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.