Income Tax In Spain

The Spanish Tax year runs from 1st January to 31st December and Spanish residents have to pay income tax (Impuestos sobre personas fisicas) on their worldwide earnings when they complete a declaration (Declaración de la Renta) during May or June the of following year. A Spanish resident is defined as someone who spends more that 182 days in the year in Spain (whether or not they have a residence card or not). Salaried workers earning less that €22.000 per annum will probably not have to complete an income tax declaration as long as they have a single employer. The Tax Agency will send you a form 105 to check that you agree with the calculations and return. You do not need to fill in a declaration at all if your income is less than €8.000 a year.

The tax agency have published a computer program called PADRE to complete the Annual declaration. Many banks and gestores now use this program. A professional advisor can help you with this and will charge €70 or more depending on the complexity of your case. Married couples should check whether it is better to file joint or separate declarations.

Spain has double taxation agreements with many countries including the UK so you will not be taxed twice. Americans will still have to file a tax declaration because the USA bases tax on nationality not residence.

Spanish income tax rates:

Taxable Base Tax Rate Band Marginal %

0 0 4000 15

4000 600 9800 24

13800 2952 12000 28

25800 6312 19200 37

45000 13416 - 45

Deductions from Income:

Single Person €3400
Married persons €6800
First Child €1400
Second Child €1500
Third Child €2200
Over 65 years of age add €800 to personal minimum of €3400

Payments to the Social Security System:
15% of mortgage payments on principal residence.
75% of Plus Valia tax paid on a property transfer.

For example a single man earning €25.000 a year would deduct his €3400 allowance leaving a taxable base of €21.600. From the table an income of €13800 pays €2952 tax and 28% on the remainder. Our example would pay €2952 plus 28% of €7.800 (21,600-13,800) or €5,136 in total.