Spain's Taxes for Retirees, Expats and Digital Nomads

Taxes in Spain

In Spain, taxes are handled differently for expats than for Spanish citizens. For expats, taxes in Spain can be divided into two categories: taxes on income and taxes on assets. Taxes on IncomeTaxes on income are collected by the Spanish Tax Agency (Agencia Tributaria) through a number of different taxes: Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas or IRPF), Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes or IRNR), Value-Added Tax (IVA), Corporation Tax (Impuesto sobre Sociedades or IS) and Wealth Tax (Impuesto sobre el Patrimonio).

Personal Income Tax is only applicable to those who are resident in Spain, and is based on their global income. This includes wages, capital gains and other taxable incomes earned during the tax year. The non-resident Income Tax is applicable to all individuals who are not considered as tax residents in Spain. They will pay taxes only from their Spanish sources of income such as rental property and other investments.

Value Added Tax is applied to all goods and services supplied in Spain with few exceptions such as energy and health care services. Companies operating within the country have to register for VAT; Non-residents companies also need to register for VAT if they provide goods or services that qualify for taxation under the IVA regulations. Corporation Tax is levied on all company profits regardless of whether they are earned in Spain or abroad. The rate of tax depends on the size of the business and ranges from 25% to 30%. Finally, Wealth Tax applies to all taxpayers whose net worth exceeds a certain threshold set by law each year at 0.2% or 0.3%, depending on the region where they reside in Spain. This tax applies both to residents and non-residents alike and it covers movable property, real estate holdings, financial investments, car fleets among others assets.

Taxation of Assets In addition to taxes on income, expats may also be subject to taxes on their assets held outside of Spain but within the European Union countries; this includes taxes such as Inheritance and Gift Taxes (Derecho de Sucesiones y Donaciones). These taxes apply irrespective of whether an asset was acquired inside or outside of Spain – expats must declare any asset acquired within EU countries for taxation purposes if its value exceeds €700K per person per year within EU countries excluding Ireland, UK & Denmark; these thresholds vary from country to country though usually range between €100K – €400K per person per year depending upon which EU country was involved with the transaction(s).