Taxes for immigrants in Spain

Personal Income Tax

(Impuesto sobre la Renta de las Personas Físicas [IRPF])

This is the income tax for all Spanish nationals and residents in Spain. It is important to remember that a person who resides in Spain more than 183 days in a calendar year acquires the status of Spanish resident. For that reason, immigrants who reside in Spain for more than 183 days must file a personal income tax return (IRPF), which must include their earned income from work (payroll income), earnings from real estate capital (real estate rentals), earnings from capital assets (capital investments), and income from economic activity (businesses).

Personal income tax is deducted from workers’ monthly paychecks, with the rate varying based on their salary level and personal situation. This type of tax ranges from a minimum of 0% to a maximum of 45%.

As part of the earnings from real estate capital, the rental of real estate property for housing is allowed a 60% deduction, which is to say the taxpayer will only have to declare 40% of the value. The maximum tax rate for this is 43%.

If the Spanish resident has any type of capital investment (bank accounts, stocks, investment funds) that offer interest or capital gains, these earnings are taxed between 19 and 23%

Finally, the generalized tax rate for earnings from business activities is 15%.

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Wealth Tax

(Impuesto sobre el Patrimonio)

This is an unusual tax intended to tax the largest estates in the country. For that reason, this tax appears and disappears according to what the government at the time deems appropriate (it was in effect in 2016 and 2017, and it seems that in 2018 it will not be). It is helpful to be aware of this tax in case the obligation to pay it arises.

In general, both Spanish residents and non-Spanish residents who have residence in a EU or EEA member country with assets in Spain worth more that 2,000,000 euros must file this tax return annually. The fee is to be paid in installments once the minimum exemption, established by each autonomous community, has been deducted.

Non-Resident Income Tax

(Impuesto sobre la Renta de No Residentes [IRPN])

Non-residents who own a home for private use in Spain must declare 2% of the assessed value of the home, for which a 19% tax rate will apply to residents of the EU, Iceland, and Norway, and 24% will apply to the remaining taxpayers. If the property is an investment for which capital gains are earned by its rental, those gains are entirely subject to the taxes listed above: a 19% tax rate for residents of the EU, Iceland, and Norway, and 24% for the remaining taxpayers. Like the IRPF, the IRNR is filed annually.

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