Guide to taxes in Spain for foreign residents and non-residents

1 February 2018

This brief article will help explain the basics of filing taxes in Spain, including Spanish taxes for non-residents, foreign residents, and information on Spanish tax deductions and VAT.

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Few things are as byzantine as tax legislation, and this seems to be true regardless of the country in which you must file taxes. Taxes in Spain may feel foreign in every sense of the word to residents and non-residents from outside the country. This brief article will help explain the basics of filing taxes in Spain, including Spanish taxes for non-residents, foreign residents, and information on Spanish tax deductions and VAT.

Who must file a Spanish tax return?

First things first: how do you know if you have to file a Spanish tax return or not? The answer is complex, with many rules and almost as many exceptions. Generally speaking, a person who earns income on Spanish territory must declare this to the Agencia Tributaria, the government tax office. This is true for both residents and non-residents (more on that later).

There are a few circumstances in which you may not need to worry about taxes in Spain. Some foreign residents whose primary purpose for being in the country is education, training, research, etc. do not have to file a Spanish tax return provided their income is below a certain threshold. Also, after your first year of tax residency, you may not have to file if your income from various sources meets certain requirements.

It is also important to realize that Spain has agreements with many countries to prevent foreigners from being taxed twice on the same income, including the United States, Australia, United Kingdom, Germany and many others. Working out which portions of your income must be taxed in each country can be tricky—a Spanish tax specialist can help ensure you comply with all tax laws without paying more than you need to.

Taxes in Spain for foreign residents

Before you can determine which forms you need to file, you need to know whether you are considered a Spanish resident for tax purposes. If you spend more than half the year in Spain (183 days a year), you will usually be considered a resident. Again, there are exceptions depending on your exact personal (or business) situation, so the safest route is to consult a professional who is familiar with Spanish tax code.

A typical case would require you to file the form called “Modelo 30” to register yourself as a taxpayer in Spain, and then declare your income using Modelo 100. The most obvious difference between paying taxes in Spain as a resident vs. as a non-resident is that you must pay Spanish taxes on income you have earned anywhere in the world (unless it is subject to one of the many exceptions in a double-taxation relief agreement), whereas non-residents are only required to declare income they earn while in Spain. There are also different rates and deductions depending on your residency status.

Spanish taxes for non-residents

As with foreign residents, non-residents who earn income in Spain will need to register with the tax office—in this case, using Modelo 149—and usually a Modelo 150 for income taxes. If you have earned income in some other country that same year, it usually does not need to be declared on your Spanish tax return. However, it will probably be subject to taxes in whatever country it was earned in.

Non-residents pay a flat rate on their income tax (unlike residents, whose income is taxed on a progressive scale). You are also not eligible for the Spanish tax deductions that residents may take advantage of.

Where things really start to get complicated is other assets and sources of income. Even non-resident property owners who do not earn rental income from their property must pay property taxes, for example. You may be subject to taxes on rental income, capital gains, wealth tax, inheritance and gifts, etc. This is why, when filing your Spanish taxes for 2018 and 2017, it is best to have an expert on your side to help you navigate this sea of paperwork.