Tax advice in Spain for international investors and expats

For those who are thinking of investing in Spain, as well as those who are thinking of settling in Spain or those who are new to this country, regardless of whether they have a visa or not, understanding the Spanish taxes you need to pay is fundamental to your life and business.

Taxation is not an easy task, because in order to correctly calculate the amount of tax a person has to pay, many nuances may have to be considered. For this reason, many people choose to hire a Spanish tax advisor or lawyer to make this task easier.

Hiring or not a professional of Spanish taxation, it’s a good idea to at least understand the basics of taxes for expats in Spain and investors considering expanding to Spain or buying investment property there. And luckily, it is not hard to understand the basics of taxes.

How to determine which taxes apply to you?

The first thing to learn, is to be able to determine whether you apply as a tax resident, which applies regardless of whether you hold a Spanish residency permit or not. You are a tax resident if you fall into at least one of the following cases:

  1. You have been in Spain for more than 183 days (don’t have to be continuous) within a single year (from January to December)
  2. Your family (spouse, children) or your business are in Spain
  3. Your main professional activities, either as an employer or as a freelancer, are conducted in Spain

For those who don’t qualify as Spanish tax residents, there’s a tax called Spanish income tax, for which the expat or investor must only pay a fixed rate of 25% of the gross income generated in Spain, and not worldwide.

Tax residents however, must pay an income tax for their worldwide income, and rates in this category are progressive, depending on the amount earned, which goes from €12,450 at 19%, up to more than €60,000 at 45%. Certain differences may also apply for rates in different regions in Spain.

The Spanish wealth tax is another tax that people, especially those investing in Spain, must be aware of. This applies for those whose worldwide assets are greater than €700,000. And there’s an extra allowance of €300,000 for residents of Spain. That is, for residents, only those who have €1,000,000 in assets worldwide must pay this tax.

Advice on Spanish taxation

These are the basic taxes any expat or investor in Spain should be aware of, as they comprise the basics of the Spanish taxation system for those who are not Spanish citizens, but for whom Spain holds significance.

Taxation can be complicated, as can the taxation of foreigners and international investors in Spain. It is therefore best to get tax advice from a tax professional in Spain or abroad.

Knowing what you have to pay after the Spanish tax year is a key part of successfully investing in Spain or having a good experience as an expatriate in the country; it can save you a lot of headaches later on.