Spain Explained

Taxes in Spain: The complete guide

Taxes in Spain depend on your residency status. Both resident and non-residents have to pay taxes in Spain and make Spanish tax declarations but they are at different times of the year.

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.

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If you live in Spain for more than 183 days per calendar year, then you’re considered resident. Residency isn’t a matter of choice, as some threads on expat forums will have you think. Plus, the 183 days need not be sequential – so it’s not sufficient to claim that you left the country for a while and then returned. So, if you are a resident in Spain, what taxes should you be paying?

Resident Taxes in Spain

IBI

First of all, everyone with a property in Spain must pay IBI – otherwise known as council tax. This tax goes towards local services and infrastructure. However, the good news is that the amount you’ll need to pay in Spain is often less than comparable taxes in your home country. 

If you would like more information about IBI you can consult our post: IBI in Spain: What is it and how to pay.

Income Tax

The other tax in Spain for residents – as you might expect – is income tax. Often, income tax is what makes most people feel most anxious and confused – as when it comes to income tax Spain has one of the more complex systems. In this article, we set your mind at ease and explain taxes in Spain, including Spanish income tax rates and bands.

The majority of residents in Spain are required to complete a resident tax declaration annually, before the end of June. Payment of taxes in Spain is retrospective, so when you make your declaration, it will cover the previous year’s bill. However, not everyone has to make a resident tax declaration:

  • If you only have one pension worth less than €14,000, then you don’t need to make a declaration.
  • That said, if you have any other income like interest from savings or rental income, you’ll need to file a declaration.

However, we still advise making a declaration even if you don’t have to, as it formally records you as a fiscal resident in Spain.

Your documentation will need to cover all your income worldwide, including any rental income, interest from savings, income from the sale of a house or any other assets. If you are working in Spain, then you must also declare your income from your job. However, if you are on a contract then you will have a ‘retention’ deducted monthly from your salary. The self-employed (or ‘autonomos’ as they’re referred to in Spain) pay their tax quarterly, but they must still make an annual tax declaration. At this point, it’s calculated whether you’ve paid too much or too little across the course of the year.

For many people who relocate to Spain in later life, taxation on pensions tend to be of most interest. If you have a civil service pension, the tax will have been deducted at the source and you won’t be taxed twice. You should be aware, however, that the income from this pension is taken into consideration when working out your tax band.

Taxes in Spain: Bands and allowances

In Spain the tax rate operates similarly to Britain, as you don’t pay tax on all your income. Instead, you’re allocated an ‘allowance’ on which you don’t pay tax. In Spain, everyone has a basic personal allowance of €5,550, which is increased in certain circumstances. For example, if you are over the age of 65 you have an additional allowance of €1,150; when you’re over 75, this increases to €1,400.

Tax year 2018
Personal allowance€5,550
Over the age of 65+ €1,150
Over the age of 75+ €1,400
Incapacity allowance+ €3,000
Incapacity allowance  > 65%+ €9,000
Married persons allowance joint tax€3,400
Deduction for other work-related expenses€2,000

Spanish income tax rates

Tax year 2018
Up to €12,45019%
From €12,450 to €20,20024%
From €20,200 to €35,20030%
From €35,200 to €60,00037%
Over €60,00045%

Calculating your taxes in Spain can be quite complicated – so it’s advisable to hire an expert to work out exactly how much you have to pay. 

Making your resident tax declaration

In Spain, you can hire a fiscal representative to help you handle your resident tax declaration. These representatives submit tax declarations annually on behalf of their clients. Before meeting your advisor, you’ll be advised as to the documents you need to bring to your appointment. Make sure you allocate around an hour for this, so your advisor can cover everything you need to know. At Ábaco, we can tell you immediately how much your taxes in Spain will be. In some cases, there is even a reimbursement which will be paid directly into your bank account. Whatever the end result of the calculation, with Ácabo, you can feel confident that you are compliant with the tax law in Spain.

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Non-resident Taxes in Spain

In this article we’ve focused on resident taxes in Spain, but if you’d like more information regarding non-resident taxes, you can visit our article All you need to know about non-resident tax in Spain.

Other Taxes in Spain

Inheritance tax in Spain

In Spain, inheritance tax is applied very differently to other countries. To begin with, all beneficiaries must declare it, even the wife or husband of the deceased. What often comes as a surprise to inheritors is that this tax must be paid before a property can be sold. Moreover, it’s not only property that’s taxed, but money held in bank accounts, deposits, vehicles and other assets are all taxable too. 

You can find more information regarding inheritance tax in Spain in this article.

Capital gains tax in Spain when selling your property

Capital gains tax is a levy imposed on the sale of a non-inventory asset, that is, a capital asset that’s not likely to be liquidated into cash within a year. The most common capital gains are bonds, profits earned from the sale of stocks, and property. Exactly when and what you will have to pay varies from country to country, depending on your residential status. However, capital gains tax in Spain is paid on the profit you make from all property sales, whether you are a resident or not.

If you’d like more information about capital gains tax in Spain, you can visit this article.

IVA or VAT in Spain

VAT is called IVA in Spain and there are three types of IVA in Spain:

  1. Super reduced rate IVA – 4%
  2. Reduced rate IVA – 10%
  3. General rate IVA – 21%

You can find more information regarding these 3 types of IVA and some recent changes in this article.

Wealth tax in Spain

The wealth tax in Spain has no equivalent in other countries. Although there was a 100% discount in 2009, now, if you have worldwide assets of over €700,000, you are liable for wealth tax of between 0.2%–2.5% on a sliding scale.

If you would like more information about the tax liability calculations and exemptions, you can visit this post.

Free consultation about your taxes in Spain

Taxation in Spain can be complex, especially if you are not familiar with the fiscal system. The rules can be difficult to understand and if you don’t follow them correctly you can be subject to fines and late payment interest.

You can fill out this form to arrange a free consultation with a tax expert from our team about the specific taxes you need to pay. You can rest assured that we will contact you as soon as possible to give you an effective response based on your needs.

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107 comments

James Taylor

28 February, 2019 2:00 pm

If you own a house in Spain
If you own a house in Spain and only spend 30 days a year there what taxes or other contributions do I have to pay

Suzanne O'Connell

10 March, 2019 7:01 pm

Hi James

Hi James

You must pay IBI council tax and imputed income tax/ rental tax depending on whether you rent out your property or not. 

Martin Malcolm beaton

28 February, 2019 3:54 pm

My wife and i have now been
My wife and i have now been in spain over the time threshhold , We have ben trying to get residency app since December with no luck , my question is , do we need to pay residence tax ? i have 2 small private pensions that equate to £14500 my wife has no income we own only our spanish home now with no savings

Suzanne O'Connell

4 March, 2019 12:34 pm

Hi Martin

Hi Martin

If you were in Spain in 2018 for more than 183 days then yes. If not, then 2019 will be your first year as residents. 

Madeleine

28 February, 2019 5:54 pm

Thank you for the information
Thank you for the information, particularly about civil service and government pensions. As stated mine are taxed at source but I am confused about the later information that I would still be given a tax band and taxed on the pension income. If I can’t be taxed twice, what does this mean, please?
Many thanks.

Suzanne O'Connell

4 March, 2019 12:32 pm

Hi Madeleine

Hi Madeleine

Your Civil Service pension, although not taxable here in Spain does influence the tax paid on your taxable income such as old age pension or private pension. This is because it is included in your income total here even though you are not taxed on that part of it. 

Andrew

5 April, 2019 8:39 am

Am I right in thinking you
Am I right in thinking you get your personal tax allowance and the married couples allowance(regardless of age?), also I am in receipt of a personal pension, but my wife does not receive an income, so can this pension be divided between two people and the personal allowance applies for both people?

Regards Andrew

Suzanne O'Connell

11 April, 2019 1:17 pm

Hi Andrew

Hi Andrew

There is an allowance of 5,550€ and if you complete a joint declaration you can have a further €3,400 

Paul

15 April, 2019 4:49 pm

I have a rental property in
I have a rental property in Spain and also own a property we live in I only earn €3000 from the rental property after all bills paid if my allowance is €5000 do I have to pay tax I don’t have a pension as to young

Suzanne O'Connell

23 April, 2019 8:01 am

Hi Paul

Hi Paul

Yes, you do have to declare the income

James

12 June, 2019 11:27 am

Good morning
Good morning
Can you tell me if both persons will get a personal allowance plus a married couples allowance. I receive uk pensions but my wife does not receive a pension yet or any other income?
Thanks

Suzanne O'Connell

24 June, 2019 6:20 am

Hi James

Hi James

On a joint tax declaration it is €5550 plus €3400

ronald vanlint

15 June, 2019 3:08 pm

How is the Notional rental
How is the Notional rental income of a property in the UK calculated?
Also, in your example above for a 76 year old, you calculate the personal allowance as 5,550 + 1,400 = 6,950. However, I have seen elsewhere the allowance as 5550 + 1150 (over 65) + 1400 (over 75) = 8100. Which is correct?

Suzanne O'Connell

24 June, 2019 6:14 am

Hi Ronald

Hi Ronald

The second one is correct.

Theo Stan

4 August, 2019 4:44 am

Good morning,
Good morning,
I am an EU national, with non-resident status in Spain. ( I work outside EU region for more than 183 days , I live in Spain maximum 60 days per year and the rest of the days I spend in my country of origin) My income is generated from a country outside EU, means outside Spain as well, where I do pay tax on it. Salary is not transferred to a Spanish bank account, but to my country of origin bank account .I do not own any property in Spain , I do not obtain any earnings in Spain from rental or things like that.
In this case, do I need to pay any tax in Spain ?
Looking forward to having your answer. Thank you!

Suzanne O'Connell

8 August, 2019 7:02 pm

Hi Theo

Hi Theo

As you are non-resident then you do not have to pay tax here as residents. However, if you have a property then you have non-resident taxes to pay. 

JD

29 September, 2019 11:34 am

Hi, if I receive income from a final salary scheme (so effectively an annuity purchased on retirement date), which myself and employer has contributed to, would this be treated as an annuity with the associated tax benefits? Thanks for any assistance

Oscar Paoli

11 November, 2019 4:02 pm

This would depend on the set up and if any Tax benifits have been receivedin IRPF, in this case if is normal income.
Kind regards,
Ábaco Advisers

Roy Owen

30 September, 2019 9:03 am

Hola
I have UK mil pension 11400 pounds .have just received the residents permit in Spain Murcia, my wife has no income
What will need to pay
Kind regards
.

Oscar Paoli

15 October, 2019 3:23 pm

Hi Roy,
This will depend on many other questions.
If you wish to receive more details you may contact us at info@abacoadvisers.com or call +34 966 703 748 to book an appointment in person or by phone to go over your case.
With kind regards,
Ábaco Advisers

Susan Loeb

26 November, 2019 11:50 am

I am a US citizen and now a Spanish resident. My income is from US Social Security and a New York State pension. I file taxes in the US, of course, and I know I have to file here. How does the tax treaty work so that I don’t pay double tax? I am 68.

Oscar Paoli

26 November, 2019 3:24 pm

Dear Susan,
Unfortunately we are not specialists in US citizens paying Spanish resident taxes as the agreement between both countries is quite complex, but from our knowledge the tax paid in the US can be deducted in Spain.
Should you need any other information we can get you in touch with a tax specialist betwween the US and Spain.
With kind regards,
Ábaco Advisers

tom b

26 November, 2019 2:07 pm

Your articles says nothing about how IRAk distributions are taxed. Are they counted as regular income (as in the US? But not in France)? In Spain, is earnings in your qualified IRA tax free until they are distributed (as in the US?) Or, do you have to declair unrealized profits/gains from investments even if you have not liqudated them?

You do not mention a wealth tax. I have read the wealth tax can be quite high and includes any savings/investiments that you have as well as real estate. So, if you have an IRA (self-funded pension) you have to pay a tax on that investment asset, even if you are not distributing from it?

Oscar Paoli

26 November, 2019 3:26 pm

Dear Tom,
Unfortunately we are not specialists in US citizens paying Spanish resident taxes as the agreement between both countries is quite complex.
Should you need any other information we can get you in touch with a tax specialist betwween the US and Spain.
With kind regards,
Ábaco Advisers

Bill Asbell

27 November, 2019 4:50 am

I am an American citizen and my wife and children have dual nationality with Spain and the U.S. We’re planning to move to Mallorca for about 9-10 month of the year. I’m aware that I must pay U.S. taxes. I don’t know all the implications of this move on my overall taxation. Do you have a tax consultant I can hire who is familiar with American expat tax law and can provide answers to all of my questions? I am selling my U.S. business and we’ll be living off of passive income (capital gains). I plan to purchase real estate in Mallorca after initially renting. — Thank you.

Oscar Paoli

27 November, 2019 5:02 pm

Hi Bill,
Unfortunately nobody in house, but should you get a recommendation of a company that could be of assistance can you email us at op@abacoadvisers.com and we will send you a referral.
With kind regards,
Ábaco Advisers

Ben

28 November, 2019 5:06 am

Some advice please….if my employer in the US actually pays for my rent would that form part of my gross income that is taxable?

Oscar Paoli

2 December, 2019 6:13 pm

Hi,

The rent paid by the company goes directly to the IRPF draft every year and we can find two scenarios:

If the house is owned by the company:
If the house is owned by the company, the valuation of the rent for the purposes of the declaration of income will be 10% of its cadastral value, as explained in article 43.1 of the Personal Income Tax Law. This percentage will be 5% if the cadastral value has been revised after January 1, 2004 and in no case may exceed 10% of other employee compensation.

If the house is not owned by the company:
At this point there are two alternatives, that it is the company itself that rents and makes the house available to the employee or that it is the worker who leases the house, with the rental contract in his name, but that it is the company who pays.

In any case, the payment of that rent will be considered work performance for the purposes of personal income tax and must be included in the tax declaration. When determining the value, the Tax Agency will start from the rent paid by the entity. In addition, the Treasury establishes a minimum limit of 5% of the cadastral value of the home. This percentage amounts to 10% in case the cadastral value has not been revised.

Please note we are not in US taxes as expats.

With kind regards,

Ábaco Advisers

david roberts

3 December, 2019 8:46 am

Nob Resident Tax

Can you please confirm whether the amount of non resident property tax is calculated per owner or property? So for example, if a couple jointly own the property, will they pay twice the amount of an individual owner.

Oscar Paoli

5 December, 2019 12:34 pm

Hi David,

The Tax is based on the property and then divided between the owners depending on the percentage owned, in normal cases for two owners it is 50% each.

Kind regards,

Ábaco Advisers

David

20 December, 2019 12:27 pm

I sold my property on 19 March 2018. Do I have to pay any non-resident income tax for 2018?

Oscar Paoli

20 December, 2019 1:54 pm

Hi David,

Yes you will have to pay before December 31st of 2019 the income tax for the period of time you owned the property from January 1st 2018 until the selling date March 19th 2018.

With kind regards,

Ábaco Advisers

Corina Zenner

30 December, 2019 6:23 pm

I have lived in Spain for a month in March 2019 and received a salary of ~1100 euros. I am now a Spanish non-resident. This appears to be non-taxable, but do I still need to file a return?

Oscar Paoli

31 December, 2019 12:40 pm

Hi Corina,

Your should have had withholding Tax applied to the payment as a non resident and your employer should be able to confirm this, if this is the case then the Tax has already been paid.

With kind regards,

Ábaco Advisers

CATERINA

3 January, 2020 4:31 pm

Hello, for the quarterly rental income tax declaration in Spain (form 210), during which range of days can the tax declaration be filled in for Q4? Only on January 20th or is this just the deadline and the tax declaration can be made between the 1st and the 20th of January?
Thanks and regards

Oscar Paoli

7 January, 2020 2:56 pm

Hi,

The online declaration is presented between the 1 and 15th Janaury and charged from the account on the 20th or in paper it can be presented between the 1st and 20th January any declarations presented after this date incur a fine for late presentation.

With best wishes,

Ábaco Advisers

Michael Johnson

6 January, 2020 5:50 pm

Good afternoon
My wife and I are UK citizens but have lived in Spain since April 2016. We are resident in Spain for tax purposes and have paid Spanish income tax for the past two years.

We have just completed the construction of a new house in Spain and are awaiting the haitation licence.

I have heard that we are entitled to a tax allowance for the cost of the new build. Is this correct?

Thank you

Oscar Paoli

7 January, 2020 2:49 pm

Hi Michael,

There may be an allowance in your region but normally there are no Tax Allowances for costs of a new build.

With kind regards,

Ábaco Advisers

Rebecca

6 January, 2020 5:54 pm

Hello,
I’ve got a few queries:
-I’m a UK citizen and lived and worked in Spain between Oct 2016 and Jan 2019 – I didn’t file a tax return for 2016 because I earned less than the minimum amount to file a tax return that year (I think the limit is €20k my company said) , however I’ve realised that I think I overpaid tax as it looks like I paid around 30% in taxes in 2016 in Spain despite earning less than €20k – can I apply for a refund even now?
-I filed for the Beckham tax law in 2017 – does that tax regime then apply to the entire year or only from the date onwards which I was accepted to the regime?
-Is it correct that I never submitted Modelo 720 despite owning a property in the UK from Dec 2016? I believe I count as non resident in 2016 as I lived in Spain less than 183 days and then I was on the Beckham Regime 2017 onwards.

Any pointers would be really helpful :-). Regards, Rebecca.

Oscar Paoli

7 January, 2020 2:55 pm

Hi Rebecca,

It is possible to present a Tax declaration now but it would be a late presentation with a fine. The Beckham law would be for the Tax year 2017 onward. Should have declared the poroperty in the UK if you are considered to be a Reisdent but as using Beckhams Law you are paying Tax at a fixed rate on just your income here you arfe not required to do the 720.

With Kind regards,

Ábaco Advisers

Rebecca

7 January, 2020 2:31 pm

I think I may have overpaid my tax in Spain in 2016 – is it too late to apply for a refund? I didn’t submit a tax return that year as I earned less than €20,000

Oscar Paoli

8 January, 2020 9:56 am

Hi,

You can apply for a refund from the Town Hall, you will need to present all the original receipts for the payments and a certificate to confirm your bank account number.

With kind regards,

Ábaco Advisers

Paulius Skrebutenas

25 January, 2020 2:08 pm

Hi , I have Stocks and Shares ISA in UK. I was told that after April, it would be changed to general investment account. If I am to keep this account would I need to pay tax on interest earned separately or it will be automatically taken from my account ?

Oscar Paoli

29 January, 2020 2:58 pm

Hi,
You will have to pay tax on interest earned separately.
With kind regards,
Ábaco Advisers

nick rothery

25 January, 2020 7:38 pm

Hi – I will have a pension income and my wife will have home rental income from a UK property – can we offset this against against the 11000 joint personal allowance , plus 1st child allowance of 2400 plus married couples allowance of 3400.
Regards
Nick

Oscar Paoli

29 January, 2020 3:01 pm

Hi Nick,
Your situation will vary if you present a combined declaration or individual tax declaration.
If individual tax declaration the allowance is 5.550 €, if combined it will be 5.550 €, plus 3.400 € (couples allowance) and 2.400 € for your child, and if made individually it would be 5.550 € plus 50 % of the child allowance which is 1.200 €.
With kind regards,
Ábaco Advisers

Richard Hoult

26 January, 2020 10:18 am

Hi, I am currently renting a house in spain, I return to the UK to work where I get my UK tax deducted from my NHS salary every 3-4 weeks. I do not have residency in spain. I am hoping to purchase a spanish property this year. I do not earn any money when im in spain my sole earnings come from the UK. Will I need to pay any taxes?

Oscar Paoli

29 January, 2020 3:03 pm

Hi,
If you are going to become residents you will need to declare your income in Spain, but if you are still working in the United Kingdom and are not living in Spain for over 183 days per year then you should not become residents.
With kind regards,
Ábaco Advisers

Richard

28 January, 2020 10:44 pm

I’m looking to get my residencia asap possible but have been told that if I apply and am accepted before September then I would have to pay tax on my previous years UK income, April 2018 to April 2019 or if after September I would pay tax on my April 2019 to April 2020 UK income, is that correct? (i have no other ROW income) Also would this normally be covered under the Double Taxation agreement i:e no tax to pay in either of the above senarios?

Oscar Paoli

7 February, 2020 12:27 am

Hello Richard,

If you take residencia this year before, or more or less just after August-September, you will be considered a tax resident here in Spain for the fiscal year 2020. This will mean that in 2021 you will have the obligation to present a 100 IRPF model on the income that you have had during 2020 according to our fiscal year that goes from January 1 to December 31.
If you take it out after these dates (between October-December), and you have not spent much time in the country during this year, your first year of residence will be considered to have been 2021 so you will pay for the first time as a resident in 2022, about the total income you had in 2021.

As to whether or not you have to pay taxes, that depends on the level of income you have. We can although confirm is that you will only have the obligation to file returns here and pay taxes here in Spain. Of course, there are certain exceptions such as military pensiones, civil pensions and other pensions, but we usually check this in each case before moving forward.

With kind regards,

Ábaco Advisers

Mrs Jacinta Levy

31 January, 2020 4:01 pm

I have been informed by the Spanish Tax authority that I have to pay back taxes from year 2015 when I moved to Spain, however I did not obtain my residencia until 10/11/2015 and I made a fiscal declaration which I never had any issues with.
I have submitted returns every year since then yet now the tax authorities are saying that I owe tax of 2500 euros for year 2015 as I was a fiscal resident prior to the official date on my residencia card.
I checked with my local town hall and according to their records I was not a resident of Spain prior to the official date of 10/11/2015
The Spanish tax office state that I was a resident in February 2014 which is impossible as I was living in the UK with my husband who was still working at Heathrow Airport until May 2015 when we came over to Spain to live and started the process of becoming full time Spanish residents and fiscal resident.
I do not know what to do as they tax authorities just keep ignoring the facts and have stated things like money was being taken out of our joint account and being spent in local supermarkets which is true but obviously only when we were over in Spain on holidays.
They have stated that the unpaid tax is in relation to payments I received from the FAS in compensation for an occupational pension that went into liquidation in 2010 and the FAS (which is a UK Government Department) pay this compensation to all members of the defunct pension scheme.
The amazing thing is that this pension only totals around £4500 a year so I really do not understand their claim for 2500 euros which is more than 50% of what I received and it is also taxed in the UK. I asked the FAS where I should be paying the income tax on these payments and they stated that as it was a UK Government payment the double taxation agreement means that tax is paid into the UK and not Spain.
I also receive a UK state pension which I know is not taxed here in Spain.
I am now just going around in circles over this matter
What more can I do to clarify the situation with the Spanish tax authorities

Oscar Paoli

11 February, 2020 3:31 pm

Hello,

In this case, since you became resident at the end of 2015 we assume that your first year as a resident in Spain was 2016, so you would have first declared your resident tax declaration in 2017.

We recommend to contact the HMRC and request a “Letter / Certificatate of Tax Residency” for the year 2014-2015 and 2015-2016.
This will justify that you were a resident for tax purposes in the UK for those years and that you paid your taxes.

As for the amount, most likely the calculation is based not only on your pension, but on all other possible income. And being from the year 2015 you will carry the corresponding penalties and late payment interests.

We would also recommend that when you request the letter or certificate of tax residency that you also request a document based on the double taxation treaty and article 18 thereof, your pension is considered governmental and is taxed at source. This might also help your claim.

With kind regards,

Ábaco Advisers

sophieB

3 February, 2020 12:37 pm

Hi there,
We are thinking of moving to Spain, buying a property there and putting our kids into school – so would need to become residents. We have a UK Ltd company where my husband and I are the sole Directors/owners (no staff). All our clients and earnings will come from outside Spain. Would we be able to keep the UK Ltd company and continue to pay only UK corporation tax? On the salary and dividends we pay ourselves from the company what tax rates would we pay in Spain as Spanish residents but earning income from outside Spain only? If we also have ISA’s (stocks/shares) in the UK and make money from these how will the profits be taxed? Many thanks

Oscar Paoli

5 February, 2020 6:08 pm

Hi Sophie,
Regarding the UK Ltd we are not that knowledgeable in the matter to be complete honest. For the other queries in your comment, we can inform that the income they would have in the form of salary or dividend will be taxed here in its entirety, that is to say the “Gross” and not the “Net” as some think. As for the types of tax that will be applicable to you, this will depend entirely on the level of income you have.
If you have ISA and receive profit from it, you will have to study in what way. There are ISA’s in which the gain is automatically re-invested every year so that the person does not receive anything yet and that these cases do not pay until they receive them. If it is the case that you receive the profit, it is necessary to look further on how it is taxed.
With kind regards,
Ábaco Advisers

Lyn

3 February, 2020 10:31 pm

Hello
We are currently U.K. tax payers but are thinking of becoming residents in Spain. We have just sold our UK home and will not pay capital gains tax in the U.K. as it is our primary home. If we decide to become residents in Spain this year would we pay tax on the money from our U.K. home even though we were not residents in Spain when we sold it?

Oscar Paoli

5 February, 2020 6:07 pm

Hi Lyn,
If you want to take residence here this year during the transitional period, do so at the end of this year. October at the earliest, and do not spend more than 5 months here. This will ensure that they are not considered as tax residents for fiscal year 2020 and will be taxed as residents beginning in 2021 as their first year as residents to file income tax in 2022. This is the only option we know right now to avoid possible income tax here.
With kind regards,
Ábaco Advisers

David Holgate

9 February, 2020 7:59 am

I am tax resident in Spain for 2019. I have a NHS pension and a Teachers pension to declare. I understand that I will pay tax on the NHS pension and the Teachers pension will be added to determine the income tax band.

What conversion rate is used to convert UK income into Euros ?

I also have a UK government injury benefit awarded as a result of permanent injury whilst in the UK Civil Service. This injury benefit is not taxable. Do I need to declare this income in Spain ?

Oscar Paoli

4 March, 2020 5:21 pm

Hi David,
The exchange Rate for Income Tax depends, you should use the offiical rate on the date the payment is received as shown in the BOE, the NHS pension is Taxable here in full and the Civial service is exempt but has to be declared as such.
Kind regards,
Ábaco Advisers

Maurice Douglas

14 February, 2020 2:35 pm

Hi, thanks for this interesting article, my question is: if I were to live with my partner in Spain (we are not married) and we both have a pension below £14000, would we have to file a tax return, and will we get taxed on our pensions..? many thanks Maurice

Oscar Paoli

17 February, 2020 3:22 pm

Hi Maurice,
If your decide to move here permanently to Spain you will have to pay taxes on that income unless they are state or military and, given the amount, depending on the deductions that are applicable to them, you will most likely have to pay something in taxes here.
In the event that each person has only one source of income, that is, a single pension, you are not legally required to file personal income tax every year because your income is less than € 22,000 per year (this depends directly on the exchange rate). Now, if the level of income that you have indicated corresponds to two or more sources you will have to present income tax every year. We also always recommend submitting a declaration even if it is € 0 tax to pay because there is a registration of the person in tax matters with the Spanish Tax Agency.
Kind regards,
Ábaco Advisers

Simon

25 February, 2020 4:21 pm

Hello. Regarding Modelo 720, do I need to declare (i) a defined benefits private pension (from which I receive a monthly income) and (ii) a defined contribution private pension (from which I have not received any income)? FYI, I am aged 55. Many thanks.

Oscar Paoli

4 March, 2020 3:57 pm

Hi Simon,
In regards to Defined Benifits of private pension you will need to include it in your 720, as it is a private pension from which you are receiving an income. From the Defined Contribution of private pension you do not need to include it at this moment as you are not receiving anything from it as we understand. When the time comes that you start receiving monthly or yearly payment you will have to revise your situation to see if you need to declare it in your 720 form.
Kind regards,
Ábaco Advisers

Christopher Giddens

26 February, 2020 10:15 am

I have a house in the UK, which is not rented out. Will I have to pay any tax in Spain on this property?

Oscar Paoli

4 March, 2020 3:45 pm

Hello,
This will depend if you are resident or non-resident in Spain.
Which is your own situation?
Kind regards,
Ábaco Advisers

adz

2 March, 2020 6:50 pm

Is it possible to get residency and not be a fiscal resident if you stay less than 183 days a year?

Oscar Paoli

4 March, 2020 3:50 pm

Hello,
You should not be granted a residency in Spain if you are not in Spain over the 183 dat limit.
Kind regards,
Ábaco Advisers

Mrs Kathryn Margaret Stych

31 March, 2020 11:40 am

I was tax resident in Spain till Dec 2019. Now live in England. I no longer have Spanish bank account. How can I pay last years tax in Spain.

Oscar Paoli

1 April, 2020 10:58 am

Hello,
The Tax if any to be paid can be sent to your representative by transfer and they can forward to the Tax office.
Kind regards,
Ábaco Advisers

Sophie Taylor

1 April, 2020 9:07 pm

Hi, if resident since October 2019, and prior to that under 183 days per year, would I need to complete a tax return in 2020 or would it not be required until 2021?

Oscar Paoli

1 April, 2020 10:12 pm

Hi Sophie,
With the information provided we understand that in 2020 you will have to declare as non-resident in Spain for the year 2019 if you own a property here in Spain, and as resident in Spain in 2021 declaring then the year 2020.
Kind regards,
Ábaco Advisers

Mrs Kathryn Margaret Stych

6 April, 2020 10:44 am

After living in Spain for many years and paying tax there, I returned to live in England in 2019. I want to pay my 2019 tax due in Spain but no longer have a Spanish bank account. Can I pay from my English account ?
What would happen if I do not pay 2019 tax ? I did not own any property in Spain.

Oscar Paoli

7 April, 2020 7:37 am

Hello,
The Tax if any to be paid can be sent to your representative by transfer and they can forward to the Tax office if you no longer have an account in Spain.
Kind regards,
Ábaco Advisers

p pierrepont

6 April, 2020 4:08 pm

I don’t understand how the personal allowance is applied to my income tax calculation. Can you explain this.

Oscar Paoli

7 April, 2020 7:35 am

Hello there,
The personal allowance of 5.550 € is deducted once the total of you taxable income worked out.
Best wishes,
Ábaco Advisers

Joseph Alvarado

9 April, 2020 6:59 am

Hi, I’m planning to move to Malaga, Spain in June 2021. I have a federal pension in the USA, retired, I’m 67 years old.
Do I have to pay taxes in Spain? I’m single.
Joe

Oscar Paoli

21 April, 2020 4:03 pm

Hello there,
Unfortunately we are not tax experts when dealing with US taxes, we would recommend you contact one of the following companies:

https://www.myexpattaxes.com/

https://www.ustaxglobal.com/

With best of luck.
Best wishes,
Ábaco Advisers

Martin

18 April, 2020 9:34 am

My UK state pension together with my occupational pension together total below fourteen thousand euros, because I have two pensions will I still have to make a declaration_

Oscar Paoli

21 April, 2020 4:37 pm

Hi Martin,
Yes you are obligated to present as you have two Pensions.
Best regards,
Ábaco Advisers

sue &alan thomas

29 April, 2020 2:50 pm

hello we are in the process of selling our house in uk ,we have a property in murcia region, we are taking early retirement and getting residency in September we would some advise as to the best time to sell uk property for tax purposes we understand that we may have to pay capital gains tax wwould this be in spain or the uk, our only income aftrr September will be pension .thankyou sue /alan

Oscar Paoli

30 April, 2020 8:50 am

Dear Sue and Alan,

It will probably be best to sell your home in the UK this year and that you do not stay more than 183 days in Spain during this year 2020. You can become resident in 2021 and therefore the sale of your UK property will only be taxed there.

Best regards,

Ábaco Advisers

Martin

6 May, 2020 9:12 am

I’m working in Dubai which is tax free, and planning to move to Spain permanently in order to open a business, should I pay income tax on my current savings after I move to Spain and transfer the amount to my bank account there? Knowing that I hold a EU citizenship however not a tax resident in my country nor in Spain so far! I don’t have a bank account in Spain currently, but planning to make a visit and open one. I will use my current savings to start up a business in Spain. It’s obvious that I will have to pay income tax after this business starts to make money however my concern is regarding any tax that should be paid on money I would bring with me to Spain but was previously earned before becoming a tax resident in Spain. Thank you!

Oscar Paoli

8 May, 2020 8:51 am

Hello Martin,
Setting up of a Company here in Spain is not our speciality, but for your information you would have to pay Tax here on your personal savings you have where ever they are (World Wide Income) and income received from the company.
With kind regards,
Ábaco Advisers

Sue Reed

6 May, 2020 2:26 pm

I work for a uk company from home, if i was to move to Spain and work from home would I need to pay any taxes on the UK earned income which has already been taxed.

Oscar Paoli

8 May, 2020 8:50 am

Hi Sue,
If you come to live in Spain as a Resident you will pay Tax here on your world wide income, you would have to apply to the UK Tax office to stop paying Income Tax there, this is something you would have to obtain information from the British Tax Office about prior to moving to Spain and complete a Statutory Residence Test.
With kind regards,
Ábaco Advisers

Anthony White

18 May, 2020 9:47 am

I am fiscally resident in Spain and pay tax on my Spanish and English state pensions. Previously the tax officers I consulted when making my “declaracion de renta” have told me that I did not need to declare the Teachers´Pension that I receive for having worked in state schools. Later in each year the local tax office would send me a request to provide documentation to explain the undeclared money that UK authorities had informed them that I had received. I submitted copies of my P60 from Teachers´Pensions , and this was always accepted.
However, this year the tax office have informed me in writing that they do do not accept this and have presented me with a demand for unpaid tax plus accrued interest. I am unable to sort his out with the local tax office because it is closed because of Covid-19. What is your advice,please?

Oscar Paoli

18 May, 2020 11:19 am

Hi Anthony,

In 2014 a new Double Taxation Treaty between the United Kingdom and Spain came into force which will effect how the Pensions received from Crown, Civil Service, Local Authorities (Teacher) Cenral and Regional Government, Fire and Police Force are treated as of the 2014 Tax Declaration. Under Article 22 section B the Text now reads

“ (B) Where in accordance with any provision of the Convention income derived or capital owned by a resident of Spain is exempt from tax in Spain, Spain may nevertheless, in calculating the amount of tax on the remaining income (or capital) of such resident, take into account the exempted income or capital. ”

Therefore income form these sources should be declared as exempt on the Tax Declaration. Where as this pension was not included in the calculation of your tax band previously, it now is.

With kind regards,

Ábaco Advisers

Barbara Betts

4 June, 2020 2:48 pm

My husband and I became Spanish residents in 2016. My husband receives his UK State Pension and income from a private pension (annuity). I only receive income from a private pension (annuity) but am currently trying to arrange for a second private pension to be implemented. I do not receive my UK State Pension until next year. Both mine and my husbands first private annuity was taken out whilst still in the UK, with a tax free 25% lump sum being paid to me, and my husband respectively. I understand the 25% lump sum from my other private pension will be taxable in Spain but I am struggling to establish how much tax is likely to be attributed to this. I have read about 40% of the lump sum being tax-free with the remaining 60% being added to my general income for tax purposes. Contrary to this I have also read that if I take the pension as an annuity the income from this is added to any interest from savings in the UK and thereby taxed at 19% (upto €6000) and 21% (€6k-€50k); unlike general income being taxed at 19% (upto €12450) and 24% (€12451-€20200). My husband also has a second private pension which he has yet to implement and may well decide to take this in its entirety (c.£14k). Any advise you are able to give me in terms of the 40% concession on the lump sum and in what area the remaining income sits, and also how my husbands 2nd private pension (c.£14k) would be treated if taken in one go, would be greatly appreciated. I do have a further question relating to UK property rental income but think it better to write separately about this. My apologies for what appears to be several questions on this subject matter and so may I thank you in advance for your time and I hope to hear from you.

Barbara Betts

4 June, 2020 2:59 pm

Hello again. My second question relates to rental income received from a UK property equally owned by both myself and husband. I am aware that HMRC in the UK tax the rental income from this property (by virtue of the fact that it’s in the UK) and, as such, should not be taxed by the Spanish Tax Authority. To this end my husband and I submit an annual self-assessment of income to HMRC each year. The question I have is, is it correct that a projected rental income (based on property value) be added to the “net balance of income to be integrated into the general tax base and income allocations” which total then becomes the “General taxable base subject to tax” – and by which definition the rental income from the UK property is indeed being taxed here in Spain. Once again, any advice you are able to provide would be most helpful.

Oscar Paoli

4 June, 2020 10:16 pm

Thank you for contacting us Barbara. Your queries are quite extensive and would require a meeting with one of our tax specialists. Should you wish to book a free consultation please do not hesitate to contact us at info@abacoadvisers.com or by phone at +34 966 703 750.
With best regards,
Ábaco Advisers

Ron Nowland

5 June, 2020 4:53 pm

Both fiscal residents in Spain, my wifes income is below the tax threshold. Can the amount below the threshold be deducted from my tax ?

Oscar Paoli

7 June, 2020 7:38 pm

Hi Ron,
The income has to be included in a joint Tax Declaration for both and on occasions although one income is below the limited jointly as there are less allowances it may not be finacially viable to do a joint Tax Declaration, your Tax adviser wshould fully explain to you the two options and show which is best for your situation.
With kind regards,
Ábaco Advisers

david

8 June, 2020 9:48 pm

Hi.
My family live in Spain and have residency. I haven’t applied yet but am thinking of applying due to Brexit.
I run a ltd company in the uk.
Im considering residency for myself, but i spend over 270 days a year in the uk working and pay all my taxes in the UK.
I understand that I would have to pay corporation tax and personal tax in spain as well as england (Just the difference between the amounts).
We want to buy a property rather than rent in Spain. But Spanish tax system seems very complicated. Would you advise i dont get residency and just travel as a tourist or apply for residency?

Oscar Paoli

10 June, 2020 9:54 pm

Hello there,
Thank you for contacting us.
Each particular case is different and specific, so our recommendation is to book an appointment with one of our representatives in person or by phone to discuss your case.
Should you wish to book an appointment please call us at 0034 966 703 748 or email us at info@abacoadvisers.com
With kind regards,
Ábaco Advisers

Angela Mitchell

9 June, 2020 7:26 am

As I receive an income of less that 10,000 euros per annum do I have to a Tax Return. I am 73 years old.

Oscar Paoli

11 June, 2020 10:12 am

Hi Angela,
You do not have to do so provided only one pension provider but it is advisable as a justification of Fiscal Residency and for Medication.
With kind regards,
Ábaco Advisers

p. HERRIDGE

18 June, 2020 10:19 am

As fiscal resident pensioners living in Spain, is it necessary to pay ABACO ADVISERS a fee if we earn under the tax bracket if we were to come to you for our income tax declarations. What documents would we need for a meeting with you in connection with our income tax declarations.

Oscar Paoli

18 June, 2020 7:56 pm

Hello there,

Should you wish us to complete the Tax Declaration and being under the limited may not mean that you are not obligated to present a declaration as this depends on circumstances and as a client there is a fiscal package with an annual fee including other services charged. If you wish to receive the list of documents please contact us at info@abacoadvisers.com and we will get them over to you.

With kind regards,

Ábaco Advisers

Andrew Bennett

18 June, 2020 1:04 pm

Hi
My question is this. Do I need to pay tax in Spain as a resident if I don’t earn anything. I sold my house in London and have around €500,000 which I think will keep me for at least the next 20 years. I am using the capital, simply transferring €1500 a month from my U.K. bank account into my spanish bank account. Do I need to pay tax on this ?
I have pensions – private and U.K. state that I can start using in 16 years time and I understand I will need to pay tax on my pension income then. But in the meantime do I need to pay tax if I am simply spending my own money ?

Thanks

Oscar Paoli

18 June, 2020 7:54 pm

Hi Andrew,
If you do not earn anything on your Worldwide income including interest on Bank accounts etc, and you assets are below the limit for Wealth Tax in your region then you would have nothing to declare in an Income Tax or Wealth Tax Declaration and therefore no obligated to present.
With kind regards,
Ábaco Advisers

Martin

20 June, 2020 5:03 pm

Lump sums from UK Government Pensions
My wife retired in 2019 taking a pension from the Local Authority (Government) Pension Scheme. We understand the pension income is covered under the Double Taxation Convention and is declared on the RENTA to calculate the tax rate for our other income but not taxable. How does the 25% lump sum get treated? Is it added to the pension income received during 2019 or is it declared separately and if so, is it still protected from tax under the Double Taxation regime?

Oscar Paoli

23 June, 2020 2:27 pm

Hi Martin,
The Lump sum payment is treated exactly the same as the income exempt but use as part of the calculations to how much Tax is to be paid on normal income.
With kind regards,
Ábaco Advisers

Steve Kite

22 June, 2020 4:42 pm

Hi in February 2019 I had to move out of the property I was renting for the last 12 years which I got tax relief on the rent I paid. My new rental contract is for 5 years from 01/03/2019 I am resident in Spain and over 65 can I claim tax relief on the new property I am renting many thanks
Steve

Oscar Paoli

23 June, 2020 11:18 am

Hi Steve,
Unfortunately you will no longer be an allowance on the new rental contract.
Sorry for the inconvenience.
With best regards,
Ábaco Advisers

Tony

25 June, 2020 5:03 pm

Soon be living in Spain on a uk and dutch stat pensions, at what amount do i pay tax. I am married and wife has her own state pension

Oscar Paoli

26 June, 2020 9:25 am

Hi Tony,
We would need a lot more information to be able to assist you properly, feel free to contact us should you wish to book an appointment with us at info@abacoadvisers.com
With kind regards,
Ábaco Advisers

Peter

2 July, 2020 11:22 am

Hi ! As a Tax paying Resident in Spain can you tell me , Is there an age whereby tax is no longer Paid on Pensions in Spain Please, I search everywhere but still can’t find any info on this subject,

Oscar Paoli

7 July, 2020 8:18 am

Hi Peter,
Our recommendation is to query with the relevant office around 3 months before you move, as the financial means requirement could be totally different by then.
With kind regards,
Ábaco Advisers