Overview: How Income Tax Works in Spain
Spain’s personal income tax system is known as IRPF (Impuesto sobre la Renta de las Personas Físicas). All residents and non-residents earning Spanish-sourced income are subject to taxation, though the rates and rules vary.
At Borderless Lawyers, we provide strategic advice to:
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🧑💼 Expats living in Spain
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💼 Foreign business owners
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💻 Digital nomads and remote workers
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🏡 Property investors and landlords
🏠 Resident vs Non-Resident Income Tax
Your tax residency determines how you are taxed in Spain.
🧾 Resident Taxpayers
You’re a tax resident in Spain if:
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You stay 183+ days per calendar year in Spain, OR
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Your main economic interests are in Spain
Residents pay income tax on worldwide income.
🌍 Non-Resident Taxpayers
If you’re not a tax resident:
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You only pay tax on Spanish-sourced income
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No tax on foreign income
🔍 Tax residency is determined yearly and audited by the Spanish Tax Agency (AEAT).
📊 Income Tax Rates in Spain
📍 Resident Tax Rates (Progressive, State + Regional)
| Income Range (€) | Tax Rate (%) |
|---|---|
| Up to €12,450 | 19% |
| €12,450 – €20,200 | 24% |
| €20,200 – €35,200 | 30% |
| €35,200 – €60,000 | 37% |
| €60,000 – €300,000 | 45% |
| Over €300,000 | 47% |
✅ Regions may add slight variations (e.g., Catalonia, Madrid).
🌐 Non-Resident Tax Rates
| Income Type | Flat Rate (%) |
|---|---|
| Employment Income | 24% (or 19% for EU/EEA residents) |
| Rental Income | 24% (or 19%) |
| Capital Gains | 19% |
| Dividends/Interest | 19% |
💡 Non-residents cannot deduct expenses, except EU/EEA citizens.
💻 Digital Nomad Tax Regime
Spain’s new Digital Nomad Visa offers tax advantages:
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Pay a flat 24% tax on income up to €600,000 for the first 5 years
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No global income tax
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Must work remotely for foreign clients or employers
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Must not have lived in Spain in the prior 5 years
📌 You can apply within Spain or from abroad via Spanish consulates.
🧮 Other Taxable Income
| Type of Income | Taxed? | Notes |
|---|---|---|
| Employment | ✅ | PAYE system, employer withholds |
| Self-employment/freelance | ✅ | Must register with Hacienda |
| Rental income | ✅ | Subject to deductions if resident |
| Dividends and capital gains | ✅ | 19% to 28% rates |
| Pensions | ✅ | Taxed based on origin & treaties |
📆 Filing Obligations & Deadlines
| Obligation | Resident | Non-Resident |
|---|---|---|
| Annual Tax Return | ✅ (Modelo 100) | ✅ (Modelo 210) |
| Filing Deadline | April – June | Quarterly |
| Form for Foreign Assets | Modelo 720 (if assets > €50,000) | ❌ |
⚠️ Penalties for late filing or misreporting can be severe.
🌐 Double Tax Treaties
Spain has over 90 treaties to avoid double taxation. Key countries include:
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🇺🇸 USA
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🇬🇧 UK
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🇫🇷 France
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🇦🇺 Australia
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🇩🇪 Germany
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🇨🇦 Canada
🛡️ These treaties help reduce withholding taxes on dividends, interest, and pensions.
🧑⚖️ How We Help with Spanish Income Tax
At Borderless Lawyers, we support:
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✅ Residency and digital nomad visa tax planning
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✅ Non-resident returns (Modelo 210)
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✅ Declaring foreign income and assets
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✅ Tax audits and dispute resolution
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✅ Reducing double taxation under treaties
📊 Personalized guidance for employees, retirees, and remote professionals.
💬 Real Case: Canadian Retiree in Valencia
A Canadian client receiving pension and rental income needed clarity on Spanish tax residency. We:
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Confirmed residency under treaty rules
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Structured pension withdrawals for tax optimization
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Declared real estate income with allowable deductions
✅ Result: Fully compliant and 28% lower effective tax rate.
🚀 Start Planning Your Taxes in Spain
Avoid overpaying and stay fully compliant. Whether you live, invest, or work in Spain, Borderless Lawyers provides expert tax support tailored to your situation.