Taxation in Spain for Expats:
A Complete Guide to Rates & Key Rules
Please note this is a snapshot of the taxation in Spain, and at all times you should seek professional advice. Here at SJB Global and SJB US, we can help you with this either directly or through our carefully chosen partners.
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Contents
1. How Spanish Income Tax is Calculated
Spain’s personal income tax (IRPF – Impuesto sobre la Renta de las Personas Físicas) is progressive and applies to residents’ worldwide income. Unlike France, rates are split between state and regional portions. Each Autonomous Community (e.g., Madrid, Andalusia, Catalonia, Valencia) has the power to adjust rates, allowances, and deductions.
For 2025, the general state bands are:
- Up to €12,450 – 19%
- €12,451 – €20,200 – 24%
- €20,201 – €35,200 – 30%
- €35,201 – €60,000 – 37%
- €60,001 – €300,000 – 45%
- Over €300,000 – 47%
Example: A resident of Madrid with taxable income of €40,000 will pay a combination of state + Madrid’s regional rates, which are slightly lower than average. In Catalonia, the same income may face a higher effective rate.
Filing process
- The annual tax return (Declaración de la Renta) covers the previous calendar year’s income.
- Filing runs from April to June.
- Spain operates PAYE withholding, but the annual declaration reconciles your
final position (refunds or extra tax due).
2. Are You a Spanish Tax Resident?
You are considered a tax resident in Spain if:
- You spend more than 183 days in Spain in a calendar year (days do
not need to be consecutive). - Your main economic interests (business, professional, or investment
activities) are in Spain. - Your spouse and dependent children live in Spain (residency may be
presumed).
Residents are taxed on worldwide income.
Non-residents (IRNR – Impuesto sobre la Renta de no Residentes) pay tax
only on Spanish-sourced income (e.g., rental, employment, pensions, property
sales).
Special regimes:
Beckham Law Regime: Newly-arrived expats (meeting conditions) can elect to be taxed as non-residents for up to 6 years, paying a flat 24% on Spanish income up to €600,000, and 47% above that, while excluding foreign income. This is popular with professionals relocated to Spain.
3. Social Security Contributions
Spain’s social security system (Seguridad Social) funds pensions, healthcare, unemployment, and other benefits.
Employees
Typically contribute around 6.35% of gross salary.
Employers
Contribute about 30% of salary.
Self-employed (Autónomos)
Pay a monthly contribution based on declared income. Since 2023, Spain has introduced an income-linked scale, with contributions ranging from ~€230/month to €500+/month.
International rules
If you are an EU/EEA or UK resident with an S1 form, you may remain in your home country’s social security system and avoid double contributions. Spain has social security agreements with several non-EU countries (e.g., the USA, Canada, Australia), which may allow credits to be transferred.
4. Local Property Taxes
IBI (Impuesto sobre Bienes Inmuebles): Annual tax on property ownership, based on cadastral value, not market value. Rates typically 0.4%–1.1%.
Plusvalía Municipal: Levied on land value increases at sale or inheritance. A reformed system since 2022 allows choosing between actual or cadastral-based calculation
5. Salary, Pensions & Common Income Types
Employment income
Employment income in Spain is taxed progressively under the IRPF system, with tax withheld monthly by your employer. Spain also offers a range of personal and family allowances, which vary depending on the region in which you live.
Pensions
Private and occupational pensions are generally taxable in Spain for residents, unless an applicable treaty specifies otherwise. Government pensions, such as those from UK public service, often remain taxable in the country that pays them. While Spanish residents can claim limited deductions on pension contributions, overall tax relief is typically more restricted than what is available in the UK or the US.
Dividends, interest, capital gains on shares
Dividends and similar income are taxed separately under Spain’s “savings base.” The rates are progressive: up to €6,000 at 19%, €6,001–€50,000 at 21%, €50,001–€200,000 at 23%, and over €200,000 at 27%. For example, €10,000 in dividends would incur €1,980 in tax, calculated as 19% on the first €6,000 and 21% on the remaining €4,000.
6. Rental Income (Resident Landlords)
- Residents: Pay tax on net rental income at progressive IRPF rates. Deductible expenses include mortgage interest, repairs, community fees, insurance, and depreciation. Long-term residential lets can qualify for a 60% reduction of net taxable rent.
- Non-residents: EU/EEA residents: 19% on net income (expenses deductible). Non-EU residents: 24% on gross income (no deductions)
Example: A non-US resident (post-Brexit, non-EU) with €12,000 annual rent pays €2,880 tax (24% gross), while a EU resident expat can deduct expenses and may pay significantly less.
7. Savings Tax
Shares & investments: Gains taxed at savings rates (19%–27%).
Real estate:
- Gains are taxed at savings rates.
- Main home exemption: If you reinvest proceeds in another EU main residence within 2 years, gains can be exempt.
- Residents over 65 selling their primary residence may be fully exempt.
Non-residents: Flat 19% on property gains (EU/EEA), 24% for others. 3% withholding at sale by buyer applies as an advance payment.
Capital gains tax
Dividends
Tax on interest
Spanish Tax Rates for Expats: Downloadable Guide
Get a clear overview of Spanish income tax, social charges, rental income rules, wealth tax, and more. Download the PDF version of this guide to keep for future reference or share with your adviser.
8. Wealth Tax (Impuesto Sobre el Patrimonio)
Applies annually on 31 December.
- Residents: Taxed on worldwide assets.
- Non-residents: Taxed only on Spanish assets.
Exemptions & allowances:
- €700,000 general allowance per person (varies by region).
- €300,000 main home exemption.
Rates: Progressive, 0.2% – 2.5%.
- Madrid, Andalusia, Galicia: Apply 100% relief (no wealth tax).
- Catalonia, Valencia, Balearic Islands: Apply full rates.
Example: A couple in Catalonia with €2m worldwide assets (€1.4m in Spain, €600k abroad) may face a €13,000+ annual liability after allowances, while the same couple in Madrid pays zero. There are ways to reduce wealth tax by up to 80% with careful planning.
9. Business & Corporate Rates
Corporate Tax
25% Standard.
New Companies
15% For the first two profitable years.
VAT (IVA)
21% standard, 10% reduced (tourism, restaurants), 4% super-reduced (basic food, medicines, books).
10. Inheritance & Gift Tax (ISD – Impuesto de Sucesiones y Donaciones)
Highly regionalised allowances:
- Children/Spouse: From €16,000 at the state level, though some regions, such as Madrid and Andalusia, offer near-total exemptions.
- Distant relatives/Non-relatives: Much lower allowances.
Rates: Generally range from 7.65% to 34%, before any regional adjustments.
Example: In Catalonia, a €500,000 inheritance for a child could attract ~€40,000 tax; in Andalusia, it could be exempt.
11. Double-tax Treaties (UK, US & Others)
Spain’s treaties (with the UK, US, EU and others) prevent double taxation.
Under UK–Spain tax rules, private pensions are taxable in Spain, while the UK state pension is taxable only in Spain, and UK government pensions generally remain taxable in the UK. For US–Spain arrangements, US pensions may continue to be partially taxable in the US, although tax credits are usually available. Additionally, Spanish residents must declare overseas assets exceeding €50,000 using Modelo 720, with non-compliance carrying significant penalties.
12. Practical Checklist for Expat Residents
Confirm tax residency (183-day test, family tie rule, economic interest).
Consider Beckham Law regime for first 6 years if eligible.
Track regional tax rules – Madrid/Andalusia vs Catalonia/Valencia differ hugely.
File Modelo 720 if worldwide assets exceed €50,000.
Consider wealth tax exposure; location choice may eliminate it.
Use allowances (pension contributions, family deductions).
Stay on top of annual filing deadlines (April–June)
Quick-Reference: Headline 2025 Rates
- Income tax (IRPF): 19%–47% (state + regional)
- Savings income (dividends, interest, capital gains): 19%–27%
- Non-resident tax: 19% (EU/EEA) or 24% (non-EU)
- Wealth tax: 0.2%–2.5% (regional exemptions vary)
- Corporate tax: 25% (15% for start-ups).
- VAT (IVA): 21% standard; 10%/4% reduced
- Inheritance/gift tax: Highly regional; 0%–34%.
Spanish Tax Rates for Expats: Downloadable Guide
Get a clear overview of Spanish income tax, social charges, rental income rules, wealth tax, and more. Download the PDF version of this guide to keep for future reference or share with your adviser.
Final Notes
Spain’s tax system is regionally complex, with big differences between communities. The right planning can significantly reduce tax exposure, especially around wealth tax, inheritance, and pensions. At SJB Global, we help expats navigate Spanish taxation and ensure compliance while optimising your financial position.
What does the obligation free call include?
An initial 15-minute introduction call explaining our services and how we can help.
We go through a fact-finding exercise so we can then provide a full financial planning report including a personalised retirement forecast with future projections and work out how on track you are.
Lastly, we will provide a recommendation on any areas where we feel you could improve.
Who is SJB Global and meet your adviser
Our regulations, Independence and Fees
Our process from start to finish
Area we help with including:
UK Pension Advice
Retirement Planning
Investment Planning
Tax Planning
US Expat Services
International Estate Planning
Note: Minimum managed assets for SJB Global is £100,000 or currency equivalent.
Licensing & Regulations
Nexus Global specialises in providing a regulatory platform and compliance support to international financial advisers and intermediaries to enable them to meet regulatory requirements to provide their clients with a professional service. The financial advisers trading under SJB Global are members of Nexus Global. Nexus Global is a division of Blacktower Financial Management (International) Limited (BFMI). All approved members of Nexus Global are appointed representatives of BFMI. BFMI is licensed and regulated by the Gibraltar Financial Services Commission (FSC) and bound by the rules under licence number 3647: http://www.fsc.gi/regulated-entity/blacktower-financial-management-international-limited-3647.
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