Taxation in Spain for Expats
A Complete Guide to Rates & Key Rules
Please note this is a snapshot of 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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Taxation in Spain for Expats Guide
An up-to-date snapshot of taxation in Spain for expatriates from the team at SJB Global.
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.
| 2025 General State Band | Rate |
|---|---|
| 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.
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.
- Your main economic interests are in Spain.
- Your spouse and dependent children live in Spain.
Residents are taxed on worldwide income.
Non-residents and Special Regimes
Non-residents (IRNR – Impuesto sobre la Renta de no Residentes) pay tax only on Spanish-sourced income.
Beckham Law Regime: Newly-arrived expats 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.
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.
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%.
6. Rental Income
Residents
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, with expenses deductible. Non-EU residents: 24% on gross income, with no deductions.
Example
A non-US resident with €12,000 annual rent pays €2,880 tax at 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 may apply if you reinvest proceeds in another EU main residence within 2 years.
Residents over 65
Residents over 65 selling their primary residence may be fully exempt.
Non-residents
Flat 19% on property gains for EU/EEA, 24% for others. 3% withholding at sale by buyer applies as an advance payment.
Capital gains tax, dividends and tax on interest should be reviewed as part of your wider Spanish tax planning.
8. Wealth Tax
Applies annually on 31 December.
Residents
Taxed on worldwide assets.
Non-residents
Taxed only on Spanish assets.
Allowances
€700,000 general allowance per person and €300,000 main home exemption. Rates are progressive, from 0.2% – 2.5%.
Madrid, Andalusia, Galicia: Apply 100% relief. Catalonia, Valencia, Balearic Islands: Apply full rates.
Example: A couple in Catalonia with €2m worldwide assets 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 for tourism and restaurants, 4% super-reduced for basic food, medicines and books.
10. Inheritance & Gift Tax
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
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.
Modelo 720
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.
- 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.
- Stay on top of annual filing deadlines.
Quick-Reference: Headline 2025 Rates
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.
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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
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.