Income and wealth tax for residents in spain
Tax for Residents
An individual is a tax resident in Spanish territory when any of the following circumstances apply:
That the person remains more than 183 days during the calendar year in Spanish territory. To determine this period of stay in Spanish territory sporadic absences will be computed unless the taxpayer proves his fiscal residence in another country. In the case of countries or territories classified as tax havens, the Tax Administration may require proof of permanence in the same for 183 days in the calendar year.
That in Spain lies the main core or the basis of their activities or economic interests directly or indirectly.
That the spouse and/or the minor children who depend on this natural person are habitually resident in Spain. This third assumption supports evidence to the contrary.
You do not lose the status of taxpayer of Income Tax (individuals), if of Spanish nationality and have a new fiscal residence in a country or territory qualified as tax haven. This rule will apply in the tax period in which the change of residence is made and during the following four tax periods.
On the contrary, a natural person will have the status of non-resident in Spain when none of the above requirements are met.
If you become a tax resident in Spain you will be taxed for your worldwide Income and Assets:
Income Tax
| INCOME in € from | INCOME in € to | STATE RATE | TIPO ANDALUCIA | TIPO TOTAL |
|---|---|---|---|---|
| 0 | 12450,00 | 9,50 | 10,00 | 19,50 |
| 12.451,00 | 20.200,00 | 12,00 | 12,00 | 24,00 |
| 20.200,01 | 28.000,00 | 15,00 | 15,00 | 30,00 |
| 28.000,01 | 35.200,00 | 15,00 | 16,50 | 31,50 |
| 35.200,01 | 50.000,00 | 18,50 | 19,00 | 37,50 |
| 50.000,01 | 60.000,00 | 18,50 | 19,50 | 38,00 |
| 60.000,01 | 120.000,00 | 22,50 | 23,50 | 46,00 |
Please note that there are deductions depending on different circumstances of the person which would have to be fine-tuned at a later stage.
Capital Gains Tax
Residents
First 6,000 Euros: 19%
6,000 – 50,000 Euros: 21%
50,000 + Euros: 23%
Tax Declaration threshold
As these vary we can only quote them on consultation.
Wealth Tax is a progressive rate applied to the value of the assets in Spain. Each Community in Spain has it own rate and in Andalucia and Madrid there is a total exemption.
Declaration of assets abroad
If you are a tax resident in Spain you must declare assets abroad by means of “Form 720”
Form 720 has three reporting categories, based on bank accounts, investments and immovable property. You have to report all assets in a particular category if the value of your (directly or indirectly) total assets amount to over € 50,000. This only applies to assets located outside Spain.
Form 720 must be submitted before the end of March for assets that you possessed abroad on the 31/12 of previous year.
Penalties
As a resident of Spain, you are legally obliged to correctly report all your overseas assets on “Form 720”. There are severe penalties for failing to do so:
- For failing to file “ Form 720 or filing it incorrectly: €5,000 per infraction (minimum fine of €10,000 for each group of assets).
- For voluntary, late submission: €100 per item (minimum €1,500 for each group of assets).
- In addition, the undeclared assets are treated as unrealized capital gains and consequently included in the general base of the income tax return for the earliest year form 720 was established.
- An additional penalty of 150% of the unpaid income tax is also levied.
Tax evasion: if it exceeds €120,000 in a tax year it becomes a criminal offence in Spain and can result in a one to four years prison sentence.
