If you are a foreigner and you are thinking of moving to Spain or you are already part of the expatriate community in the country, you should know that according to Spanish regulations there are a series of taxes that you have to pay. Do you know what they are? Continue reading this article to find out!
Which foreigners must pay taxes in Spain?
Depending on your tax situation as a foreigner, there are certain conditions in Spain that will oblige you to pay taxes. Are you a resident in tax terms? Below, we tell you about the possible cases that apply:
If you have resided more than 183 consecutive days in the country, your tax domicile will be considered to be in Spain and, therefore, you will have to pay taxes.
If you have any kind of economic interest in Spanish territory you will be liable to pay taxes. Some of the most common cases are: owning a property in Spain that generates income, carrying out a professional activity or working for a third party.
If your partner and/or children reside in Spain, you will also be taxed as a foreigner.
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Tax rates to be paid in Spain as a foreigner
Now that you can identify whether you are liable to pay taxes as a foreigner according to the tax laws in the country, we would like to explain the five types of taxes that you should take into account:
1. Personal Income Tax (IRPF)
Probably one of the best known taxes. Personal income tax is levied on the salary received by a person as an employee or self-employed, as well as on the income obtained or capital gains during a calendar year.
In this regard, the income tax brackets for 2022 were established with withholdings as follows:
With income up to 12,450 euros: 19%.
From 12,450 euros to 20,200 euros: 24%.
From 20,200 euros to 35,200 euros: 30%.
From 35,200 euros to 60,000 euros: 37%.
From 60,000 euros to 300,000 euros: 45%.
Income over 300,000 euros: 47%.
2. Non-resident tax (IRNR)
This type of tax applies when you do not reside in Spain, but you are still generating income in the territory.
In this sense, if you are a citizen outside the European Union, a tax rate of 24% will be applied on the profits obtained in Spain, and if you belong to the European Union it will be 19%.
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3. Wealth Tax (IP)
Regardless of your tax residence, if you have a property as an expatriate you must comply with the payment of wealth tax in Spain. This includes all types of assets such as properties, cars, boats, art pieces, among others.
In addition, a tax rate of 0.2% to 2.5% will be applied in the event that the assets you hold are worth more than 700,000 euros.
4. Inheritance and Gift Tax (ISD)
Are you about to receive an inheritance or some kind of asset in Spain? In these situations there is a compulsory tax to be paid: the inheritance and gift tax.
It is thus established that the aforementioned tax must be paid if the heir is a resident in Spain and receives an asset from abroad, or if the assets to be transferred are located in some of the Spanish autonomous communities.
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5. Capital gains tax
In case you obtain some kind of capital gain by selling an asset that you previously acquired at a lower price, then you must pay a 19% to 23% tax on the profit obtained.
Enjoying Spanish life is attractive for foreigners who decide to make a life in the country. However, as you may have noticed, with it comes a great responsibility: to be up to date with tax obligations.
In TAS Consultancy we have tax experts capable of advising you in your procedures, so, enter our website and come to clarify your doubts with us!