Everything you need to know about income tax Spain
If you live in Spain, it is recommended that you have knowledge about income tax Spain. You will have to pay taxes on your income and assets and also file a tax return. If you are not a resident of Spain, you will only pay taxes in Spain with Spanish income. The Spanish tax is applied to property, to goods and services (IVA/VAT) and also to investment interests in Spain.
Spain and its taxes
Taxes in Spain are divided between the State Government and the Local Governments. For that reason, the tax rates may vary in any of the 17 autonomous regions of Spain.
There are three levels of VAT in Spain:
- The general VAT is 21% in terms of goods and services.
- Reduced VAT is 10% on health products, non-basic foods, passenger transport, toll roads, exhibitions, amateur sports events, etc.
- Super reduced VAT is 4% and applies to medicines, essential foods, books and newspapers.
In case you live in Spain for less than six months, you will be classified as non-resident and you will only have to pay taxes for the income you have obtained in this country. Spain has signed different treaties with other countries to avoid double taxation. It must be remembered that the Agencia Tributaria (the Spanish tax authority) has its treaties updated at all times.
Regardless of whether or not you are a resident of Spain, you must register with the Agencia Tributaria. If you are not a resident, you will need your Tarjeta de Identidad de Extranjeros (NIE) and complete Modelo 30 to record your obligation to pay taxes. The NIE can be obtained at the Oficina de Extranjeros (Foreigners Office) or at the police station within 30 days after arriving in Spain.
The general income tax rate for non-residents is 24% and 19% if you are a citizen of a European Union state. In addition, there are other income subject to Spanish taxation by non-residents. Some of them are:
- Those capital gains resulting from the assets transferred have a rate of 19%
- Royalties are taxed at 24%
- Both investment interests and dividends are taxed at 19%, although they can be lower thanks to the double taxation agreements that Spain has with other countries.
Taxation in Spain is very different from that of other countries. Therefore, it is advisable to have professionals who can advise foreign persons at all times about their tax obligations.