Spain Expat Tax—Rates, Laws, and Benefits for Returning Expats

If you’re planning to return to Spain, understanding tax rules is especially important as your tax obligations may change once you return.

In this detailed guide, we’ll provide the necessary information about Spain’s expat tax, focusing on tax rates, rules, and breaks that apply to Spanish expats.

Do Expats Pay Tax in Spain?

Yes, upon arrival in Spain, all tax residents and non-residents must register as taxpayers by obtaining a tax ID number (NIE). You can get the NIE number at a local police station or a Foreigner’s Office (Oficina de Extranjeros) within 30 days of arriving in Spain.

However, the type and amount of taxes you must pay depends on your residency status.

When Do You Become a Tax Resident in Spain?

Upon returning to Spain, the first step is to establish whether you’re considered a tax resident or non-resident, as this will define your tax liability. Tax residents typically pay Spanish tax on worldwide income and gains, while non-residents are only taxed for income and gains sourced in Spain.

You’re considered a Spanish tax resident if:

1. You have spent over 183 days in Spain during a calendar year, consecutive or non-consecutive.
2. Your spouse or children primarily reside in Spain.
3. You have business interests in Spain.

If any of these three conditions apply to you, you must pay taxes on worldwide taxable income earned from:

• Employment
• Self-employment
• Capital gains
• Rental property
• Savings

Your taxable income in Spain refers to what’s left after deductions for personal allowance, pension contributions, social security, and business costs.

If none of the previous conditions apply, you’re a tax non-resident in Spain. This means you pay a flat tax rate on Spanish-sourced income rather than a standard progressive rate, and you don’t qualify for personal allowance and deductions.

How Much Tax Do Expats Pay in Spain?

Expat tax rates in Spain vary across the country and depend on factors like:

• Your residency status.
• Your employment status in Spain.
• The industry you work in.
• The region you live in.
• The amount of income you earn.
• The property and investments you hold.

As an expat returning to Spain, you should be aware of your rates and responsibilities regarding the following major tax categories:

1. Income tax.
2. Wealth tax.
3. Capital gains tax.
4. Property tax.
5. Inheritance tax.

Income Tax in Spain for Expats

When you pay income tax, also known as IRPF (Impuesto sobre la Renta de las Personas Físicas) in Spain, your tax rate is split in half between the state and the region you’re registered in. This means the exact tax amount you must pay depends on the region.

Income tax rates for Spanish tax residents typically range from 19% to 47%, depending on your income amount. As a tax resident, you also qualify for a personal allowance of:

1. €5,550 if you’re under 65.
2. €6,700 if you’re over 65.
3. €8,100 if you’re over 75.

The usual income tax rates for expats considered Spanish tax residents are:

Keep in mind that these rates vary depending on the region you live in. Also, if you’re a tax non-resident in Spain, you’re taxed at a flat 24% rate or 19% if you’re a citizen of an EU or EEA country.

The Spanish tax year runs from January to December, and you must submit your tax return between April 11 and June 30 every year. In the tax return, you should include income from employment, as well as other sources like rent and pension.

Wealth Tax in Spain for Expats

If you’re an expat with significant worldwide wealth and you reside in Spain, you may have to pay wealth tax on your assets. The tax amount you’re subject to is calculated after applying a tax-free allowance, which is:

1. €700,000 for tax non-residents in Spain.
2. From €500,000 to €800,000 for tax residents in Spain, depending on the region.

If you’re a homeowner, you’re eligible for an additional €300,000 tax allowance. You may also qualify for a regional allowance depending on the region you live in. However, the different Spanish Autonomous Communities have the ability to establish different limits for this purpose.

If the total gross value of your goods exceeds €2 million after allowance deductions, you must submit the wealth tax declaration.

The wealth tax rate is progressive, and once you exceed €2 million in assets, it is:

Solidarity Tax for High Net-Worth Individuals

Since 1 January 2023, the Spanish government introduced the Solidarity Tax for High Net-Worth Individuals (Impuesto de Solidaridad de las Grandes Fortunas). This is a temporary tax levied on net assets exceeding €3 million, accrued annually on 31 December.

Who Pays the Solidarity Tax?

• Spanish residents: Worldwide wealth is taxed, but they can apply a €700,000 tax-free allowance (same as Wealth Tax).
• Non-residents: Only Spanish-based assets are taxed, and the €700,000 allowance still applies.

Solidarity Tax Rates

Since this tax complements Wealth Tax, any Wealth Tax already paid is credited against the Solidarity Tax bill, ensuring no double taxation.

Relying on professional tax services like those Titan Wealth International offers can help you determine exactly how much tax you’re obligated to pay. Our tax planning services assist you in navigating your tax responsibilities properly, ensuring you preserve your wealth and reduce tax liability.

Capital Gains Tax in Spain for Expats

Spanish tax residents are liable for capital gains tax (CGT) on profit made from sales of global assets. This includes gains from selling real estate, stocks, artwork, and other assets.

The typical tax rates in Spain for expats considered tax residents are:

Spanish non-residents are subject to a flat 19% CGT rate and are only taxed on Spanish-sourced assets.

You may qualify for a tax exemption if:

1. You’re 65 or older and selling your main home in Spain.
2. You’re under 65 and selling your main home with the intention of buying a new one in Spain.

If you’re currently a resident of a tax-free country, you may want to dispose of any assets you have before repatriating to Spain to reduce CGT liabilities.

Property Tax in Spain for Expats

Whether you’re a tax resident or non-resident in Spain, you must pay property tax—or Impuesto sobre Bienes Inmuebles (IBI)—on any Spanish property you own.

The amount you should pay is calculated by multiplying the property’s rental value by the tax rate a local government sets. The rates vary by municipality, but they’re usually 0.4% to 1.1% of the cadastral value—the monetary value the Spanish administration assigns to each property.

For new property, you must pay the value-added tax (VAT) of 10% set at the national level. You may also be liable for a stamp duty tax of 1.5% and are subject to a property transfer tax if you sell property in Spain.

Inheritance Tax in Spain for Expats

If you have a property you’ve inherited in Spain, you’ll have to pay inheritance tax (IHT) on it regardless of your residency status. IHT and gift tax are grouped together in Spain, and the rate you pay depends on the asset’s value and the relationship with the deceased.

However, IHT rates and rules vary depending on the region, and in some regions like Andalucía, you may be exempt from IHT based on your circumstances. To ensure you’re paying taxes correctly, consider speaking to a tax adviser.

What Are the Main Tax Laws in Spain for Expats?

If you’re planning to relocate or return to Spain as an expat, it’s important to understand the key tax laws and residency rules that may apply. Spain offers favourable tax treatment for certain individuals moving to the country for work, but there are also strict compliance requirements for those with foreign assets or extended stays. The three main areas to be aware of are:

1. Beckham’s Law (Special Expat Tax Regime)
2. Foreign Asset Reporting Obligations (Modelo 720)
3. The 90-Day Rule for Non-EU Nationals

Beckham’s Law – Special Tax Regime for Inbound Workers

Spain’s “special regime for inbound taxpayers,” commonly known as Beckham’s Law, was introduced in 2004 to attract foreign talent. It allows qualifying individuals who move to Spain for employment to benefit from significantly reduced tax rates.

To be eligible, you must not have been a Spanish tax resident in the five years prior and must be relocating to work for a Spanish employer. The regime offers:

• A flat 24% income tax rate on employment income up to €600,000.
• 3% tax on income from dividends, interest, and capital gains above €200,000.

This is notably lower than Spain’s standard progressive income tax rates, which can reach up to 47%, depending on the region. The relief applies for up to six tax years, though income above €600,000 may still be subject to higher taxation.

Foreign Asset Reporting – Modelo 720

Expats who become Spanish tax residents and hold assets outside Spain valued at over €50,000 are required to report them using the Modelo 720 declaration. This obligation includes:

• Overseas real estate.
• Bank accounts held abroad.
• Investments such as shares and funds.
• Life insurance policies.

Introduced in 2013, this law aims to reduce tax avoidance. Non-compliance can result in severe financial penalties and potential criminal charges. While owning foreign assets doesn’t automatically trigger a tax liability in Spain, reporting is mandatory, and any income or gains may be taxable depending on your circumstances.

Professional tax advice is strongly recommended to ensure compliance and optimise reliefs under any applicable double taxation treaties.

The 90-Day Rule – Schengen Zone Limit for Non-EU Citizens

Expats from outside the EU are considered third-country nationals under Schengen rules. As such, you may only stay in Spain—or within the Schengen Area—for up to 90 days in any rolling 180-day period without a visa or residency permit.

Exceeding this limit can lead to fines, entry bans, and future visa complications. While this rule relates to immigration, extended or regular stays can also result in you being deemed a Spanish tax resident, depending on your circumstances.

If you intend to live, work, or spend significant time in Spain, it is essential to obtain the correct visa or residence status and ensure your immigration and tax planning are aligned.