If you’re a Canadian living in Spain — whether as a resident, retiree, remote worker, or property owner — you’ll likely be subject to Spanish tax rules. But when do you officially become a tax resident, and how are your Canadian assets, income, or pensions treated?
In this guide, Borderless Lawyers explains how Spanish tax residency works for Canadians, what taxes you may owe, how to avoid double taxation, and what compliance steps you must take to avoid penalties.
🧍♂️ When does a Canadian become a tax resident in Spain?
According to Spanish tax law, you are considered a resident for tax purposes if:
| Condition | What It Means |
|---|---|
| You spend more than 183 days in Spain per calendar year | You are automatically a tax resident |
| Your main economic interests are in Spain | Income, work, or business ties |
| Your spouse and/or minor children live in Spain | Even if you are temporarily abroad |
📅 Spain uses the calendar year (January–December) as its fiscal year.
💰 Taxes Canadian residents may owe in Spain
If you become a Spanish tax resident, you are taxed on your worldwide income and may also be subject to wealth and asset-reporting obligations.
Here’s what you might be taxed on:
✅ Income Tax (IRPF)
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Applies to all worldwide income (employment, pensions, rental, investments)
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Progressive rates: approx. 19% to 47% depending on income level and region
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Tax credits may apply for foreign tax paid
✅ Wealth Tax (Impuesto sobre el Patrimonio)
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Applies to high-net-worth individuals (net assets typically over €700,000)
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Rates vary by region and scale (0.2% to 2.5%)
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Includes global assets: real estate, investments, vehicles, crypto, etc.
✅ Property Tax (IBI)
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Annual municipal tax on real estate in Spain
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Based on cadastral (government-assessed) value
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Varies by location — typically €200–€2,000/year
📝 Foreign asset reporting – Modelo 720
If you’re a Spanish tax resident and own assets outside Spain valued over €50,000 (combined across categories), you’re legally required to file the Modelo 720.
| Assets to Report | Examples |
|---|---|
| Bank accounts abroad | TD, RBC, Scotiabank, etc. |
| Real estate outside Spain | Properties in Canada |
| Stocks, bonds, mutual funds | Held in Canadian brokerages |
| Insurance or pensions | RRSP, TFSA, private pensions |
📆 Filing Deadline: Typically by March 31 each year for the previous calendar year.
💡 Severe penalties used to apply for failure to file — now moderated, but still serious. Legal advice is highly recommended.
🌐 Double taxation: Will I pay taxes in both Spain and Canada?
Not necessarily. Canada and Spain have a double tax treaty that avoids dual taxation on the same income.
🔄 Key mechanisms:
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Income taxed in one country is often credited in the other
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Spanish residents may deduct taxes paid to the CRA
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Canadian pension income may be partially or fully taxed in Spain, depending on type
🧾 Example: A Canadian retiree living in Spain pays tax in Spain on their CPP or private pension, but may avoid CRA taxes by proving foreign residency.
✅ We help Canadians apply this treaty properly to avoid being overtaxed.
🧾 What about declaring departure from Canada?
If you plan to live in Spain long-term, you may need to file a departure declaration with the CRA and indicate your non-resident status in Canada.
Doing this:
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Stops most Canadian tax obligations
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Excludes you from future Canada health coverage
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Requires you to declare Canadian assets (deemed disposition) at the time of exit
📌 Residency ties (e.g., bank accounts, property, dependents) may affect your non-residency status. Legal advice is crucial.
⚠️ Common tax mistakes Canadians make in Spain
| ❌ Mistake | 💥 Consequence |
|---|---|
| Ignoring 183-day rule | Unintended tax residency in Spain |
| Not filing Modelo 720 | Risk of fines and investigations |
| Not declaring Canadian pensions | Underreporting income |
| Keeping strong ties to Canada | CRA may still treat you as resident |
| Filing taxes late or incorrectly | Penalties and stress |
👩⚖️ How Borderless Lawyers helps Canadians in Spain
✔️ Tax residency analysis – Spain vs. Canada
✔️ Assistance filing Modelo 720 and Spanish tax returns
✔️ Double taxation relief advice under the Spain–Canada treaty
✔️ Property tax and rental income declarations
✔️ Coordination with Canadian accountants (if needed)
✔️ Guidance for retirees, remote workers, and high-net-worth clients
✔️ Legal support in English and Spanish
✅ We ensure you’re tax-compliant and legally protected in both countries.
📞 Call to Action
Confused about your tax residency or foreign asset obligations in Spain?
Let our cross-border legal team handle your compliance, so you don’t have to.