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Spanish Income Tax Rates 2019

Andalucía Lawyers’ guide to Spanish income tax for Spanish residents for the years 2012-2014.

Am I a Spanish resident?

Individuals become officially resident in Spain for tax purposes if they live more than 183 days of the calendar year on Spanish territory or if the principal centre of activity or physical base of their economic interests is in Spain.

For more detailed information on how tax residency is established or if you are unsure about whether or not you are a Spanish resident, read our article How Do I Know if I’m a Spanish Resident or Non-resident for Tax Purposes?

What must I declare and when?

Spanish residents are taxed on worldwide income therefore you have to declare all earnings, regardless of where they come from. This includes pensions from your home country, with the exception of some civil service pensions. According to the treaty for double taxation, a deduction is applicable to all earnings that are taxed abroad. As a result you will not be taxed twice on the same income. These rules apply even if your income is not paid into a Spanish bank. You are only exempt if your income falls below the established thresholds (see below). Spanish residents have from 1 April 2020 to 30 June 2020 to declare their income from the 2019 calendar year.

How do I prepare my tax return?

Option 1: Contact the Spanish Tax Office and request your fiscal information.

Option 2: We can do it for you. Contact us to enquire about this service or to set up a consultation, either in person or via phone/email.

What are the Spanish income tax allowances and deductions?

Various income tax allowances and deductions are available for Spanish residents. These vary according to the individual’s personal situation:

Age Allowance

  • Individuals aged 65 to 75: €6,069.
  • Individuals aged 75 and over:  €7,191.

Disability Allowance

The disability allowance is calculated according to a graded scale of disability:

  • Grades 33-65: €2,316.
  • Grades 65-100: €7,038.
  • If third party care is required then an additional allowance of €2,270 applies.

Child Allowance (Under 25 years Old)

Child allowance for under 25s with an income below €8,000 living at home:

  • First child: €1,836.
  • Second child: €2,040.
  • Third child: €3,672.
  • Fourth and additional children: €4,182.

Child Allowance (Under 3 Years Old)

  • For each child under 3: €2,244.

Dependent Parent Allowance

If your mother or father is living with you and has an income below €8,000:

  • Over 65s: €918.
  • Over 75s: €1,122.

Earned Income Allowance (Including Pensions)

  • Earnings up to €9,180: €4,080.
  • Earnings up to €13,260: €2,652.
  • A sliding scale applies for income between the two limits.

Dividends

  • Receivable tax free up to €1,500.

Deductions

  • Cost of principal residence with a mortgage.
  • Incomes earned from rent which are taxed on 40% of the net.
  • There are also some deductions applied by local governments that vary from region to region.

What are the 2019 tax rates?

Rates for Capital Gains and Investment Income

  • Dividends up to €1,500 are tax free.
  • €0-€6,000: 21%.
  • €6,000-€18,000: 25%.
  • More than €18,000: 27%.

Rates for Other Income After Allowances and Deductions

  • €0-€17,007:  24.75%.
  • €17,007-€33,007: 30%.
  • €33,007-€53,407: 40%.
  • €53,407-€120,000: 47%.
  • €120,000-€175,000: 49%.
  • €175,000-€300,000: 51%.
  • More than €300,000: 52%.

Local surcharges have been added by autonomous regions such as Andalusia and Catalonia. For example, the income tax rate in Andalusia is 1% higher than the rates in the table above for incomes above €80,000, 2% higher for incomes above €100,000 and 3% higher for incomes above €120,000.

I have a low income, do I have to declare?

The allowable levels of income before a declaration must be made:

  • Earned income already subject to employer deductions (if any other incomes amount to less than €1,500): €22,000.
  • Reduced limit if earned from more than one employer: €10,200.
  • Bank interest and other investment income: €1,600.
  • Rent: €1,000.

Our Services

We offer a resident tax advice service for a set annual fee:

RESIDENT

If you would like advice about your tax situation or you’d like us to take care of your Spanish income tax return on your behalf, please get in touch.

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How Do I Know if I’m a Spanish Resident or Non-resident for Tax Purposes?

Are you a Spanish resident? It’s important to know so you can plan your taxes accordingly.

Am I a Spanish resident?

Individuals become officially resident in Spain for tax purposes if they live more than 183 days of the calendar year on Spanish territory or if the principal centre of activity or physical base of their economic interests is in Spain. A presumption of residence arises if an individual´s family lives in Spain.

Spain’s Double Taxation Agreements

According to Spain’s agreements to avoid double taxation, a person is defined as resident of a country according to the internal legislation of each country. Bearing in mind that different criteria may be established by each country, it is possible for an individual to be considered resident by both countries. To avoid this, the following criteria apply:

  1. A person will be resident in the country in which their permanent residence is located.
  2. If they happen to have permanent residences in both countries, they will be considered resident in the country in which they have the strongest personal and financial ties (centre of vital interests).
  3. Failing this, they will be resident in the country in which they mainly reside.
  4. If they split their time equally between both countries or do not live in either, they will be considered resident in the country of which they are a national.
  5. If they are a national of both countries, or of neither, the responsible authorities of each country will decide the individual’s country of residence by mutual agreement.

How do I register as a Spanish resident?

If, according to the criteria above, you are a Spanish resident you have to register for tax in Spain. For this purpose you have to inform the tax authorities in your home country that you have moved to Spain. You also have to register for tax in Spain with the Spanish tax authorities (Agencia Tributaria) using tax form 030. Our fees to complete form 030 for you are €50 plus VAT (21%) per person:

Spanish Tax Registration Service
€50 + VAT 
Contact Us

What are my tax obligations as a Spanish resident?

Residents are taxed on worldwide income therefore you have to declare all earnings, regardless of where they come from. This includes pensions from your home country (with the exception of some civil service pensions). A deduction for double taxation is applicable to all earnings that are taxed abroad so you will not be taxed twice on the same income. These rules apply even if your income is not paid into a Spanish bank. There are tax allowances and deductions for residents. These vary according to the individual’s personal situation, get in touch to arrange a consultation with us about your specific situation.

How does taxation differ for Spanish residents and non-residents?

Residents are taxed on worldwide income and non-residents are taxed on their gross Spanish source income and on capital gains arising from assets located in Spain. However, non-residents may also be taxed on deemed income in certain cases.

Contact Andalucía Lawyers if you have doubts about your tax obligations and would like to set up a consultation with us, either in person or via phone/email.

How can I prove I am a tax resident outside of Spain?

A person may have a residence permit or administrative residence in a country without being considered a resident for tax purposes. However, fiscal residency is established by means of a certificate issued by the appropriate tax authority of the country in question. The certificate remains valid for one year.

Our Services

We provide both a non-resident tax advice service and a resident tax advice service, each for a set annual fee.

Related Articles by Andalucía Lawyers

Residents

Non-Residents

Tax Advice for the Self–employed in Spain

Autónomo is the Spanish equivalent of self-employed or freelance. It also covers people operating unincorporated small businesses. Below Andalucía Lawyers answers some questions you may have about becoming self-employed in Spain.

Who is required to register as autónomo?

Anyone engaged in any type of independent economic activity in Spain, whatever their profession, is obliged to register as autónomo at the social security office and the tax office.

What tax obligations are applicable to autónomos?

1) Spanish Invoices

Autónomos must issue and retain copies of invoices for the work they have done. Additionally, in order to offset your expenses against your income for tax purposes, you must keep invoices of your work-related expenses. These invoices must include the following information:

  • The name of the autónomo or business.
  • The identification number of the individual (DNI/NIE) or the business (CIF).
  • The date.
  • A description of the product sold or service rendered.
  • The total invoice amount.
  • VAT (IVA) where applicable.

2) VAT (IVA) Requirements for Autónomos

There are no VAT exemptions in Spain for small companies. The general rule is that everyone must charge VAT, however low their turnover is. However, some autónomos only offer goods or services which are exempt (exento) from VAT, such as educational services or medical supplies.

VAT is reported quarterly using form 303 at the end of December, March, June and September. The form must be submitted within 20 days from the last day of those months. An annual VAT return (form 390) must also be completed. This is due at the end of January with the final submission deadline being within 30 days of the month end.

You will receive a VAT rebate if the amount of VAT on your expenses exceeds the VAT you have collected on your income. The refund amount is calculated annually not quarterly.

Businesses that provide exempt services don’t have to do the quarterly VAT return and they cannot recover VAT on their costs.

3) Spanish Income Tax for Autónomos

Autónomos must also make a quarterly payment, due within 20 days of each quarter end, of 20% of their profits. This is a payment on account of your personal income tax and is done using form 130.

Once the fiscal year has come to an end, you will have to file a personal income tax return due from May to June known as the RENTA. This return will combine all of your sources of income, including your business profits, and all of the tax reliefs you are due. Read our article Spanish Income Tax Rates 2015-2016 to find out more.

When your final tax liability for the year has been ascertained through this process, you will either have to make a balancing payment or request a tax refund.

A balancing payment will arise if your tax liability is greater than any payments on account already made through the system outlined above. Bear in mind that the maximum payment on account suffered will have amounted to 20% of your business profits, and that the higher earners in Spain are taxed up to 48%.

You may request a refund if the withholding tax suffered exceeded your liability once other reliefs, such as mortgage costs, have decreased your taxable base to an effective rate of tax below 20%.

Accounting Records

Autónomos must keep accounting records according to the legal standard, including income, expenses, supporting invoices for expenses and accounts of capital items. These accounting records will be absolutely essential if you are selected for inspection by the tax office.

Social Security

The self-employed in Spain are required to pay social security contributions monthly, regardless of their turnover. There are various rates and options open to autónomos depending on their age, circumstances and economic activity classification. They all cost a minimum of approximately €267 a month, unless you can benefit from one of the social security allowances (see below). You can opt to pay more than the minimum charge of €267 per month in exchange for greater benefits such as accident or illness coverage or an increased state pension.

However, it may be possible to opt out of paying autónomo social security if earnings are sporadic and it is not a proper living. Contact us to arrange a consultation if you need advice on whether you qualify for this exemption.

Social Security Subsidies for New Autónomos

Some reductions on the monthly social security payments are available for new autónomos without employees.

If you have never been self-employed in Spain or you haven’t been self-employed in Spain in the last five years you can apply for this discount on your monthly social security contribution:

Months 1-6: 80% discount (you pay approx. €50 monthly if you have opted to pay the minimum social security contribution).
Months 6-12: 50% discount (you pay approx. €130 monthly if you have opted to pay the minimum social security contribution).
Months 12-18: 30% discount (you pay approx. €185 monthly if you have opted to pay the minimum social security contribution).

Additional New Autónomo Subsidy for Men Under 30 and Women Under 35

As above but with a 12 month extension of the 30% discount time:
Months 18-30: 30% discount (you pay approx. €185 monthly if you have opted to pay the minimum social security contribution).

Grants

In the case of individuals who are considering becoming self-employed, for some types of grant it is important that any grant application is made prior to the commencement of trade, so please be aware of this and do your research before you start trading.

A good source of information on grants and financial incentives for businesses is the website of the Spanish Ministry of Industry, Energy and Tourism. This contains detailed information about the criteria for grants from central government and those awarded by autonomous communities, municipalities and city councils.

Some of the Spanish Chambers of Commerce also have information, as do the one-stop business creation offices known as Ventanilla Única Empresarial or VUE. Please note that their information is not always available in English. The Madrid Chamber of Commerce has information available in English on its website, which is a useful reference point.

The Dirección General de Política de la PYME, the association of small and medium-size businesses in Spain, is an important organisation in the Spanish business world and can give entrepreneurs a considerable amount of support. If you aren’t a fluent Spanish speaker, find someone who is to help you make contact with them.

Bear in mind that any grant or incentive offered by the state or by an autonomous community is governed by the regulations which the EU has established for all its members. Aid and incentives are permitted only in areas which meet EU criteria, of which details can be found on the Invest in Spain website.

Subsidy for New Autónomos in Andalusia

This subsidy for new autónomos in Andalusia  generally only benefits those who were previously unemployed. Contact us or go directly to your local Centro de Apoyo al Desarrollo Empresarial (CADE) office or the Junta de Andalucia’s website to find out more.

Andalucía Lawyers’ Self-employed Services

We offer a Self-employed Tax Package from as little as €50 per month. Find out more:

SELF-EMPLOYED

Contact Us

For more information or if you have any questions please contact us to enquire about our services.

We provide tax advice to private individuals, many of whom are expatriates or non-residents who require thorough tax planning regarding their assets in Spain, whether owned privately or through companies.

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