Becoming a tax-paying resident in Spain

Becoming an official Spanish tax resident will allow you to report your income and your tax activity in Spain. You will be able to benefit from reduced tax rates and bonuses.

Tax Residency

In Spain, you must meet two criteria in order to be considered a Spanish tax resident. You must live in Spain for longer than 183 days a year (between January 1 and December 31) and you must also consider Spain the centre for your professional activity and economic interests.

On becoming a Spanish tax resident, you become liable for Spanish income tax (Impuesto sobre la Renta de las Personas Fisicas or IRPF).

How to become a Spanish resident

In order to become a Spanish tax resident, you must communicate in France that you are leaving and declare yourself as a non-resident to the French tax authorities. Sometimes there are conflicts of residence between the country of departure (France) and the arrival country (Spain) since each considers that the individual is a tax resident in his own country. These conflicts must be resolved through a tax treaty. In Spain, you must enrol at the central register of foreigners in order to obtain an NIE. This number is valid for five years and is very useful for various processes: exchange of or registration for a driving license, buying or renting a property, opening a telephone line, enrolling in temporary work, opening a bank account, access to the world of work etc.

Advantages of Spanish residency

Although it is not one of the lowest in Europe, the Spanish tax system allows, via its flexibility, many opportunities for reducing corporate taxation. The tax status of the self-employed combines flexible taxation and reduced processes. The main tax advantages are: business tax, education tax, annual flat rate tax (IFA) and the axle tax for trucks does not exist. Corporate tax is 25% on that below 8 million Euros, shares may be registered or bearer. Social charges are 30.6% and fixed fee for management is 250 Euros a month and VAT reimbursement is monthly or quarterly. Since 2008, inheritance tax has not existed in Spain. Spanish tax residents are therefore exempt from this type of taxation. There have been, for some time now, rumours of reinstatement in 2011 though. However, in becoming a Spanish tax resident, if you inherit or receive a donation, you will become liable to pay Spanish Inheritance and Donations tax.

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