Frequently asked questions about Spanish Financial and Tax Law
We have provided a general guideline with the information sheet below. Specific information and advice on financial and tax should be sought before any action is taken, as explained fully in this website’s notice.
Who is eligible to a tax declaration in Spain?
Any individual living in Spain above 183 days with an income or capital gain wherever is legally responsible for filing a tax return. If you are a non-resident and a property owner, you are also obligated to file tax returns. With very few exceptions under these circumstances, the cutoff rate is 12.00€.
What income is liable to be taxed in Spain?
You will be obligated to pay tax for your international investments when you are a Spanish resident. Also, when you have more sources of revenue and you receive above 12.000€ in pension, you are legally bound to a tax return.
Furthermore, being a fiscally Spanish resident has some significant benefits, especially when it has to do with inheritance taxes.
Take note of the five categories of income that are taxable in Spain
- Investment income (dividends, profit)
- Real estate income (second home, rentals)
- Income from employment (pensions, earnings)
- Capital gains (Gambling, Lottery, stocks, etc.)
- Income from economic activities
You can get more details on the subject from a licensed tax consultant.
I understand there are tax deductions when residing in Spain?
Of course. Most tax deductions include:
- Employment allowance
- A joint declaration from married couples allowances
- Annuity pension deduction from taxation regime
- Child allowance
- Personal tax-free allowance
- Private pension plan deduction
- Double taxation
When can an I turn out to be a tax resident?
The straightforward response is that residing in Spain above a hundred and eighty three (183) days (including random trips during one calendar year out of the country) makes you a tax resident.
What about non-residents revenue tax legal responsibility?
Every non-residents is required to pay tax on any income generated from property or resulting from any owned investment in Spain. Asset owners are taxed on the revenue generated from that assets or its value. If you fail to pay this tax, you will be penalized and charged by the Tax Agency.
What information do I need to work out my tax returns?
You will need the following documents:
- Suma Bills for leased or personal resident properties
- Date of purchase of the property
- Proof of loans or mortgage (if any)
- Charitable donations
- Pension contributions and specification of the plan
- Copy of resident
- Name and birth date of your dependents
- Previous year’s income tax return
- Certificate of ill health or disability approved by the Spanish Social Security (if any)
- Copy of Deeds (IBI bill or Escritura)
- IBAN and bank account details
What if I don’t pay taxes?
Any failure to pay taxes can attract severe punishments of additional 50 to 150 percent of due tax, plus interest. A late payment can as well attract about 5 to 20 percent of the fee, plus interest. Thus, this is not a great plan.
What is a NIE and where can I get it?
NIE means ‘Numero Identification De Extranjero.’ NIE is a foreigner’s identification number. You must have an NIE number to be eligible to buy a property or a car in Spain. Getting an NIE number is relatively easy, but the process can be long as you will have to obtain one from the foreigner’s department of Spain’s National Police.
What are the capital gains tax implications in Spain?
Fiscal residents over the age of 65 years and who have lived in the property for more than three (3) years are not subject to capital gains when they sell their property.
If you want to learn more about the Spanish tax policy, our Tax Advisors can assist you with any request.