Spain Explained

Must you make a resident tax declaration in Spain?

Do you enjoy sudoku? Are you one of those people whose coffee table is piled high with completed, half completed and ready to complete puzzle books? Working with numbers is absorbing; it can also be frustrating at times. When you are locked in battle with a particularly difficult sudoku grid, they have the upper hand. At other times, numbers can be open to misinterpretation, twisted and cajoled into telling whatever tale you wish.

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What has this to do with who should make a resident tax declaration in Spain? This is one of those areas where numbers have simply added to the confusion rather than clarifying it. The issue of who should present a resident tax declaration has been rather confused over the years by the publication of the figure, 22,000€ as a threshold.

Some people have been led to believe that if your income is less than this you do not have to make a declaration. This is not the case. You are only exempt from paying the 22,000€ figure if you are employed by only one employer and are already paying Spanish withholding tax as you earn. A situation that applies to very few expats.

So, to make sure that we get the numbers correct, this grid shows who must and who needn’t present a resident tax declaration:

Residents required to complete an annual tax declaration

PensionersReceiving one or more pensions from abroad that total more than 11,200€ a year*
Early retireesWith an income through:

– interest of more than 1,600€ a year

– renting of 1,000€ or more a year

*some other conditions apply

As you will see from this table, this means that most people resident in Spain will have to complete a resident tax declaration.

There are advantages to doing this. Presenting annual tax declarations makes obtaining a fiscal residency certificate much easier. The fiscal residency certificate is what is needed in the case of claiming residency for inheritance purposes. You also require one to ensure that there is no 3% retention if you sell your Spanish property as a Spanish tax resident.

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Hopefully, these figures won’t confound you further and with this information you can be clear whether you should or shouldn’t be presenting a resident tax declaration. If you are still in doubt then a fiscal representative, such as Ábaco, will answer any queries you might have. The deadline for presentation of your declaration is the 30th June.

With the Spanish Tax Authority continuing to take its tax fraud campaign to the next level, this is one case where you mustn’t let the numbers get the better of you.

To help navigate the bureaucracy of the Spanish tax system, our dedicated advisers are on hand to help at every step of the way. Contact us and we will offer you a free consultation without obligation.

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42 comments

Eddie

28 February, 2014 3:46 pm

I am confused regarding tax
I am confused regarding tax in Spain I am led to beleive that if I keep going back to the UK every 5 months I can pay my taxes in the UK,where I get a private pension.

admin

4 March, 2014 4:24 pm

 

 

Dear Eddie
Under the Double Taxation Treaty you pay Tax on your worldwide income in the Country where you are a Tax resident that is to say where you spend 183 days per year (they do not have to be continuous days). If you are currently spending less than than 183 days a year in Spain then it is right that you pay your tax in the UK. 

Lawence Dixon

28 February, 2014 8:58 pm

As a non resident in spain do
As a non resident in spain do I require to make a Resident Fiscal declaration.

admin

4 March, 2014 3:07 pm

Dear Lawrence

Dear Lawrence

Thank you for your enquiry. The good news is that as a non-resident you do not have to make a resident fiscal declaration. The bad news is that you should make a non-resident tax declaration before December 31st each year. This will enable you to pay your imputed income tax for non-residents. This is the additional property tax that non-residents must pay if they do not rent out their property. 

Fred Faulkner

9 March, 2014 3:07 pm

dear sir,
dear sir,
I would like to live in spain full time.Most of the information I can find on this states that if I live in spain for more than 183 days in a year I will have to become a fiscal resident and submit an annual tax return. In your newsletter you say that if I have a pension of less than 11200 euros a year I will not have to submit a tax return I am a pensioner and I receive less than 11200 euros from the British goverment.Please could you clarify this matter for me,Yours faithfully

admin

11 March, 2014 3:32 pm

Dear Fred

Dear Fred

Thank you for your enquiry. It is possible that you don't have to present a resident tax declaration, provided your pension is only from one source and you only have one property. If, for example you have a house in Spain and retain a house in the UK you will need to declare. If you have two pensions then you might have to declare depending on how much the individual income from them is. If your 11,200 is made up from three pensions then you definitely will have to declare.

The declaration  process itself can be quite straight forward and does have benefits such as reducing the amount of inheritance tax to pay and ensuring that you are counted as a resident if you come to sell. 

Fred Faulkner

14 March, 2014 10:19 am

Dear Sir.
Dear Sir.
Thankyou for answering my previous question.I would like to ask you another one.If I pay money to rent a property in Spain and live there full time would I be liable for any spanish taxes.
Yours faithfully Fred.

admin

18 March, 2014 9:22 am

Dear Fred

Dear Fred

This will depend upon your income. As you might expect, in Spain as in other countries, you pay income tax according to the level of income you receive. If you have a pension below 11,200€ you may not have to pay taxes at all due to the personal allowance you will receive. 

NORMAN ABBOTT

18 March, 2014 4:50 am

My mother owns a flat in
My mother owns a flat in England which I will eventualy inherit;I am a spanish tax-paying british resident of Spain,can you tell me how I stand when my mother passes on? Need I take any action to mitigate any tax due? The property will be worth aprox.£130,000.Yours faithfully,Norman

admin

1 April, 2014 1:59 pm

Dear Norman

Dear Norman

Due to impending EU legislation, reform concerning inheritance tax obligations is expected. This makes it difficult to answer specifically at this time. We would recommend that you take specialist advice in both Spain and the UK. 

roy

30 April, 2014 4:08 pm

Please could you tell me what
Please could you tell me what the personal allowance for a marrued man, whose partner is at present working in the UK and paying tax there. Thank you

admin

1 May, 2014 7:52 am

HI Roy

HI Roy

It would be a single allowance of 5,151€, if he is over 65 there would be an extra allowance of 918€ and if he has a pension then there is the minimum extra of 2.652€. 

Chris hammond

29 June, 2014 3:39 pm

We are British and live in
We are British and live in Spain for more than the 183 days a year.
We are non residents and pay our rates and the IRNR tax
We have a business in the UK and pay our tax to the revenue via our accountants.
We have no house or assets in the UK.
Question,
Can we stay like this or doe we both need to be residents.
I’m worried that as I pay my tax in advance, then in my have to be twice in the first year?

admin

8 July, 2014 1:16 pm

Hi Chris

Hi Chris

As the business is in the UK you have to pay tax there. However, as you live in Spain for more than 183 days you are a resident in Spain. Therefore, any income you receive as wage or dividends should be declared here. Spain has a double tax treaty with the UK that means that you should not have to pay tax in both countries on the same income. You will need to complete the paper work but should then be able to stop paying tax in the UK. 

There is a possibility that the situation could be resolved prior to you having to pay your tax in Spain, as you pay tax retrospectively for the previous year. This would mean that you would not have to pay twice in the first year. However, it does vary and you  should be prepared in case this isn't possible. The good news is that even if you did end up paying both initially you would receive the extra tax you've paid back from the UK. 

susan

27 July, 2014 9:02 am

I have been offered a job in
I have been offered a job in Spain. I have been told I would need to become tax resident, register vehicles on Spanish plates etc. My husband would join me for part of the year. He has a private pension. We own our home which would continue to be used by our family while we are away. Can you let us know if the potential pitfalls? What about inheritance tax? Thank you.

admin

29 July, 2014 11:31 am

Dear Susan

Dear Susan

Congratulations on the job offer to begin with. There is a lot for you to consider here that is well out of the scope of this post. However, I will try and cover some of the main points to keep in mind. 

Alot depends on what kind of job it is and whether it is on contract or not. If it is on contract ( and it should be if you are being employed by someone else) then you will have to be tax resident and ensure you have the necessary paper work, including NIE. Your tax will be retained and before the end of June each year you will complete the annual resident tax declaration. Your husband will also do this to declare his annual income.  

If you are to be self-employed then you will need to register as autonomo and an accountant will complete quarterly tax declarations for you – for a fee of course.  Being either autonomo or on a contract of employment will mean that you receive a SIP (health card) that entitles you to national health in Spain. A very important consideration if you are going to live here. Your husband might be registered as a dependent or entitled to a SIP in his own right if he is drawing a state pension. 

If you intend to bring a car over with you, you will need to change it to Spanish plates and register it in Spain. There are people here who do this for a living if you do not feel ready to tackle the procedure yourself. 

Inheritance is worth thinking about but I would take all this one step at a time. If you do decide that emigrating is right for you then make sure your tax obligations are met, you have you residency secured and your health care. Then, if you are happy and are intending to stay, we do advise you to make a Spanish will and take advice on inheritance tax. 

Many people advise that you rent initially to be sure that you have  found the right area and type of housing for yourself. Your circumstances make this particlarly desirable and retaining your house in your own country will mean you do have an alternative if you change your mind. You will need to declare your house in time on the 720 asset declaration form. A tax advisor will be able to help you with this. 

It is a big step but one that many people have made. The most difficult issue is usually finding work, so if you have that in the bag and your heart is set on it, good luck and have fun! 

Lynn hannington

1 September, 2014 10:43 am

Myself and husband bought a
Myself and husband bought a house in Malaga 8 years ago and I have residency but not fiscal as my husband is the earner, however he is classed as non resident as he works at sea and is out of Spain more than 6 months a year. When we sold our house this year and bought another in Malaga we have been told I will not receive the 3% witheld tax because I never registered as fiscal. We sold at a loss so there were no capital gains and we bought a cheaper house. We have a mortgage with Sabadel. I cant believe I have lived here 8 years as a resident but am told I cannot get the 3% tax. It seems I am only tax liable where it suits them. For instance all the various taxes I paid for the sale and purchase, car tax, IBI, etc etc. Is there any chance of getting the 3%?

admin

2 September, 2014 8:42 am

Dear Lynn

Dear Lynn

Thanks for contacting us. The 3% retention is applied to non-residents when you sell a poperty in Spain. The tax department has classed you as a fiscal non-resident even though you live in Spain. As such, you should be able to claim the retention back as a non-resident provided you have been making a non-resident tax declaration. Another alternative is that your husband claims it back as a non-resident, making sure he completes the 210 and you present a 2014 tax declaration as a resident showing the 3%. You might explore these alternative with a fiscal representative. 

 

M

14 October, 2014 12:16 pm

Hi,
Hi,

Hope you can answer my question.
Me and my wife came to spain to live. We had to bring some money as a back up so we borought 12k euros with our self.
I opened a bank account and gradually put the money in the bank.
Since then I have been contacted by the bank several times each time asking for a new document. origins of money, 6 months payslip from my home country..
1. Is my earnings while i was not resident in Spain taxable?
2. why they are asking for payslips? to make sure I have paid the tax in my home country?

admin

15 October, 2014 1:57 pm

Hi

Hi

Thanks for contacting us. As residents, any interest you gain on this capital should be declared on your annual resident declaration before the end of June each year. However, depending on your other sources of income, this would not reach the threshold whereby you would have to pay income tax. Whilst you were resident in your home country you would pay tax on your income there and not in Spain. 

What is more likely is that the bank's checks  are precautions against money laundering. They want to know the origin of the money to ensure that it is legitimately earned.  Spain will not be too concerned about what you paid in tax to your country's tax authority whilst you were a resident there. 

Paul

10 November, 2014 3:18 am

Hi,
Hi,
We are moving to Spain shortly. I work overseas and earn my money there. I will also spend less than 183 days in Spain. My wife will spend more than 183 days but have no income. We will co own a property. What tax will we pay?

admin

13 November, 2014 12:14 pm

HI Paul

HI Paul

Thanks for getting in touch. As you are working outside Spain you should pay non-resident tax on your half of the property. Your wife, however, should be paying tax on her world wide income as a resident. As she has no proper income of her own it is very probable that she would file a 0€ tax return. Even if she is under the limit she might still have to present a 720 for assets held abroad. 

Sue

21 December, 2014 11:03 am

I declare my u.k state
I declare my u.k state pension in Spain and also any interest I receive from Isa I have and any interest from elsewhere. Is this correct

admin

30 December, 2014 10:55 am

Hi Sue

Hi Sue

That is correct. You must declare your world wide income in Spain. 

Roy Brammeld

17 January, 2015 9:32 am

Preview: Dual Taxation
Preview: Dual Taxation
This will be our first year paying tax in Spain & the UK. We have a letter from the UK gov saying we pay tax on our pensions in Spain and tax on house rentals in the UK, fine, a bit inconvenient but we can live with that.

Our intended tax advisor tells us that we have to pay tax on all of our earnings and then claim back tax that we have paid in the UK. The problem we see is that the UK tax year is 3 months after the Spanish tax year, we will have to pay tax on all earnings to Spain, three months later pay rental tax to the UK and then claim back from Spain what we have paid in the UK.

We live in the Murcia region.

We don’t see this as a fair way of applying dual taxation, as we will have to pay our Spanish tax advisor to do our tax declaration and later pay again to apply for a tax credit.

admin

20 January, 2015 3:49 pm

Dear Roy

Dear Roy

It is right that you must pay tax on all your earnings in Spain. As the property is in the UK you do pay tax there, however, when it is declared in Spain you deduct the tax paid in the UK from the income received. Any tax paid in the UK that corresponds with you being a resident here will be refunded. 

Bob

29 April, 2015 10:04 am

Hi, I currently am retired
Hi, I currently am retired under state pension age with my sole income coming from UK Government pension which must be taxed in the UK. I currently visit my property in Spain under 183 days per year. I would like to visit longer 7/8 months split into 3 visits no longer than 3 months. My wife still works and lives in our UK property and would only visit for short breaks. We submit and pay non residents tax. What would I need to do tax wise should I extend my visits as outlined?

Suzanne O'Connell

29 April, 2015 12:10 pm

Hi Bob

Hi Bob

If you do live in Spain for 7/8 months even if it is split, you are a resident. That means that you must make an annual resident tax declaration. This is due before the end of June each year and you will be taxed according to the previous year. So someone making their declaration now, would submit their income from January to December 2014. Even though you are taxed in the UK you will still have  to declare your income in Spain. However, you will not be taxed twice on it.  There is also the 720 asset declaration form to complete if you will still hold assets in the UK. This would not need completing until March 2016. 

Lynne

20 June, 2015 10:51 am

I have 2 private pensions and
I have 2 private pensions and will receive my state pension in November. I have been resident in Spain since 2005 and have filled a nil tax return in Spain as I was told I could pay my taxes in the UK. However this year I have seen a new assesoria who told me I must pay my tax in Spain as a resident. Is this correct and if so who do I notify in the UK of this change? Also Is this correct as I obviously I pay a lot more tax in Spain than I would in the UK as the allowances are much lower. Please can you advise?

Suzanne O'Connell

23 June, 2015 2:17 pm

Dear Lynne

Dear Lynne

Yes, if you are a resident in Spain then you pay your taxes in Spain. The only exception to this is where you have a crown pension where the tax is deducted at source. However, if you have been making an annual resident tax return, provided everything was done corretly, then you would have had to pay taxes if you were eligible. 

Clarkie

14 July, 2015 11:59 am

Hi
Hi

We have owned our home in Spain since 2001. We were full time resident until 2003 and paid taxes etc etc. We moved back to the Uk but continue to own our home and visit for far less than the 183 days in any one year.

We still pay the following bills to Diputacio De Valencia, issued by our local Ayuntamiento.

Basura
IBIU
TTRU

Are you saying that we still have other taxes to pay, that we were not aware of?

Thanks
Clarkie

Suzanne O'Connell

4 August, 2015 8:40 am

Hi Clarkie

Hi Clarkie

As you are a non-resident you have to file the non-resident income tax (modelo 210) as you own a holiday home in Spain. 

Mike Mason

12 September, 2015 12:42 pm

It appears that I hace been
It appears that I hace been wrongly advised about taxation living in Spain. I have been here 8 years but have never worked and therefore am not in their system. My only income is from interest earned in the UK (andctaxed at source) and in recent years from rental on a second house. I gave been paying non resident tax on both houses but now wish to get affairs in order. If, as I believe is true, I must now start doing tax returns what will happen if they see previous payments for non resident tax on the properties? As I have various accounts in the UK from which I earn interest filling in a tax return starts to look complicated. How far back can they claim any taxes due and would this offset from what I have already paid. Clearly I was given poor advice when moving here, being told “if you are not working stay out of the system”. Many thanks for any advice received.

Suzanne O'Connell

29 September, 2015 7:51 am

I don’t think you will be the

I don't think you will be the only person to have received this kind of advice. Things are changing in Spain and although you might have kept below the radar years ago it is becoming harder and harder to do so. The main difficulty you face is not having declared the 720. However, if in previous years you were in Spain for less than half a year, this wouldn't be a problem. 

If you live on interest you have the obligation to present a tax return if you earn more than €1,500 in interest. You also have to declare any rental income. It would be worth you approaching a fiscal advisor and discussing your circumstances. 

David Harper

4 October, 2015 4:35 pm

Dear Sir, I am receiving a
Dear Sir, I am receiving a non taxable insurance payment as salary replacement due to long term illness. This will stop when i am 65 (8 years) If i take residencia in Spain (Lanzarote) will it become taxable?
Also, we are thinking of renting our home in the UK but are also renting ourselves in Lanzarote and not buying property there. How will my tax liabilities regarding this be affected?
Kind regards

Suzanne O'Connell

7 October, 2015 10:48 am

Dear David

Dear David

The same rules apply to this as to a normal pension. It will be considered as taxable. You should contact a tax advisor in Lanzarote to find out about your tax liabilities there, as each region is different.  

Ewelina

19 November, 2015 9:17 pm

Hello,
Hello,
I currently live and work in UK but my company offered me to work from home from Spain full time(as my boyfriend lives and works in Spain). I will be visiting UK office and work for 4-8 days per month to catch up with my team. I will be still working on UK contract.

I have a question about the tax, as I will be resident of Spain I should pay taxes in Spain, is it right? Am I going to get my salary including Tax and pay tax myself in Spain, or should my company do that? Should my company pay tax in UK for the days I will be working in UK? Which UK Tax code will be appropriate in this scenario?

I am trying to figure it out I am first person with this kind arrangement, and HR couldn’t answer my questions so far.

Could you please advise me how tax proces will work in my case?
Thank you so much in advance.

Best regards

Ewelina

Suzanne O'Connell

24 November, 2015 9:37 am

Dear Ewelina

Dear Ewelina

Yes, you are correct that you must pay tax in Spain. You will need to contact the British Tax office for non-residents in Cardiff to arrange for a change in tax coding and request the forms that you need to complete and documentation you require. They will be able to give you the specific advice about your particular case. 

brian

3 December, 2015 11:37 am

Hello,
Hello,

I live and work in Spain but own a house in the UK which is rented out. Do I need to declare the money I receive in rent (which stays in the uk) as part of my Spanish tax returns, or only my Spanish salary? I hope you can help.

Regards,

Brian

Suzanne O'Connell

22 December, 2015 11:16 am

Hi Brian

Hi Brian

Yes, you do have to declare the money you receive in rent in Spain. However, if you are registered as a non-resident landlord in the UK and you have paid tax on your income over there you can deduct the  tax paid in the UK on your Spanish Tax Return and so avoid double taxation. 

simon foy

2 January, 2016 11:27 am

Hi
Hi
Both my wife and myself are moving full time to Spain. We own property in the uk that will be rented out. We will not need a job in Spain to survive and would both have a private healthcare plan.
Could you please advise if we would pay our taxes in the uk still and any implications.
Thanks.

Suzanne O'Connell

5 January, 2016 8:51 am

Hi Simon

Hi Simon

Thanks for your enquiry. You will need to declare your rental income in Spain and you will be taxed on it here. However, you can register in the UK as a non-resident landlord and any tax paid in the UK will be deducted from the tax you have to pay on your Spanish Tax Return so you should not be taxed twice.