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Andalucía Lawyers’ guide to Spanish income tax for Spanish residents. Find out about the Spanish RENTA: what it is, how it affects you and how to declare your income tax in Spain.

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 is the RENTA?

The IRPF (Impuesto sobre la Renta de Personas Físicas) is Spain’s nearest equivalent to personal income tax. Every year, Spanish residents have from 1 May to 30 June to declare their annual income from the previous calendar year – this is called the RENTA.

Must I declare the RENTA?

You are only exempt from declaring if your income falls below these established thresholds:

  • You earn a sole income of €22,000 as an employee already subject to employer deductions.
  • You can benefit from a reduced limit if your income is earned from more than one employer and is under €12,000.
  • Your bank interest and other investment income is under €1,600.
  • Your rental income is under €1,000.
  • You receive income from employment, investment capital, economic activities or capital gains up to a combined limit of €1,000 annually or you have capital losses below €500.

However, please note that it’s obligatory to make a declaration in the first year of your tax residency in Spain. Therefore, if you became a Spanish tax resident in 2016 you must file the RENTA 2016 income tax declaration between 1 May and 30 June 2017 no matter what your income level as

What earnings do I have to declare?

As a Spanish resident you are taxed on your 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). These rules apply even if your income is not paid into a Spanish bank account. A deduction for double taxation is applicable to all earnings that are taxed abroad thanks to Spain’s double taxation treaties with other countries. As a result you will not be taxed twice on the same income.

How do I register for tax in Spain?

First you will need to get your NIE (foreigner’s identity card) from the local foreigners’ office (Oficina de Extranjeros) or police station. You must notify the tax authorities in your home country that you have moved to Spain and 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 
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What are the Spanish income tax allowances and deductions?

Various tax allowances and deductions are available for Spanish residents according to the individual’s personal situation. Tax rates were reduced for 2015-2016 as part of Spain’s tax reform aiming to simplify the system. Allowances and deductions were increased, especially for those in the low income bracket or with several dependents. Below we have listed some of the Spanish income tax allowances and deductions, please contact us if you’d like to consult with us about your particular situation.

Personal Allowance

  • Individual: €5,550.
  • 65 years old and upwards: €6,700.
  • 75 years old and upwards: €8,100.

Married Couple Allowance

  • Individual allowance of €5,550 for the first spouse and €3,400 for the second spouse in a joint return.

Married couples can make a joint return or declare separately. The tax implications of this decision can be very significant so you should calculate the best option for your situation. Contact us if you’d like us to help you with that.

Disability Allowance

Calculated according to a graded scale of disability:

  • Grades 33-65: €3,000.
  • Grades 65-100: €9,000.
  • An additional allowance of €3,000 if third party care is needed.

Child Allowance (Under 25 years Old)

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

  • First child: €2,400.
  • Second child: €2,700.
  • Third child: €4,000.
  • Each additional child: €4,500.

Child Allowance (Under 3 Years Old)

  • For each child under 3 years old: €2,800.

Dependent Relative Allowance

Applicable if a parent or grandparent with an income under €8,000 lives with you:

  • Over 65s: €1,150.
  • Over 75s: €2,550.

Dividends

  • The exemption on the first €1,500 of dividends no longer exists.
  • The exemption on up to €12,000 of equity income remains under certain circumstances.

Rental Income

  • The 100% deduction for rental income from young tenants has been withdrawn.
  • All landlords will now be taxed on 40% of net rent income – this includes any lettings income from outside Spain but not short-term holiday lets.

Deductions

You can claim deductions for:

  • Payments into the Spanish social security system.
  • Pension contributions.
  • The costs of buying and/or extending your main residence.
  • Charitable donations.
  • Some deductions applied by local governments – these vary from region to region.

What are the Spanish tax rates applicable for 2015-2016?

For tax purposes your income is divided into general income (renta general) and savings income (renta del ahorro). The total of the two produces the taxable base (base imponible). Once any allowances or deductions have been applied to this, the resulting figure is the net taxable base (base liquidable).

Differences Between Spanish State and Regional Tax Bands and Rates

It is important to be aware that tax rates in Spain vary from one autonomous community to another. The State sets its income bands and respective tax rates, but since 2011 each autonomous government has been permitted to set its own bands and rates. Consequently, the final tax bands and rates affecting tax payers in each autonomous region are calculated from a combination of the two. Which rates apply to you will depend on the region in which you are a resident.

Spanish General Income Tax Rates 2015-2016

Below are the State bands and rates applied to general taxable income. As a Spanish resident you are taxed on your worldwide general income. This includes anything that doesn’t fall into the savings category i.e. all your earned income such as your salary, income gained from self-employment, your pension, rental income, royalties, imputed income and income not resulting from the sale or transfer of assets e.g. gambling.

Income band 2015 2016 
Up to €12,450 19.5% 19%
€12,450-€20,200 24.5% 24%
€20,200-€35,200 30.5% 30%
€35,200-€60,000 38.5% 37%
Over €60,000 46% 45%

 

As stated above, it is important you check the particular rates for the region of your fiscal residence as they can vary from the State rates. For example, here are the 2015 general income tax rates for Andalusia, calculated from the state and local rates:

Andalucía State Region Total 2015
€0-€12,450 9.5% 12% 21.5%
€12,450-€17,707.20 12% 12% 24%
€17,707.20-€20,200 12% 14% 26%
€20,200-€33,007.20 15% 14% 29%
€33,007.20-€35,200 15% 18.5% 33.5%
€35,200-€53,407.20 18.5% 18.5% 37%
€53,407.20-€60,000 18.5% 21.5% 40%
€60,000-€120,000 22.5% 23.5% 46%
Over €120,000 22.5% 25.5% 48%

Spanish Savings Income Tax Rates 2015-2016

As a Spanish resident you are taxed on your worldwide savings income. This includes any income from interest, dividends, life insurance, purchased annuities and capital gains on the sale or transfer of assets.

Income band 2015 2016 
Up to €6,000 19.5% 19%
€6,000-€50,000 21.5% 21%
Over €50,000 23.5% 23%

Submit your Spanish Income Tax Return for 2016 (RENTA 2016)

Don’t forget to submit your tax return for the 2016 calendar year during May and June of 2017 – the deadline to present your RENTA 2016 declaration is 30 June 2017. 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.

Our Services

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

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