Spain, renowned for its vibrant culture, Mediterranean climate, and picturesque landscapes, also offers enticing tax policies, especially for expatriates and new residents, makes it a highly attractive destination.
In this guide, we’ll walk you through everything you need to know about relocating to Spain from a personal tax perspective, including tax residency, income tax, special tax regimes and tax return obligations.
TaxPilot recommend that you organize your affairs in good time to get ahead and make the most of favorable tax treatment while making sure you’re meeting your tax return obligations.
Spain follows a residence taxation model. If you are resident, you will pay tax worldwide incomes. If you are non-resident, you will pay tax on local incomes only.
if you spend more than 183 days in Spain during a calendar year.
if your business activities are conducted in Spain or family reside in Spain.
Providing that you are considered an 'expatriate', you may be eligible to use Spain's special tax regime 'Beckhams Law' which enables you to be taxed as a non-resident, even though you are living and working in Spain. To be eligible for this scheme you must demonstrate five years of non- residence and you must apply to use the scheme within six months of moving to Spain. Spain can be a very tax efficient place to live in and as such, Global Tax Consulting recommends seeking personalized tax planning advice to take advantage of the special tax regime.
Exempt from Spanish taxation.
Applied for six years.
Tax on property and share sales
Tax on value of owned assets
Tax on assets passed to heirs
Tax to contribute to state welfare
If you receive incomes overseas while you are living in Spain, you may find the source country, as a starting point, continues to tax the income which may cause double taxation unless you are using special tax regime.
Double taxation agreements can be used to mitigate double taxation and receive tax free income. As such, the more double taxation agreements a country has, the better, as agreements will ensure you’re not taxed twice and even better, ensure your income is tax free.
At present, Spain has 88 double taxation agreements signed.
