Last updated on May 9th, 2020 at 03:58 pm.
The new tax legislation in Spain has been debated for a while. Originally proposed in June 2014 it has now been passed and will come into force from the income year 2015. The new law brings with it implications for both residents and non-residents.
In most cases the reduction in tax rates will be welcomed. However, although the tax rates are being reduced, the thresholds are also being changed. It might be that some people find that they are still paying the same or more as they’ve moved into a higher tax category.
On a similar note, although capital gains tax in Spain is being reduced, the inflation factor is being removed, affecting the amount that some people will have to pay. This part of the legislation has been particularly controversial and many people will be disappointed that this coefficient wasn’t allowed to remain.
In this article we will go through some relevant information regarding the new Spanish tax law for 2015. However, we would like to remind you that taxes in Spain can be complicated and you could be subject to fines or penalties if you miss a deadline or don’t do your taxes properly. Advisably, you should seek fiscal advice from an expert to avoid possible complications.
The good news for residents is that there should be a slight reduction in the Spanish income tax to pay. The current tax scale with 7 bands will be reduced to 5:
- the lowest rate will decrease from 24.75% to 20%
- the highest rate from 52% to 47%
Although this will apply to income during 2015, it will not be noticed until the following year (2016) when residents make their tax declaration in June.
There is good news for those with savings or who make some money on selling their property. The tax rate on capital gains in Spain is set to change. In 2014 the tax rate was:
- 21% on the first 6,000€
- 25% between 6,000-24,000€
- 27% on the rest
From 2015 the rates will be:
- 20% on the first 6,000€
- 22% between 6,000-50,000€
- 24% on the rest
This is particularly important information if you are selling your property as a resident.
If you rent out a property in Spain or another country and you are a resident here then the allowance of 60% that you were given previously has been reduced to 50%. This means that 50% of your rental income will now be taxable instead of 40%.
For non-residents, the 2014 capital gains tax flat rate of 21% will be reduced to 20% in 2015 and 19% in 2016.
The general tax rate will go down in 2015 from 24.75% to 20% for non-residents from EU countries or countries in the Euro monetary zone with a signed agreement with Spain. The rate for other countries will be 24%.
Winner and losers
There are going to be winners and losers in the wake of this new legislation. However, exactly which category individuals will fall into is still a little unclear until the completion of the tax returns in the year 2016.
To help navigate the bureaucracy of the Spanish tax system, our dedicated advisers are on hand to help at every step of the way. Fill out this form and we will offer you a free consultation without obligation.
8 January, 2015 8:57 am
I believe the Spanish Tax
I believe the Spanish Tax Authorities are levying a new tax on the purchase of property. Where they believe the price paid is not the “market” price
8 January, 2015 9:37 am
Thank you for your comment. You are right that there is a tax that can be levied after you have purchased your property if the price you paid doesn't agree with the tax authority's calculation of its value. It is generally known as complementary tax. However, this isn't a new tax although it does seem to be receiving more publicity recently, largely because people are buying property more cheaply at the moment.
We are aware that information is being published about it that's not always accurate and have written this article to clear up any misconceptions:
2 August, 2015 10:34 am
I am a UK citizen but living
I am a UK citizen but living in Spain for 8 years and have residencia here. I entered the Spanish tax system in 2013 and have been hit with having to pay 19.000 euros for back taxes. I have two pensions from UK , the state pension and an NHS pension. I rent a property in Spain.
I spoke with an official from the local hacienda who informed me that as a public servant (nurse) I would not have to pay tax in Spain. I would appreciate clarification on this
11 August, 2015 1:44 pm
Unfortunately an NHS pension is not in the same group as the Civil Service pensions which is what the official was probably referring to. You should have completed the form SI 1976 Number 1919 Inland Revenue Office (UK) to stop paying the tax in the UK.
6 August, 2015 1:43 pm
Hi Iam bewilderd!!! I am
Hi Iam bewilderd!!! I am moving to Spain and am a OAP on the basic state penshon it is toped up at the moment but when I move to Spain I will have £51 per week, how will this work for me when I have to pay the Property tax please help.
11 August, 2015 10:16 am
Everyone who has a property in Spain has to pay the IBI property tax. That is the equivalent to what we might call rates or local taxes. In addition, if you are a resident, you may need to pay income tax on the amount you have received in the previous financial year. This would need to be checked by an accountant through making a resident tax declaration before the end of June 2016. Not everyone has to make a declaration but you would be wise to check out with an accountant whether you must and what tax (if any) you can expect to pay. He/ she will advise you according to your personal circumstances.
29 August, 2015 9:11 pm
Hello, After visiting Spain
Hello, After visiting Spain in August, 2015 I began to developed the idea of retiring in that beautiful Country. Now I noticed this big alarm about the new tax law. Most of the articles that I’ve read are referring to emigrants from the UK, would this law apply to people originally from the USA as well?
17 September, 2015 8:22 am
Living here as a resident affects all foreigners in the same way although it does depend a little on the Double Taxation Agreement. If you are referring to the asset declaration form 720 then that applies to all foreigners with property in another country. However, it is for information purposes only.
12 January, 2016 9:28 am
I have recently purchase in
I have recently purchase in Spain , a non resident , what portion of my holiday rental for 6- 7 months income is taxed , will this be the same as residents that are taxed 60% of the rental income at 19% ? Also what expenses can I offset and what is the income threshold in Spain after which I am taxed , I read it is 8000 euro . I am currently not drawing a pension or have income from other sources for another 18 months when I am 65.
14 January, 2016 8:24 am
There is no 'free' amount for a non-resident and the same rules don't apply as for residents in relation to the 60%. You will be taxed from the first euro you make at the rate of 19%. However, the costs directly derived from letting the property can be deducted. This includes a proportional part of the house insurance, IBI, the community fee, water and electricity if paid by the house owner.
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