The income tax campaign started on the 6th April and finishes on the 30th June.
Anyone tax resident in Spain (more than 183 days) is obliged to declare worldwide income and wealth to the Spanish tax authorities.
Obligation to file an income tax return
Although we recommend you contact us to confirm if you have to file a return, the general obligation is applied to:
- Any person who receives only one source of employment/pension income taxed at source that exceeds 22,000 euros during the calendar year or if they receive various sources of employment/pension income that exceeds 14,000 euros. In the latter case, this will be an obligation so long as the rest of the income exceeds 1,500 euros in one year.
- Anyone that has sold a property.
- Any person who has received dividends, interest, capital gains for the purchase-sale of shares exceeding 1,600 euros. This amount is reduced to 1,000 euros if no tax has been withheld.
- Any person who has received rental income.
- Any person who has obtained full income from work, capital (liquid or property) or economic activities in 2021 exclusively, as well as capital gains, whether or not subject to withholding, up to a combined maximum of 1,000 euros per year and capital losses of less than 500 euros, in individual or joint taxation.
Below are the National Income Tax rates issued by the central Government:
|Taxable income bands (euros)||Tax Rate|
|Up to 12,450||19%|
|12450 – 20,000||24%|
|20,000 – 35,000||30%|
|35,200 – 60,000||37%|
|60,000 – 300,000||45%|
Each autonomous community may amend the income tax rates so best to double check on what they are where you live. Income subject to the above tax rates includes, working/salaried income, pension income, profits/losses generated from businesses carried out as a sole trader.
Allowances applicable to reduce your tax liability:
|Minimum personal allowance||5.550,00 €|
|Personal allowance for 65 yrs and over||6.700,00 €|
|Personal allowance for 75 yrs and over||8.100,00 €|
Earned income allowance
|11,250 and under||3.700,00 €|
|9,280.01 to 13,260||3,700 -1.15625% x (earnings – 11250)|
|First child||2.400,00 €|
|Second child||2.700,00 €|
|Third child||4.000,00 €|
|Fourth child||4.500,00 €|
|Additional allowance for each child under 3 yrs||2.800,00 €|
|Up to 65% incapacity||3.000,00 €|
|from 65% – 100%||9.000,00 €|
|Additional allowance if third party care required||3.000,00 €|
The percentage of incapacity is certified by the health authorities in Spain and can only be applied when this has been officially recognised.
Additional allowance for elderly parents living with you and their income is less than 8,000 euros.
|Over 75||2.550,00 €|
Capital Gains and Savings Tax
|Savings income (euros)||Tax payable||Rest of savings income||Tax rate|
|0||– €||6.000,00 €||19%|
|Upto 6000||1.140,00 €||44.000,00 €||21%|
|6,000 – 50,000||10.380,00 €||150.000,00 €||23%|
A new tax bracket has been incorporated for any savings income of 200,000 euros and above. Income subject to the above tax rates include, capital gains, dividends, bank interest.
Law Beckham tax rates
As from the 1st January 2021, those employees who have been transferred to Spain and apply Law Beckham will be subject to the following tax brackets:
|Working income in Spain||Tax rate|
|Upto 600.000 euros||24%|
|from 600.000,01 euros||47%|
New limits to the reduction of tax burden for private pension contributions
Up until the end of 2021, you have been able to obtain an additional allowance of up to 8.000 euros when you pay this into a private pension plan. As from 2022, this has been reduced to 2.000 euros. The allowance of 2.500 euros for pension contributions for your spouse who has earnings less than 8.000 euros has been reduced to 1.000 euros as from the 1st January.
New Tax Credits
- For works on energy efficiency improvements to your habitual residence or second property that is being rented to a tenant who uses it as their habitual residence. These works must be carried out between the 6th October 2021 and 31st December 2022. There are 2 types of improvements:
1) Reduction in heating and refrigeration – the credit will be the amount you have invested with a maximum of 5.000 euros and the credit will be 20% of the investment. The reduction must be at least 7%.
2) Reduction in primary energy consumption – the credit will be the amount you have invested with a maximum of 7.500 euros and the credit will be 40% of the investment. The reduction must be at least 30%.
You must obtain an energy certificate from an authorised technician before and after the improvements for both cases.
- For personal damages caused by the La Palma volcano.
- For investment in new companies. The credit is 30% of up to a maximum investment of 60.000 euros. The shares in the business must have been acquired by you in the moment the company was established or via an increase in share capital taken place within three years of the company being established. The share must remain in the Company for a further three years.
Wealth tax is levied on the worldwide net wealth of tax residents in Spain held on the 31st December. The net wealth is the difference between the value of gross assets and the total deductible debts.
Obligation to file a wealth tax return
The obligation to file a wealth tax return applies to:
- Those taxpayers whose net wealth exceeds 700,000 euros. There is also an exemption of 300,000 euros on the taxpayer’s habitual residence.
- When the above does not apply, the value of their property or rights, determined in accordance with the tax regulations, is greater than 2,000,000 euros. (includes all owned property and rights, whether or not they are exempt from the tax and calculated without considering any burdens or encumbrances that reduce their value or the personal obligations or debts for which the taxpayer is answerable.)
Wealth tax rates
Below is a table of the tax brackets applied however these may vary slightly in each Autonomous Community as they have the powers over the tax-free threshold, the tax rate, deductions and rebates:
|Wealth tax bands (euros)||Tax Rate|
|0 – 167.129,45||0,2%|
|167.129,45 – 334.252,88||0,3%|
|334252,88 – 668.499,75||0,5%|
|668.499,75 – 1.336.999,51||0,9%|
|1.336.999,51 – 2.673.999,01||1,3%|
|2.673.999,01 – 5.347.998,03||1,7%|
|5.347.998,03 – 10.695.996,06||2,1%|
|10.695.996,06 and above||3,5%|
General exemptions from wealth tax:
Spanish Historical Heritage Assets
Assets forming part of the Historical Heritage of the Autonomous Communities
Household furnishings (does not include jewellery, furs of a sumptuary nature, vehicles, vessels and aircraft, art objects, antiques).
Intellectual and industrial property rights
Securities owned by non-residents
Business and professional assets.
Participating interests in certain entities
Taxpayer’s principal residence (up to 300,000 euros)
Please do not hesitate to contact us and we will be please to assist, wherever you are in Spain.
Information by E.B.F Consulting S.L. E.B.F Consulting has been providing tax and accounting services to expatriates in Europe since 1999. Office is based in Lanzarote, Spain. Visit www.ebfconsulting.com for more details. Copyright© E.B.F Consulting 2022 All Rights Reserved.