Who has to pay taxes in Barcelona?
This article is written in collaboration with ACCOMPANY.
Disclaimer: The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with our tax or legal advisors for your individual case.
Taxes in Barcelona
Spanish Tax for Residents
If you live in Spain for a period of six months (183 days), longer than the calendar year (not necessarily consecutive), or if you have vital interests in Spain (e.g., your family or business), then you will be considered a Spanish fiscal resident. As a fiscal resident, you will need to submit a Spanish tax return form and pay Spanish income tax on your worldwide income if:
- your yearly employment income is more than €22.000 from one employer, or more than €15,876 in total when received from more than one employer.
- you are self-employed or run your own business
- you receive rental income of more than €1.000 a year
- you obtain capital gains and savings income of more than €1.600 a year
Your taxable income is the income left after deductions for contributions to social security and pension funds, your personal allowance, and professional costs. Please note that Spanish tax rates are progressive.
You will also have to declare all assets abroad worth more than €50.000 annually. No taxes are to be paid; however, failure to comply may result in penalties under the general tax sanction regime.
Spanish Tax for Non-Residents
If you have lived in Spain for less than six months (183 days) and do not have vital interests in the country, you are classified as a non-resident and will be taxed only on your income earned in Spain. Your income is taxed at flat rates with no allowances or deductions.
Tax Obligations for Non-Resident Property Owners in Spain
If you are a non-resident and own a property in Spain, you will need to submit a tax return form and pay the appropriate Spanish property taxes for non-residents (assumed income from property), as well as local Spanish real estate taxes.
Dual Taxation Agreements
Spain has signed numerous treaties with other countries to avoid double taxation (meaning you won’t have to pay tax both in your home country and in Spain). The Spanish tax authority (Agencia Tributaria) maintains an up-to-date list of all treaties.
Taxes in Spain: Income Tax
Personal income tax in Spain is called ‘Impuesto de Renta sobre las Personas Fisicas’ or ‘IRPF‘. Spanish income taxes are split between the state and regions, and while the state has reduced taxes and simplified income tax bands, this hasn’t happened everywhere in Spain. Each region sets its own tax bands and rates of income tax, so the amount of income tax you pay will depend on where you live in the country.
You will need to register to pay tax in Spain with the Spanish tax authority (Agencia Tributaria), regardless of whether you are a resident or non-resident. You will also need your Foreigner’s Identity Card (NIE) number, which you can get through the local Foreigner’s Office (Oficina de Extranjeros) or at certain police stations within 30 days of your arrival in Spain.
Income Tax Rates
As we mentioned before, tax rates in Spain are not uniform across the country. Below you will find the basic Spanish tax rates that are applied to income from employment. Your total liable tax is a calculation of the state’s general tax rates, plus the relevant regional tax rates.
Spain’s current basic income is (for income earned the previous year):
- Below €12.450: 19%
- €12.451 – €20.200: 24%
- €20.201 – €35.200: 30%
- €35.201 – €60.000: 37%
- €60.001 – €300.000: 45%
- Above €300.000: 47%
For the tax rates in each region, check the Agencia Tributaria website.
Income Tax for Residents
Whether you are required to file a Spanish tax return depends on the type and amount of income you receive during the year.
You may not need to file a tax return at all if:
- your yearly employment income is more than €22.000 from one employer, or more than €15,876 in total when received from more than one employer.
- your rental income is below €1.000 per year, and if
- your bank interest, dividends, and investment income subject to withholding do not exceed €1.600 per year.
The tax return for the previous calendar year must be filed during the months of May and June of the following year. The deadline for submitting and paying the tax is the 30th June.
Income Tax for Non-residents
As of 2016, the general flat income tax rate for non-residents is 24% and 19% if you are a citizen of an EU/EEA state. Other income is subject to Spanish non-resident taxes as follows:
- Capital gains resulting from transferred assets are taxed at a flat rate of 19%
- Investment interests and dividends are taxed at a flat rate of 19%
- Royalties are taxed at 24%
- Pensions are taxed at progressive rates, ranging from 8% to 40%
In many cases, these rates may be reduced through applicable double taxation treaties, helping you to avoid being taxed twice on the same income. Interest tax is exempt for EU citizens. To meet your Spanish tax obligations as a non-resident, a specific tax return must be filed. Non-resident property owners are also required to file a specific tax declaration.
Special Income Tax for Foreigners on Assignment (Beckham Law)
There is a special tax regime for foreigners coming to work in Spain on an employment contract with a Spanish company. It is also known as the ‘Beckham Law’, as it was the football player David Beckham who first took advantage of this law when he came to play for Real Madrid in 2003.
Under this regime, you are only taxed in Spain on Spanish income at a flat rate of 24% up to €600.000. For earnings over €600.000, a rate of 47% will be applied.
As a general rule, taxation is limited to Spanish‑source income, while most foreign‑source investment income (such as interest, dividends, and capital gains obtained outside Spain) is not subject to Spanish tax.
If you are a Spanish tax resident (spending more than 183 days a year in Spain) and have not been a resident in Spain in the last 5 years, you can apply to be taxed under this regime within six months of arriving in Spain. This reduced taxation can be enjoyed for a period of up to six years, starting in the year you arrive in Spain.
Fiscal Advantages for Non-EU Digital Nomads
A new law for newly created economic activities was approved for 2023, offering tax advantages for non-EU Digital Nomads who start a freelance activity in Spain, allowing them to benefit from a tax regime similar to that available under the Beckham Law.
Income Tax Deductions and Allowances
Resident taxpayers in Spain are given certain Spanish tax deductions. A basic personal allowance for everyone under the age of 65 is set at €5.550, which is increased to €6.700 for people over the age of 65 and €8.100 from the age of 75+.
If you have children under 25 living with you, and an income of less than €8.000 per year, you can claim an additional allowance of:
- €2.400 for the first child
- €2.700 for the second
- €4.000 for the third
- €4.500 for the fourth
There is an additional allowance of €2.800 for each child under three years.
If you have a parent or grandparent living with you, with an income of less than €8.000, you can claim an allowance of €1.150 if they are 65+, and €2.550 if they are 75+.
In general, you can claim tax deductions in Spain for:
- Payments into the Spanish Social Security system
- Spanish private pension plan contributions
- The costs of buying and renovating your main home
- Charitable donations
Income Tax for Married Couples
- Joint vs. Separate Taxation: Married couples, including both heterosexual and same-sex partners, have the option to file their income taxes either jointly or separately. It’s advisable to compare both methods to determine which is more tax-efficient for your specific situation.
- Joint Filing Allowance: When opting for a joint tax return (declaración conjunta), the second taxpayer is entitled to an additional allowance of €3.400. This is in addition to the general personal allowance of €5.550 granted to the first taxpayer.
Property Tax
Impuesto sobre Bienes Inmuebles (IBI) is a local property tax that every property owner (fiscal residents and non-residents) in Spain needs to pay. The amount is the rental value multiplied by a tax rate set by the local authorities.
You will also be charged for a rubbish collection tax (impuesto de basura). Non-resident property owners may also need to pay income tax at flat rates on assumed rental income on Spanish property.
Impuesto Transmisiones Patrimoniales (ITP) is a property transfer tax that must be paid by the buyer when purchasing a property in Spain. When a property is sold, the seller is responsible for paying the local tax on the increase in value, which is known as the plusvalia municipal.
Capital Gain tax
Spain’s capital gains tax rates (the tax on dividends, profits from participations, or selling property or other investments, including cryptocurrencies) are as follows:
- Below €6.000: 19%
- From €6.000 to €50.000: 21%
- From €50.000 to €200.000: 23%
- From €200.000 to €300.000: 27%
- Over €300.000: 30%
This percentage will be applied to the difference between the price you paid to buy the property (or any other investment) and the price you receive when you sell it. If the gains are reinvested in your primary residence, taxation can be avoided.
Wealth Tax
Wealth tax is a tax that both residents and non-residents must pay based on the value of their assets by 31st December each year. This must be paid on top of others, such as the income tax or the capital gain tax.
It currently applies with a general tax‑free allowance of €700.000 per person, which also applies to non-residents and is subject to regional rules.
If your wealth exceeds €700.000, wealth tax is generally charged at a progressive rate ranging from 0,2% to 2,5% on net assets, although rates, exemptions, and rebates may vary significantly by region, with some regions applying partial or even full exemptions.
In addition to the €700.000 tax-free allowance, Spanish tax residents are entitled to a further exemption of up to €300.000 in respect of the value of their main residence.
Inheritance and Gift Tax
The rules regarding inheritance and gift tax in Spain allow for non-residents from within the EU/EEA to be treated the same as residents of Spain. This tax, commonly referred to as the succession tax, varies significantly by region, meaning that the amount payable can range from almost zero in some regions to substantial sums in others.
As inheritance and gift taxation in Spain is highly regionalized and depends on factors such as family relationship, asset value, and place of residence, careful planning and professional advice are essential to achieve the most efficient tax outcome.
Value Added TAX (VAT)
Value Added Tax (VAT) (Impuesto sobre el Valor Añadido (IVA)) is an indirect tax added to the consumption of products and services and paid by the buyer. There are three levels in Spain:
- General: 21% on goods and services
- Reduced: 10% on passenger transport, toll roads, amateur sporting events, exhibitions, health products, non-basic foods, rubbish collection, pest control, and wastewater treatment
- Super reduced: 4% on essential foods, medicine, books, and newspapers
FAQ
Do I need to pay taxes?
If you are living and working in Spain, you will be required to pay taxes on your income and assets and, in most cases, file a Spanish tax return. Whether you are taxed on your worldwide income or only on income generated in Spain will depend on your residency status.
Spanish tax residents in Spain are taxed on their worldwide income, calculated on a progressive scale, although tax deductions and allowances exist. If you are a non-resident, you will only pay tax in Spain on Spanish-source income, including income from Spanish property, even if you don’t rent it out. Spanish tax is also applied to real estate, interest income, and VAT on goods and services acquired in Spain.
One of the key features of the Spanish tax system is its structure, shared between the central and regional governments. Each of Spain’s 17 autonomous communities sets its own tax rates and liabilities. As a result, income tax, property tax, wealth tax, capital gains tax, and inheritance tax can vary depending on where you live.
Additionally, workers in Spain must contribute to the Spanish social security system.
The Spanish tax year follows the calendar year, runs from January 1 to December 31.
Disclaimer
Information provided is general and based on authorities, subject to change.
About ACCOMPANY
ACCOMPANY is an English-speaking consultancy firm supporting international companies, investors, and entrepreneurs in Spain. BCNBS offers a full range of legal, tax, and payroll services that cover all essential administrative business needs for setting up and running representations, subsidiaries, or Spanish limited companies.
When running a company, you should focus on what matters most and have the peace of mind that everything else just works. That is where ACCOMPANY comes in.
They specialise in setting up and supporting Spanish companies with international shareholders. Their goal is to provide clarity in a complex bureaucratic environment with different laws, languages, and cultures, as well as to satisfy expectations in terms of speed, transparency, and quality of service.
ACCOMPANY is in charge of all legal, fiscal, and social obligations for setting up and running a limited company in Spain. To ensure fast and effective service, they work 100% paperless and use cloud technology connected to chambers of commerce, mercantile, property registers, banks, tax authorities, and social security services.
Optimize your time and resources by letting ACCOMPANY handle your administrative needs in the most efficient way possible and concentrate on what matters most: Making your business work!
Add a comment