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ATTENTION: the Guide has not yet been reviewed by a local tax consultant. The purpose of the Guide is to consolidate my research over time, to obtain feedback from the public and professionals and to review and revise it based on the follow-up research and feedback. The Guide is only provided to you for informational purposes and is neither a tax advice nor is it meant to substitute tax advice which you are always advised to get from a qualifed local tax consultant.
Version. 15.08.2023
Table of contents
Subject to certain conditions, an individual who moves to Spain to work there and who becomes a Spanish tax resident, may elect to be taxed under either:
<aside> 💡 Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas, IRPF)
Taxation with deduction of certain expenses and allowances at progressive rates:
Net wealth tax (Impuesto sobre el Patrimonio)
The tax is imposed on worldwide net wealth (calculated as of December 31 of each tax year) on behalf of the 17 autonomous regions. The regions are authorized to set their own tax rates and allowances within certain limits. If a region does not set such rates, the standard progressive rate table currently ranging from 0.2% (on the first EUR 167,129.45) to 3.5% (on the excess over EUR 10,695,996.06) applies. Some regions have approved different measures which include imposing a nil rate on the residents of their autonomous regions (e.g. Madrid).
In the case of tax residents, the tax is imposed on the total net wealth, regardless of its location or where the rights can be exercised (worldwide wealth). In contrast, tax non-residents are taxed only on the wealth located, exercisable, or requiring fulfillment within Spanish territory (wealth in Spain).
Spouses are taxed separately. If they are married under the community property system, the assets are generally attributed to the spouses on a 50/50 basis. If they are married under the separate property system, each asset is attributed to the appropriate owner.
Exemptions include unquoted shares and comparable interests in companies (other than portfolio or real estate management companies) in which the taxpayer holds (i) more than 5% of the capital and (ii) a managerial function which is the source of more than 50% of his total income.
In computing the taxable base, each resident / non-resident taxpayer is entitled to a standard allowance of EUR 700,000 (the allowance may vary per autonomous region).
The aggregate burden of income tax and net wealth tax due by a resident taxpayer may not exceed 60% of his total taxable income for income tax purposes.
Solidarity tax on large fortunes
In 2022 a temporary solidarity tax on large fortunes has been introduced which would apply only until December 31, 2023. The solidarity tax is a direct tax complementary to the net wealth tax (the same taxable base and exemptions) but it is levied on the net wealth of individuals exceeding EUR 3 million.
The taxable base will encompass the value of the net assets held on 31 December of 2023. Assets between EUR 3.0-5.3 million will be subject to a 1.7% tax; those between EUR 5.3-10.6 million will incur a rate of 2.1%; and assets in excess of EUR 10.6 million will be taxed at 3.5%.
This tax must be reported between July 1st-31st, 2024 by individuals who have a net wealth of more than EUR 3 millions as of December 31, 2023 and must declare it in the 718 form of the Spanish Tax agency.
**Inheritance and Gift Tax (**Impuesto sobre Sucesiones y Donaciones, ISD)
The individual recipient of the property and associated rights is liable to inheritance or gift tax (article 5 of the Inheritance and Gift Tax Law (Ley del Impuesto sobre Sucesiones y Donaciones, LISD)); article 16(1) of the Regulations on Inheritance and Gift Tax (Reglamento del ISD, RISD)). A recipient who is a resident of Spain is liable to the tax with regard to property and associated rights located in Spain or abroad which are acquired through gratuitous transfer. Non-resident recipients are subject to this tax (articles 6 and 7 of the LISD):
Three types of exemptions (allowances) may be noted:
The basic tax is calculated, maximum, at 16 progressive rates ranging from 7.65% (on the excess of EUR 7,993.46) ending with 34% (on the excess of EUR 797,555.08) (article 21 of the LISD).
The final tax liability is the amount resulting from applying fixed surcharges to the basic tax due by reference to the recipient’s net wealth before receipt of the inheritance or gift in question and his relationship to the deceased or donor; the surcharge varies from 0% to 140%.
Disclosure obligation for foreign assets (Form 720 filing)
Resident taxpayers applying the general tax regime are obliged to disclose the following information:
Information regarding accounts the balance of which in the aggregate does not exceed EUR 50,000 on 31 December of a given year and the average aggregate balance of which in the last quarter of the same year did not exceed EUR 50,000 must not be disclosed unless there has been a transfer of assets or an account has been closed.
This form must be filed in the period between 1 January and 31 March of the year following the tax year subject to the information. Late or incomplete filing may be subject to administrative penalties.
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OR
Provided that the requirements of the "Beckham Law” are met (see the General Requirements and **the Procedure sections **below), you may declare personal income tax using a special form (Form 151) while maintaining your status as a personal income taxpayer.