FREQUENTLY ASKED QUESTIONS
These are some of the usual queries that foreigners have about their fiscal obligations under Spanish tax laws:
WHAT SHOULD I DECLARE IN MY INCOME TAX DECLARATION?
As a tax resident in Spain you have to declare all income earned over the year (Jan-Dec), including foreign income. Income will include your salary from a job anywhere, freelance (autónomo) earnings, most forms of pension income, interest/dividends, property rental and capital gains. The income tax return is called the “Declaración de Renta” with the deadline for filing around June 30th.
DO I HAVE TO FILE? ARE THERE ANY EXCEPTIONS?
There are exemptions for very low incomes and, most importantly, filing is optional if your only source of income is a salary from a single Spanish employer if less than €22,000 gross p.a. However, if you think you’ve paid too much tax you have to formally claim the refund – the tax authority doesn’t do this automatically; you have to ask for your money back!!
WILL THE TAXMAN PREPARE THE RETURN FOR ME?
Yes, if you make an appointment at your local tax office or access a draft return called a “borrador” online through Hacienda’s website. However, be warned that this draft will only include the limited information that Hacienda has on the database on your Spanish income. Additional income such as a freelance activity, foreign earnings or property rental will have to be added manually. And importantly, as the taxman may not be aware of your full personal circumstances, you could miss out on certain tax breaks and deductions if you rely on their figures
WHAT DEDUCTIONS CAN BE OFFSET AGAINST MY INCOME?
In addition to the personal, marriage and child allowances, other important deductions may apply to you:
mortgage repayments on your main residence (if mortgage taken out before 2013)
contributions to a “Plan de Pensiones”
business expenses for registered freelancers (autónomos)
time spent abroad for your employer
rent paid by low income-earners
WHAT TAX RULES ARE APPLICABLE TO FREELANCE “AUTÓNOMOS”?
Apart from filing your annual income tax you’ll very probably have to file quarterly tax returns such as IVA (Vat) and income tax. These obligations will vary depending on the nature of your business activity and specific fiscal circumstances
IS THE SPECIAL “BECKHAM” LAW APPLICABLE TO ME?
Only if you’ve applied formally to be taxed under this regime and Hacienda only grants this dispensation if you have an employment contract and very specific conditions are met
DOES A NON-RESIDENT IN SPAIN HAVE TO FILE ANYTHING?
A non-resident has to declare and pay income tax on income arising in Spain. These sources would typically be:
if you own a property in Spain (the tax is levied on genuine income when rented or, if left empty, an imputed income based on the property’s tax value)
capital gain on the sale of a Spanish property
if taxed under the “Beckham” regime, your salary and any other Spanish income
WHAT IS THE MODELO 720?
All Spanish tax residents have to file this when they have assets outside Spain – specifically bank accounts, property and investments – and their value exceeds €50,000 at Dec 31st. However, the rules on compliance are complex and we recommend you seek advice if you think you’re obliged to declare these assets
WILL I HAVE TO PAY WEALTH TAX (PATRIMONIO)?
This tax only hits the wealthiest tax residents. If you live in Catalunya the tax starts when the net value of your worldwide assets exceeds €500k per person. The rest of Spain applies different rules depending on where you live but the standard starting point is €700k per person. The value of your assets is computed after loans and mortgages and your main residence in Spain is very favourably treated. If you believe the tax may be applicable to you please consult us for more information
For more detailed information or to arrange a consultation please contact David Cook directly at spainaccounting@gmail.com
The above information was prepared in November 2019 and is designed for informational purposes only. While every attempt has been made to provide correct details and information neither Spain Accounting nor the owners bear any responsibility for loss or damage suffered as a result of using information given in this web site.