Everyone who receives an income in Spain is required to pay income tax (IRPF). Income is defined as:
- Wages and salaries, either as a salaried employee or as a businessperson
- Pension benefits
- Dividends, yields, interest and capital gains
- An employer’s pension contributions
- In-kind benefit
The amount of income tax that you pay is determined by the amount of money that you earn per calendar year, which is outlined in the table below:
Income (in euros) Spain’s national tax rate Provincial tax rate Total tax rate
0 – 17,707 15.66% 8.34% 24%
17,707 -33,007 18.27% 9.73% 28%
33,007 – 53,407 24.14% 12.86% 37%
53,407 and above 27.13% 15.87% 43%
In order to pay income tax, you must have a DNI, a NIE or you must apply for a Número de Identidad Fiscal (NIF) in order to pay your taxes in Spain. You are considered a tax resident of Spain if your main financial interests are in Spain or if you have resided in the country 183 days during the calendar year. In the majority of cases, you only have to file a tax return if you earn more than 22,000 per year, receive a rental income of more than 1,000 and/or receive a capital gains and savings income of more than 1,600.
The Spanish fiscal year is equivalent to the calendar year, and tax returns must be submitted between May 1st and June 30th. Married couples can also decide whether they want to be treated as a family unit or as individuals.
An expat’s income is subject to Spanish NRIT (Non-Resident Income Tax). However, it may be more beneficial for you to take advantage of a new law that allows expats the flat income tax rate of 25%. To apply for this flat rate, you must not have been a resident in Spain at any time during the 10 years prior to your current work or position in Spain. You must have a legal employment contract with a Spanish company or with a non-resident company holding a permanent establishment (i.e. a branch) in Spain. The work must be performed in Spain, although some flexibility is allowed. Work may be partially performed outside of Spain if the salary for work abroad does not exceed 15% of the total salary for the year. If the working contract provides that the individual performs functions in another group company, this limit goes up to 30%.
If you qualify for the flat rate, you have six months in which to decide whether the flat rate would be personally advantageous since you would be taxed as a non-resident regarding all income and capital gains.
T: +34 966 774 777
In order to declare your professional and capital gains, you must collect the form 100 (declaración ordinaria) from your local Spanish tax office. It is up to the employee to fill in this form, which can be confusing as it is 13 pages long. However, you can make an appointment with the Spanish tax office in your district to receive help completing the form. The tax office has also devised a computer program called the Personal Income Tax Return Help Program (Programa de Ayuda a la Declaración del Impuesto sobre la Renta de las Personas Fisicas/PADRE) to ensure that you fill in your taxes correctly. To take advantage of this scheme, you must phone the number below and arrange an appointment with an advisor who will help you fill in your details and data:
901 223 344
If you still feel intimidated by the process, it is possible to employ the services of a Gestor, an independent tax advisor who will deal with your taxes for you. This service generally costs around 35 euros for a simple tax return and 60 euros for a more complex declaration.
If you are a salaried worker your employer will deduct tax on a monthly basis and the tax office will also automatically calculate your tax form for you, simplifying your tax situation. The tax office will send you your tax declaration form (form 105) already filled in to check, sign and send back.
Double Taxation Agreements
Spain has many bilateral double taxation agreements with countries throughout the world. In order to check if your country benefits from this type of agreement, check your country’s tax office website.
Expat Tax Paying Status at Home
When you relocate to Spain, you should ensure that you are fully aware of what taxes you should be paying because you may not have to file or pay taxes in your home country. Here is a guide by country:
UK: Apply for the E101 certificate to declare your tax paying status in Spain. This in turn negates your tax obligations in the UK.
USA: See IRS Forms and Publications. In particular, Publication 514: Foreign Tax Credit; Form 2555 and 2555-EZ: Foreign Earned Exclusion; Form 1116: Foreign Tax Credit. You are exempt for up to $80,000 while you live overseas.
Canada: Spain and Canada have a double taxation treaty; read it carefully to determine your tax obligations while overseas. If you plan to be in Spain for longer than two years, look into declaring non-resident status in Canada in order to avoid paying tax there during your absence.
Non-Europeans: The 16% VAT/IVA tax can be rebated for many items over 90 euros. Keep your receipts and upon leaving the European Union and Spain, you may receive the tax money back from the government. This mostly applies to tourists, but it may be applicable to short-term expats as well. This process can be completed at the airport and some tourist information centers.