Taxes for Foreign Residents in Spain

Introduction to Taxes for Foreign Residents in Spain

Spain is an attractive destination for expatriates due to its climate, culture, and quality of life. However, understanding the Spanish tax system is essential to avoid legal and tax issues. This article will provide you with a comprehensive guide on the taxes that foreign residents must pay in Spain in 2026.

Who Are Considered Foreign Residents in Spain?

For tax purposes, it is important to understand who is considered a resident in Spain. Spanish legislation establishes certain criteria:

Tax Residency Criteria

• Physical presence: If you reside in Spain for more than 183 days during a calendar year, you will be considered a tax resident.
• Center of economic interests: If your main economic interests are in Spain, you may be considered a resident, even if you do not spend 183 days in the country.
• Habitual residence: If your family, or part of it, resides in Spain, you may also be considered a resident.

Exceptions to Tax Residency

There are exceptions that may apply to certain groups, for example, for diplomats or officials of international organizations. It is crucial to review each case individually.

Types of Taxes Affecting Foreign Residents

Expatriates in Spain must be aware of several types of taxes, which are detailed below:

Personal Income Tax (IRPF)

This is the main tax that all tax residents in Spain must pay on their global income.

• Tax rates: Range from 19% to 47%, depending on income brackets:
• Up to 12,450 euros: 19%
• From 12,450 to 20,200 euros: 24%
• From 20,200 to 35,200 euros: 30%
• From 35,200 to 60,000 euros: 37%
• Over 60,000 euros: 47%
• Deductions: There are available deductions that can reduce the taxable base, such as donations to NGOs or expenses for habitual housing.

Wealth Tax

This tax applies to the net wealth of residents in Spain, although there are exemption thresholds.

• Exemption threshold: Generally, 700,000 euros. Each autonomous community can establish its own exemptions.
• Tax rates: Range from 0.2% to 3.5% on the taxable base.

Tax Obligations of Foreign Residents

Foreign residents in Spain have certain tax obligations that they must fulfill to avoid penalties.

Annual Declarations

Residents must file the IRPF declaration annually. The dates are generally between April and June of the following year.

• Required documentation: Income certificates, tax payment receipts, and any documents supporting deductions.
• Consequences of non-compliance: May include fines and surcharges on the amount due.

Payments on Account

Expatriates must make payments on account of the IRPF if their income exceeds certain thresholds.

• When and how to pay: Payments are usually made in July and December, and can be made through the Tax Agency.
• Calculation: The amount is based on estimated income for the current year.

Double Taxation Agreements

To prevent expatriates from paying taxes in more than one country, Spain has double taxation agreements with several countries.

Benefits of Agreements

The agreements allow income earned in one country not to be taxed in the other, or for a reduced rate to apply.

• Example: If you are a resident in Spain and work for a company in the U.S., you may not have to pay taxes on that income in the U.S.
• It is important to review the specific agreement between your country and Spain to know the applicable benefits.

How to Apply Benefits

To benefit from a double taxation agreement, you generally must:

• Submit the corresponding form to the Tax Agency.
• Prove your tax residency in Spain.

Practical Tips for Expatriates

To facilitate tax compliance, here are some practical tips:

Tax Advisory

Consider hiring a tax advisor specialized in expatriate taxation in Spain to help you navigate the system.

Keep Detailed Records

Keep all receipts and documentation related to your income and deductions to facilitate tax filing.

Stay Informed About Legal Changes

Tax laws can change, so make sure to stay updated on any modifications that may affect you.

Conclusion

Understanding taxes for foreign residents in Spain is essential for a successful and hassle-free expatriate experience. From the IRPF to the wealth tax, every aspect of the tax system may seem complicated, but with the right information, you can manage it effectively. We recommend seeking professional advice and staying informed about your tax obligations.

Health4Spain can help you navigate these aspects and ensure that you are meeting all your tax obligations, as well as providing advice on other relevant topics for expatriates. Contact us for more information on how we can assist you in your new life in Spain.