Spanish Resident and Non-Resident Tax law

No matter if you are resident or non-resident in Spain there are taxes that you will need to pay in Spain if you own a property. That is unavoidable.

Income tax and IBI for residents

If you live in Spain for more than 183 days a year (they do not have to be continuous), you are a tax resident here. It is not a choice you have, which you can sometimes get the impression of when you read on the Internet forums, but that is the law. The days do not have to be consecutive, so it is not enough to claim that you have left the country for a few days and that you can then ignore the days you have already been in your Spanish home during the year.

What taxes do you have to pay if you are a resident of Spain? First of all, all those who own a property in Spain must pay IBI – Municipal Property Tax. That tax goes to municipal services and infrastructure that the municipality offers. This tax is paid once a year by both residents and non-residents.

The other tax you have to pay is, of course, Spanish income tax. It is often the person who worries the most when considering moving to Spain permanently.

Income tax in Spain

Most residents must complete a resident tax return before the end of June each year. The tax is paid retroactively for the previous year, the so-called income year. So now this year, before the 25th of June, you pay your tax for income in 2014.

But not everyone has to file a tax return for residents. If you only have a pension that is lower than € 11,200, you do not have to do so if you do not have other income such as interest income or rental income. But we still advise to present an annual declaration because it will then be easier to prove that you are a tax resident in Spain.

You must declare your global income in the Spanish tax return, such as rental income, interest, capital gains on the sale of a home or other asset, even if these are outside Spain. If you work in Spain, you declare your salary according to the “certificado de retenciones”. It also shows how much Spanish provisional tax has already been deducted when paying the salary each month and how much has been paid into the Spanish social security system.

Self-employed people (autónomos) pay their taxes every quarter but must still present an annual tax return where you can see if you have paid too much or too little during the year.

Most people who move to Spain are most interested in knowing how much the tax will be on their pension. If you have been a government employee, you sometimes do not pay tax on that pension in Spain but in your home country. However, this income is considered when calculating the progressive tax rate. If you have SINK tax (Special Income Tax) in Sweden on your other pensions, Sweden deducts a 20% withholding tax when the pension is paid out. Then you pay tax on the gross amount in the Spanish tax return. Thereafter, every year you must send a copy of the Spanish tax return to Sweden and request a refund of the Swedish tax because it is in Sweden that the double taxation must be eliminated.