Last updated on June 3rd, 2021 at 10:38 am.
Tax brackets are a familiar concept across most European jurisdictions and tax brackets in Spain follow a similar basic principle. In Spain, the amount of income tax you pay will depend on the amount of money you earn. These earnings are divided into groups, with the percentage of tax you pay ascending the more you earn. In this article, we summarise the Spanish income tax system and detail the different tax brackets in Spain.
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.
Do I have to pay income tax in Spain if I do not live there full time?
Whether or not you pay income tax in Spain will depend on your residency status. However, it is important to be aware of the Spanish definition of a resident. If you live in Spain for more than 183 days per calendar year, then you are classified as a resident. Remember, these 183 days do not need to be consecutive, so you cannot argue that you do not need to pay income tax because you only stay intermittently.
Note that non-residents are still liable for some tax, mostly associated with property. Take a look at this guide to find out more.
Income tax in Spain
The vast majority of Spanish residents are liable for taxes and have to submit a tax declaration. This declaration is made annually, usually before the end of June and then paid before the assigned deadline. The self-employed, or autonomos, also submit their declaration annually but have to pay their taxes quarterly. The only instance within which you do not need to submit a tax declaration or pay income tax in Spain is if one of the following apply to you:
- If you have pensions worth less than €14,000.
- You have less than €1,000 worth of interest, investment income, Rental income, property owners’ imputed income, capital gain or as self employed.
- If you earn less than €22,000 as an employee in Spain, as your employer will deduct your income tax at source.
- Lastly, if you have any capital loss greater than €500 you are obliged to declare it.
The charges are retrospective, so will cover last year’s earnings. The document will have to cover your worldwide income, including any gains from employment, rental properties, savings, dividends, property sales or any other assets.
If you have retired in Spain, then you will be taxed on your pensions, however, some pensions come under governmental employment and are treated differently under double taxation treaties, and the figure will be taken into account when calculating your tax band.
Tax brackets in Spain
Like Britain, Spain has a ‘personal allowance’ on which you do not pay income tax. However, it is much smaller. The personal allowance is as follows, depending on your age and whether or not you have a disability recognised by the Spanish Authorities:
|General personal allowance||€5,550|
|Married couples allowance for joint declarations||€3,400|
|Deductions for work-related expenses||€2,000|
|Over 65s||+ €1,150|
|Over 75s||+ €1,400|
|Incapacity allowance||+ €3,000|
|Incapacity allowance for over 65s||+ €9,000|
Due to the size of the personal allowance, the vast majority of residents are liable for some income tax. The table below details the different tax brackets in Spain:
|Up to €12,450||19%|
|From €12,450 to €20,000||24%|
|From €20,200 to €35,200||30%|
|From €35,200 to €60,000||37%|
Calculating your income tax obligations
The Spanish tax system can be complex. Therefore, it is advisable to hire a fiscal representative to handle your tax declaration. Ábaco Advisers have been assisting our clients with their fiscal obligations in Spain for more than two decades. If you would like a free consultation, without obligation, please fill in this form. One of our team will be in touch to arrange a meeting at a time that suits you. With Ábaco, you can be confident you are fully tax compliant in Spain.