Taxes in Spain

Written by Lais Cattassini Moderated by Oleksandra Dosii

Lais Cattassini

Lais is a Brazilian journalist and copywriter with over 17 years of experience, writing about things she knows really well (travelling, cinema, social media trends) and things she loves learning about.

Oleksandra Dosii

Oleksandra is a dedicated marketer with a passion for growing HR-tech products. She believes content marketing is about delivering high-quality content that provides value—not just generating leads. Since 2016, Oleksandra has been involved in tech talent relocation.

Last update: September 16, 2024

Next update: Scheduled for February 1, 2025

The tax system in Spain covers various forms of taxation, with income tax being a key component.

Income Tax (IRPF) is progressive and levied on residents of Spain based on their worldwide income. It applies to income from various sources, including employment, investments, and property. Non-residents are only taxed on their income generated within Spain.

You are considered a tax resident if you spend more than 183 days in Spain in a calendar year, your main economic interests (business or professional) are in Spain, and your spouse or dependent children reside in Spain.

Taxable income includes salaries, dividends, interest, capital gains, rental income, and business income for business owners.

What is the income tax in Spain?

Income tax in Spain is split between national and regional governments. Each autonomous community in Spain can modify certain tax brackets or deductions, meaning the actual rates may vary slightly depending on the region where you live.

Income tax in Spain ranges from 19% to 47%, with the average resident paying 24%.

The Spanish tax year follows the calendar year (January 1 - December 31), and the deadline for filing the IRPF is between April and June of the following year.

Spain applies a progressive tax rate structure, meaning the higher your income, the higher your tax rate. These rates for 2024 are as follows:

Spain offers a special tax regime for expats, called the Beckham Law, allowing qualifying foreign workers to be taxed at a flat rate of 24% on Spanish income for up to six years rather than the progressive rates. This law applies to individuals who move to Spain for employment and meet specific criteria, such as not being a tax resident in Spain for the previous 10 years.

Social Security contributions

Employers and employees both contribute to Spain’s social security system. These contributions are based on a percentage of the employee's salary. Self-employed individuals (known as autónomos) must pay the entire contribution themselves.

Employer contribution is between 29% and 31% of the employee’s gross salary, depending on the contract type. The employee contribution is roughly 6% of their gross salary.

These contributions are capped at a certain level of income, so if an employee earns above a specific threshold, the contributions stop increasing beyond that point. The monthly maximum contribution base is around €4,720 per month in 2024.

The contribution rate for self-employed individuals depends on the declared income. The minimum contribution base is usually about €735 per month, which is the minimum amount most self-employed workers must pay. Contributions can increase based on income, and self-employed individuals have more flexibility in choosing their contribution level.

The contributions cover different areas of social security, such as general welfare benefits, healthcare, unemployment insurance, work accidents, and more.

Online tax calculator for taxes in Spain

To calculate income tax (IRPF) in Spain, you need to consider your taxable income, applicable deductions, and progressive tax rates. You can calculate your net income here.

Annual tax returns in Spain

Not everyone in Spain is required to file a tax return. The need to file depends on your income level and type of income. Salaried employees who earn less than €22,000 annually from a single employer do not need to file a tax return if no other significant income sources exist.

If you earn over €22,000 from one source, or over €14,000 from multiple sources, you must file a tax return. Those who receive rental income, investment income, or capital gains must also file. Self-employed individuals (autónomos) must file regardless of income level.

Most taxpayers file their returns using the Renta Web system on the Spanish Tax Agency's website (Agencia Tributaria). You can also file a tax return in person at a local tax office or hire a tax advisor (gestor) to do it for you.

When filing their taxes, many salaried employees in Spain receive a pre-filled tax return called a borrador from the Agencia Tributaria. This includes most of the information that the tax office already has (e.g., salary, withholdings, etc.). You can accept it, if it’s accurate, or edit it to include more information.

Once you file your return, the Agencia Tributaria will determine whether you owe additional taxes, or are due for a tax refund if you've overpaid throughout the year. Taxpayers often have taxes withheld from their salary throughout the year (via retenciones). If the amount withheld exceeds your final tax liability, you’ll get a refund. If it’s less, you’ll need to pay the difference.

If you are entitled to a refund, the tax authorities will typically issue it within a few weeks or months. Refunds are usually processed by direct bank transfer. If you owe taxes, you must pay them by the deadline (usually by June 30). You can either pay the full amount or request to pay in instalments (commonly split into two payments: one at filing and one in November).

How to pay less taxes

You can reduce your tax liability through deductions, allowances, and strategic financial planning. These methods help optimise your taxes and are available to both employees and self-employed individuals.

Personal allowance

Every taxpayer is entitled to a basic personal allowance, which is typically around €5,550. If you are over 65 or 75 years old, you can claim an additional allowance.

Family deductions

If you have children who are your dependents, you can deduct €2,400 for the first child, €2,700 for the second, and up to €4,500 for subsequent children.

Deductions are also available for caring for elderly relatives (parents or grandparents), typically around €1,150 to €2,550, depending on the relationship.

Pension plans

Contributing to a pension plan (plan de pensiones) reduces your taxable base, up to certain limits. You can contribute up to €1,500 per year and deduct this amount from your taxable income. For those over 50 years old, the contribution limit increases, allowing for higher deductions.

Tax relief for investments

Investments in new or recently created companies can be deducted up to 30% of the invested amount, with a maximum deduction limit of €6,000 per year.

If you sell an asset and reinvest the proceeds in certain types of qualifying assets (such as another property or investment funds), you can defer or reduce the tax on the capital gains.

Charitable donations

Donations to registered charitable organizations are tax-deductible in Spain. You can deduct 80% on the first €150 donated. For any amount exceeding €150, you can deduct 35%.

If you've been donating to the same charity for more than three years, the deduction increases to 40%.

Beckham law for expats

The Beckham Law offers a flat tax rate of 24% for expatriates on their Spanish-sourced income for up to six years.

To qualify, you must move to Spain for work purposes and not have been a tax resident in Spain in the previous 10 years.

This tax regime is particularly beneficial for high earners, as it allows them to avoid Spain's higher progressive income tax rates.

Talk to a tax advisor

It may be beneficial to consult a tax advisor or accountant. These services ensure you pay correctly and can help collect benefits, allowances, and deductions. For expats, services like these can be even more beneficial, as they help foreigners overcome language barriers and the complicated tax regulations of a new country.

Other Spanish taxes

Spain has a range of taxes beyond income tax (IRPF) that individuals and businesses might encounter.

Value added tax (VAT) - IVA

Like in other countries, VAT is a consumption tax applied to most goods and services. The general rate of 21% applies to most goods and services. The reduced rate of 10% applies to certain items like food, medicine, and hotel accommodation. The super-reduced rate of 4% applies to essential items such as bread, milk, and some books.

Businesses collect VAT on their sales and pay VAT on their purchases. They then remit the difference to the tax authorities.

Corporate tax (Impuesto de Sociedades)

Corporate tax is levied on the profits of companies and legal entities. The standard rate is 25%, but it can be 15% for newly created companies during their first two years and 30% for certain companies like banks and oil companies.

Companies must calculate their profits, apply the appropriate tax rate, and file annual tax returns.

Property transfer tax (Impuesto de Transmisiones Patrimoniales - ITP)

This tax is paid when purchasing second-hand property or other assets. The rate varies by region, but it is typically between 6% and 10% of the property value.

The buyer is responsible for paying the tax based on the declared value of the property.

Inheritance and donations tax (Impuesto sobre Sucesiones y Donaciones)

This is a tax on the transfer of assets through inheritance or gifts. Rates are progressive depending on the value of the inheritance or donation and the relationship between the giver and receiver, varying from 7.65% to 34%.

Many regions offer reductions or exemptions, especially for close relatives.

Local taxes

Local taxes are imposed by municipal authorities and vary depending on the location. Key local taxes include property tax (Impuesto sobre Bienes Inmuebles - IBI) and vehicle tax (Impuesto sobre Vehículos de Tracción Mecánica).

The IBI rate typically ranges from 0.4% to 1.3% of the property's cadastral value, depending on the municipality, while the IVTM (vehicle tax) can range from €34 to €224 per year, depending on horsepower and location.

Tax treaties with Spain

Spain has signed numerous Double Taxation Agreements (DTAs) to clarify the taxation rules between Spain and another country, ensuring that taxpayers are not taxed on the same income in both countries. You can see here the list of treaties the country has and what they entail.