Whether you’re planning to retire, work remotely, or buy property in Spain, understanding how Spanish taxes affect Australians is essential. Once you spend enough time in Spain or establish a home base there, you may become a Spanish tax resident, triggering a wide range of legal and tax obligations.
In this article, Borderless Lawyers explains how tax residency works, how Australians are taxed in Spain, what assets must be declared, and how to avoid double taxation with the help of legal guidance.
🏠 When does an Australian become a Spanish tax resident?
You are considered a tax resident in Spain if you meet any of the following:
| Condition | What it means |
|---|---|
| Spend more than 183 days in Spain during a calendar year | Automatic tax residency |
| Have your main economic interests in Spain | Your primary income or business is in Spain |
| Your spouse or dependent children live in Spain | Presumed residency unless proven otherwise |
📅 Spain’s tax year runs from January 1 to December 31.
💰 Spanish taxes Australians may face
If you’re classified as a tax resident, Spain taxes your worldwide income and certain assets. Here’s a breakdown:
✅ 1. Personal Income Tax (IRPF)
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Progressive rates from ~19% to 47%, depending on region and income
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Includes salary, business income, investment returns, pensions, and rental income
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Tax deductions or treaty relief may apply to Australian income
✅ 2. Wealth Tax (Impuesto sobre el Patrimonio)
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Applies to residents with net assets over €700,000 (after allowances)
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Tax rates range from 0.2% to 2.5%, depending on wealth and region
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Includes property, bank accounts, shares, crypto, etc. — worldwide
✅ 3. Real Estate Taxes
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IBI (Impuesto sobre Bienes Inmuebles): Annual local tax based on cadastral value
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Non-resident income tax (if renting): 24% on gross rental income (19% for EU/EEA residents)
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Capital Gains Tax: 19% for residents on property sales (with exemptions for reinvestment)
🧾 Modelo 720 – Foreign Asset Declaration
If you’re a Spanish tax resident and hold assets abroad (in Australia or elsewhere) valued at more than €50,000 in any of the following categories, you must file Modelo 720:
| Category | Examples |
|---|---|
| Bank accounts | Westpac, CBA, NAB, ANZ accounts |
| Securities & shares | ETFs, stocks, super funds, crypto |
| Real estate | Property in Australia |
📅 Filing deadline: By March 31 each year for the previous tax year.
💡 Penalties for non-compliance used to be severe but are still serious — legal guidance is strongly advised.
🌐 Avoiding double taxation – Australia-Spain treaty
Australia and Spain have a Double Taxation Agreement (DTA). This treaty ensures that Australians don’t pay tax twice on the same income.
🔁 Key features:
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Australian pensions or superannuation may be taxed only in Spain (if resident)
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Income already taxed in Australia can often be credited against Spanish taxes
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You must obtain tax residency certificates and maintain full documentation
🧾 Example: A retired Australian in Spain with rental income in Sydney may be taxed in both countries, but avoid overpayment through treaty relief.
🚨 Declaring departure from Australia
If you plan to live in Spain long-term, you may need to:
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Notify the Australian Taxation Office (ATO) of your change in residency
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File a final tax return declaring worldwide income
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Pay Capital Gains Tax (CGT) on deemed disposal of some assets
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Cease participation in Medicare and other tax-resident-only systems
📌 You should seek legal coordination between Australian and Spanish advisors for smooth tax planning.
⚠️ Common tax mistakes Australians make in Spain
| ❌ Mistake | 💥 Risk |
|---|---|
| Assuming short stays don’t trigger tax residency | Can lead to surprise audits and back taxes |
| Not declaring Australian property or investments | Modelo 720 penalties |
| Double paying tax on pensions or rental income | Missed treaty benefits |
| Failing to separate personal & business income | Overpayment or legal violations |
| Late filing or bad translations | Rejections, fines, and legal headaches |
👨⚖️ How Borderless Lawyers Helps Australians Stay Tax Compliant
✔️ Determine whether you are (or will become) a Spanish tax resident
✔️ Assist with Modelo 720 and tax return filings
✔️ Review your income sources and apply treaty relief
✔️ Advise on wealth tax and inheritance planning
✔️ Coordinate with your Australian accountant or tax lawyer
✔️ Help you stay compliant while protecting your wealth and privacy
✅ Everything explained in plain English, tailored for Australians.
📞 Call to Action
Moving to Spain from Australia? Already living here and unsure about your tax status?
Let us handle your compliance so you can enjoy your new life — worry-free.