Tax Guide

Taxes in Spain can be complicated and for residents it is advisable to employ an assessoria (accountant).  For non-residents of Spain there is a legal requirement to have a nominated assessoria to take control of the annual tax returns.  For non-residents, the UK and Spain have a double tax treaty meaning that total annual taxes are recovered in the relevant countries and not both.  For residents of Spain then global income and assets are included in the annual tax returns in Spain.

Income tax:  is split into general income (renta general) and savings income (renta del ahorro). General income is taxed at progressive scale rates. There are four tax bands, which range from 24% to 45%.  Savings income is taxed at a fixed rate of 18% and includes income from interest and dividends, income from a purchased annuity and capital gains. 

>€4,000	15%
€4,000>	24%
€13,800>	28%
€25,800>	37%
€45,000>	45%

Capital Gains tax:  this tax is now set at 18% for residents and non-residents.

Inheritance and Gift Tax: This tax applies to the beneficiaries of the inheritance or gift. The tax is on assets received with a value over €8000. Even if the beneficiaries are not residents of Spain, they must pay this tax when the assets or rights are located in Spain. The tax rate starts at 7.65% and rises to 34% for assets with a value above €815,000. If the beneficiary is a child (under age 18) of the deceased, then the tax rate on the assets is reduced to 5%.

Wealth Tax (impuesto sobre el patrimonio): Resident individuals pay wealth tax on their worldwide assets at the end of each year. Non-residents are taxable on property situated in Spain. The wealth tax applies only to assets with a value above €170,000. The tax rate starts at 0.2% and rises to 2.5% for estates with a value above €10,700,000.

Transfer Tax and Stamp Duty (impuesto de transmisiones patrimoniales y actos jurídicos documentados): This tax is for certain real estate and commercial transactions. This tax is paid by the purchaser, or the beneficiary.  The rate starts at 0.5% (for commercial activities) and rises to 7% (for real estate transactions).

Corporation Tax: in 2007 this is 32.5% reducing to 30% in 2008.

Property Tax (IBI):  Each year, the municipality issues a property tax payment slip for all properties. The tax is usually between .5% and 1.1% of the cadastral value (valor catastral) of your property, which is roughly 20 times lower than the market value.

Municipal Tax (basura): This varies depending on where you live. Usually assessed per house or building. Sometimes the tax is combined with water consumption. It is generally around euros 200-250 per annum.

VAT Tax (IVA): The Canary Islands, Ceuta and Melilla have a different rate.  The standard rate is 16%. Services linked to transport and purchases from a property developer (off plan) have a reduced rate of 7% and there is a super reduced rate of 4% for essential food items such as bread, cheese and eggs, newspapers and magazines.  If you are tourist, you can get a refund of this tax at a booth in the airport before you leave Spain by showing your receipts for over €90 (including IVA). The €90 doesn't have to refer to a single item but it does have to be on a single receipt.