Taxation on savings (ahorros) has changed and covers all non-work income e.g. shares and dividends, investments, annuities, sale of property, interest on bank accounts, pensions etc and the new flat rate is 18%. This is favourable to the previous system in which savings taxation was calculated alongside income taxation and, for the high earners, could be as much as 43%. The Spanish Government is encouraging us to save.

Under the new system income tax is calculated under the general section and savings or investment income under a separate ahorros section.

If you are a salaried worker earning less than 22,000 euros you do not need to complete a tax declaration yourself, the Hacienda (Tax Agency) will do it automatically for you as they deduct and withhold the monies from your gross salary. This means that many expats do not have to worry about tax declarations or employing an Asesor Fiscal (Tax Consultant) for this purpose. If the Hacienda has overcharged you, you should receive a refund via the Devolucion Rapida (Rapid Refund) plan. If you wish to you can request a borrador (draft declaration) and the Hacienda can prepare this and send it to you.

All Autónomos (self employed workers) must make their own income tax declaration and quarterly IVA (Impuesto Valor Añadido – VAT) declarations.

If you earn over 22,000 euros it is easier to prepare your tax return using the Hacienda’s own computer program PADRE (Programa de Ayuda a la Declaración de la Renta).

If you have residencia, or you live here for over 6 months each year, you are liable for Spanish tax on your worldwide income. However you should not be subjected to double taxation e.g. you do not have to pay tax on a British pension in both the UK and Spain as Spain has agreements in place to avoid this and relief is available through a programme called Compensación Extranjera (Foreign Compensation).

If you are here as a tourist (up to 6 months of the year) and do not have residencia you are still liable to pay Spanish tax on income generated here e.g. letting out a beachside apartment or a villa.

Red Tape can help you with your tax declaration by:

1. Requesting statements from all your sources of income
2. Making an appointment to use PADRE and have a member of the Hacienda’s staff on hand to advise
3. Completion of the tax return and written acknowledgement from the Hacienda that they accept it
4. Calculate allowances for you such as those for children, special needs children, one-parent families, having an elderly relative living with you, mortgage deductions
5. Avoidance of double taxation from the UK and Spain.

Tax declarations must be submitted in May or June each year.

If you own more than one property in Spain then Valor Catastral (income tax on additional property) is payable at a rate of 2% of the official rated value of your investment properties - which can be found on your IBI (Impuesto sobre Bienes Inmuebles - annual real estate tax).

The Patrimonio tax (wealth tax) is Spain’s tax on capital assets. A resident must declare worldwide assets while a non-resident declares only assets in Spain. Taxable assets include real estate and cars, yachts, jewellery, works of art, antiques etc. A resident is exempt on around 250,000e of assets so most do not pay Patrimonio, however if you have over one million euros of assets you may find that you have a Patrimonio liability of some 1000e/month.

Let Red Tape tie up a solution today

Contact: Jose Ensenat on 661 341 568 or at jose@redtape.es