Tax is an inescapable fact of life and understanding tax regulations in another country can be daunting. The following sections will help breakdown the types of taxes that you are mostly likely to encounter while living in Spain.
It is important to bear in mind that there are two types of Spanish taxes: provincial and national. The fiscal Spanish year is equivalent to a calendar year, and tax returns have to be submitted between May 1st and June 30th. In the majority of cases, you are only required to file a tax return if you earn more than 22,000 Euros per year, receive a rental income of more than 1,000 Euros and/or receive a capital gains and savings income of more than 1,600 Euros.
IVA is a sales and service tax that everybody is obligated to pay when purchasing goods or services. There are three rates of IVA in Spain. The full rate that is charged in shops is 16%. There is the reduced rate that is charged in restaurants at 7% and a super-reduced rate of 4% for items considered basic commodities, such as food and newspapers. However, there are no commercial goods that are exempt from IVA. IVA is generally included in the price of the items being purchased.
Some services are not subject to IVA. The following operations are exempt:
- Medical services
- Cultural and sportive associations
- Financial and insurance transactions
- Renting rural or urban properties (except the rental of business premises)