Spain Explained

Being a resident in Spain: Requirements and tax obligations

Unlike what many expat forums and Facebook pages would have you believe, you can’t simply choose whether or not you are a tax resident of your home country or Spain.

Who is classed as resident in Spain?

The rules are actually very clear cut – if you live in Spain for more than 183 days per calendar year, you are classified as a resident in Spain. These days don’t have to be sequential; if you live in Spain for a few months in spring and a few months in winter totalling 183 days that year, then you’re considered to be resident. 

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This means that you need to file a Spanish tax declaration and pay taxes on your global income and assets. In Spain, fiscal legislation is shared between the state and each of the country’s 17 autonomous regions, so tax rates can vary depending on where you live. Consequently, many people can feel a little overwhelmed by the prospect of filing a Spanish tax return, especially if Spanish isn’t their first language.

However, Ábaco Advisers are here to help. In this article, we run through the fundamentals of Spanish tax obligations for residents.

An overview of your resident tax obligations

If you have been living in Spain for six months of the year – and not necessarily consecutively – then you are classified as a resident for tax purposes. This is also the case if you have your main vital interests in Spain, such as your business or immediate family. As a Spanish resident you are obliged to file a tax declaration with the Spanish Tax Authority if:

  • You earn more than €22,000 a year from a single employment source with Spanish withholding tax.
  • Own your own business or are self-employed.
  • If you receive more than €1,000 per year from renting property.
  • If you earn more than €1,600 from capital gains or interest on savings.
  • It’s your first year as a tax resident in Spain.

Your taxable income is what’s left after contributions to the Spanish state welfare system, pensions, personal allowance, and any allowable expenses if you own your own business. Furthermore, in Spain, it’s important to be aware that you are required to declare your global income. This means that any money you make from overseas assets, businesses, or savings has to be declared to the Spanish Tax Authority. 

The Spanish tax year coincides with the calendar year, so the tax year runs from 1 January to 31 December. Residents in Spain will file their tax declaration at the end of June – at the time of writing, the deadline was the 30th June. Payment of taxes in Spain is retrospective, so when you make your declaration, it will cover the previous year’s bill.

Furthermore, if you own property in Spain, you are liable for various local taxes such as the IBI. This tax is comparable to British council tax and finances public services and amenities such as rubbish collection and road maintenance. 

Note: Dual taxation agreements

Spain has dual tax agreements with several countries. This legislation ensures that people don’t pay taxes on their income twice. In some cases tax has to be paid in the country of origin, and in these situations, they are either declared as exempt or tax paid there is deducted from the tax to pay in Spain on the same income. For instance, if you sell a property in the UK and pay capital gains tax on the profit in the UK, when you declare the sale in Spain the tax paid in the UK is deducted from the tax payable in Spain. For a full up-to-date list of Spain’s tax treaties, visit the Agencia Tributaria website. 

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Spanish resident tax: Keep on top of your payments

Navigating the taxation system of a foreign country can be an intimidating task – especially if you don’t speak the language. Furthermore, it’s important to seek expert advice on the specifics because of differences across regions.

At Ábaco Advisers, our team of experienced fiscal and taxation advisers can help you make sure you follow regulations. For more information, without obligation, you can fill out this form and we will get in touch with you as soon as possible.

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4 comments

Steven Coen

23 April, 2020 2:49 pm

Hi Team,
I am considering filing for residentia in Spain and would like to know my tax obligations here.
I have a UK state pension of around £11000 per annum and have several businesses where I take dividends. Tax is paid on this income and corporation tax on any profits the companies make.
The businesses are not large and my total income is around £23,000 per annum.
Indeed because one of the business makes a loss it is combined with my personal tax computations and this fiscal year I will be paying only £800.
As my tax affairs are fully paid up in the UK will I be subject to further tax payments here. If I become a full resident.
I have a property here and I pay all the tax required plus suma etc.
I am on the local Murcia Padron.
Regards,
Steve Coen

Oscar Paoli

24 April, 2020 8:47 am

Hi Steve,
If you come to Spain to live then you have to pay tax on your personal income.
As the businesses are in the UK you will be obligated to pay Tax there, however any personal income, dividends, that you draw from these will be Taxable here in Spain.
Best wishes,
Ábaco Advisers

SALLY KEABLE

27 May, 2020 5:36 pm

hi i am a live in care worker in the uk and work for a uk company. i pay tax and N.I. in the uk. I do 4 weeks on and 4 weeks off. i own a property in spain for my own use. do i need to pay tax in spain. i know i need to fill in a form every year thanks

Oscar Paoli

27 May, 2020 9:13 pm

Hi Sally,

If you live in Spain less than 183 days in a single year, then you are not a resident of the country. There are two essential taxes in Spain for non-residents:

– IBI (Impuesto Sobre Bienes Inmuebles) or council tax
– Imputed income tax or rental tax (in some cases a combination of the two)

Should you need assistance with any of these two taxes please do not hesitate to contact us at info@abacoadvisers.com

Kind regards,

Ábaco Advisers