the language barrier during registrations and payments, complications of laws and procedures, and double taxation issues. A tax consultant can help you to solve these issues with appropriate measures.

A better understanding of local laws and overcoming the language barrier are the main benefits of working with a tax consultant in Spain. Working with a tax consultant can also save a lot of time. Consultants usually help with tax planning for expats in Spain as well. This way, you don’t have to look out for payment deadlines and spend time looking up the procedures.

What Is the Process for Filing Taxes As an Expat in Spain?

Tax filing in Spain for expats starts with registration with Spain’s tax agency, Agencia Tributaria. Both resident and non-resident taxpayers can start filing their taxes after registering with the tax agency. Tax payments can be made through the tax agency’s website, mobile app, or in person from tax offices or banks.

How Can I Minimize My Tax Liability As an Expat in Spain?

Expats should thoroughly research the tax exemption rules in Spain to minimize their tax liability. The Spanish government bestows some additional rights to expats living in Spain since expats have to pay taxes in their country of origin as well. These additional rights may look like allowances, tax brackets, and benefits from the Beckham Law and the double taxation agreement between the two countries.

The tax allowances and rates change greatly depending on the circumstances of expats such as age, marital status, citizenship status, date of arrival in Spain, parental status, etc. Therefore, it’s best to examine each case separately.

What Are the Tax Implications of Buying Property in Spain As an Expat?

Expats who buy a property in Spain have to pay some of the following tax types depending on their circumstances: value-added tax, stamp duty, property transfer tax, annual property tax, income tax, capital gains tax, and wealth tax. Spanish property tax for expats varies depending on the nationality of the buyer, the tax residency status of the buyer, and the status of the property.

Value-added tax has to be paid only when buying a newly built property. If the said property is a resale property, then the taxes that have to be paid during the purchase are the property transfer tax and stamp duty. On the other hand, property owners may be liable for income tax and/or capital gains tax if they earn profit by renting or selling their properties.

What Are the Tax Implications of Working Remotely in Spain As an Expat?

Foreign remote workers living in Spain have to pay some types of taxes depending on their individual circumstances. One of the most important tax types that expats have to pay in Spain is the income tax. Just like in the property tax, the Spanish income tax for expats changes depending on the nationality of the buyer and their tax residency status.

How Can I Avoid Double Taxation As an Expat in Spain?

One of the most concerning topics for expats living in Spain is double taxation. Indeed, paying taxes both in Spain and in their country of origin would be financially burdensome for many foreigners. However, the Spanish government has taken some precautions to prevent the extra financial burden.

Today, double taxation agreements in Spain include many countries. You can check out this up-to-date list on the Spanish Tax Agency’s website to see which countries are included.

Hopefully, this brief article has been helpful for you to understand the essentials of the Spanish tax system for expats. If you are thinking of moving to Spain and want to know more, you can contact our lawyers abroad to benefit from our tax consulting services in Spain.

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