Taxes in Spain
Published at: 10/06/2019 03:34 pm
Investors of the Spanish Golden Visa must understand the complexity of the Spanish tax laws and practice. Spain is a high-tax country, and the tax residents may face serious legal consequences if they do not comply with the strict taxation rules of the EU Member State. Luckily, the tax experts from Discus Holdings Ltd forged this comprehensive information package for you.
An investor who makes one of the investments under law 14/2013, receives special permission to reside in Spain, and based on this, he/she can live in the country year-round. Furthermore, for this residency type, there is no minimum period that the investor must spend in Spain to renew his/her residence permit. Thus, the investor can choose whether to become a tax resident of Spain or maintain his/her tax status in another jurisdiction.
When citizens of other countries become tax residents and subject to taxation in Spain?
- if they spend more than 183
- days/year in Spain
- if they lack any other permanent
- place of residency (for more than 183 days/year) and
А) they are present within Spain for more than 120 days/year
В) they are present within Spain for more than 90 days/year if one of the members of the family is present in Spain for more than 120 days/year and this family member lacks any other permanent place of residence (for more than 183 days/year).
Tax obligations can thus arise both for a resident as well as a non-resident, whose spouse:
- lives in Spain for more than 183 days/year
- lacks any other permanent place of residence (for more than 183 days/year) and
А) the spouse is present within Spain for more than 120
days/year, or
В) is present within Spain for more than 90 days/year, if one of the children spends within Spain more than 120 days/year, and he/she lacks any other permanent place of residence (for more than 183 days/year).
In such a case, tax obligations to Spain arise both for a resident spouse with regard to a non-resident spouse, and to one spouse through the other spouse owing Spain taxes. This means that half of the profit received by a spouse outside Spain, due to this half belonging to the other spouse under Spanish law, is subject to Spanish taxes on profits, dividends, capital gains, etc.
The tax on the income of non-residents (IRNR – Impuesto sobre la Renta de No Residentes) is 24%.
- If one's property is rented out, then a declaration is submitted every three months, and the tax is calculated based on the total income received from rent. (Form 210)
- If the property is not rented out, then a declaration is submitted annually by December 31, and tax is paid in the amount of 1.1% of the cadastral value of the property. (Form 210)
The wealth tax (Impuesto sobre el Patrimonio) is 0.2–2.5% (Madrid 0%).
* taxable minimum 700,000 euro. Property within Spain is considered. The declaration is submitted from April 7 to June 25. (Form 714)
The investor is a tax resident of Spain
Types of income subject to tax:
- employment (salary, self-employment income, pension);
- royalties;
- rents;
- dividends;
- interest;
- income from investment life insurance;
- capital gains;
- other income (casino and lottery winnings).
The individual income tax (IRPF – Impuesto sobre la Renta de las Personas Físicas) is 19–45%.
* progressive scale. The minimum threshold for employment income from one source, upon which one is required to submit a declaration, is 22,000 euro. However, if income comes from two or more sources, then the minimum threshold is 12,000 euro. The period for submitting the declaration is from April 1 to June 30.
The wealth tax (Impuesto sobre el Patrimonio) is 0.2–2.5% (Madrid 0%).
* taxable minimum is 1,000,000 euro. All assets worldwide are calculated. The declaration is submitted from April 7 to June 25. Form 714 Obligation to declare assets abroad.
* assets located abroad with a value of more than 50,000 euro are declared. Real estate, deposits, luxury possessions, and art. The period for submitting the declaration is from January 1 to March 31. (Form 720)
General taxes in Spain
The property (real estate) tax (IBI – Impuesto sobre bienes inmuebles) is 0.9–1.1%.
* depending on the cadastral value of the property and its location. The municipality calculates this tax and a bill is sent to you by post VAT (IVA – Impuesto al valor agregado) is 21%, 10%, 4% and 0%.
The inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones) is 7.65–34%.
* depending on the region and the degree of kinship.
(Form 650, 651)
The tax on the transfer of ownership (ITP – Impuesto sobre Transmisiones Patrimoniales) is 6–10%.
* depending on the province. The buyer pays this when ownership of goods and real estate is transferred if VAT is not imputed.
The vehicle tax (IVTM – Impuesto sobre Vehículos de Tracción Mecánica) is around 100–150 euro per year.
* depending on the class and state of the vehicle
Do you want to invest under the Spanish Golden Visa programme for the residence permit? Click here to read all the detailed information!