Spain: What Tax Consequences Can Follow After Obtaining a Residence Permit

The Spanish tax system

Spain's tax system has a multi-level structure. It consists of state, regional, and municipal taxes. The contributions collected at the state level are governed by the 2003 Tax Law, which sets mandatory taxes and rates for both residents and non-residents of Spain.

When discussing the Spanish tax system, it is necessary to explain the concept of a tax resident. This category covers people who live in the country for at least 183 days a year or who have significant ties to it (whether through business or close relatives). Residents are taxed on the same basis as Spanish citizens. Non-residents are taxed under different rules and rates.

Most goods and services in Spain are subject to a 21% VAT rate. However, reduced rates apply to certain sectors, such as passenger transport, building renovation, and food production.

The income tax rate varies depending on income and the taxpayer's status. Non-residents are taxed at a flat rate of 24%, while for EU residents the rate is reduced to 19%.

Spain applies a progressive income tax scale. This means the more you earn, the larger the share you pay to the state treasury:

income up to €12,450 is taxed at 19%;

• from €12,450 to €20,200 - at 24%;
• from €20,200 to €35,200 - 30%;
• from €35,200 to €60,000 - 37%;
• from €60,000 to €300,000 - 45%;
• above €300,000 - 47%.

What tax consequences can follow after obtaining a residence permit

Obtaining a residence permit in Spain opens up a substantial list of benefits for foreigners, which is especially valuable for people who are not citizens of the EU or the Schengen area.

We already discussed the features of the Spanish tax system above. Now let's look in detail at what amounts a resident with a Spanish residence permit needs to pay:

Personal income tax (IRPF). Spanish residents are taxed on their worldwide income, including income earned both in Spain and abroad. Income tax rates are progressive, ranging from 19% to 47%.

Wealth tax. Spanish residents whose net worth exceeds €700,000 are required to pay wealth tax. This tax is calculated on a progressive scale ranging from 0.2% to 3.5%.

Here is an example. A foreign national who has obtained a residence permit owns Spanish real estate worth €500,000. In addition, they hold savings of €250,000 in their bank account. Their net worth totals €750,000, and they will be taxed on wealth at a rate of 0.2%.

In this case, whether or not there is rental income from the property makes no difference. A resident who personally lives in a premium property must still pay this tax.

Property tax (IBI). It is paid annually and calculated at the rate in force in the specific region of the country. The IBI rate ranges from 0.4% to 1.1%. The tax base used is the cadastral value of the property.

VAT is a tax levied at every stage of the production and sale of various categories of goods. The maximum VAT rate in Spain is 21%. The VAT rate for businesses depends on which category of goods the company sells or produces.

As in any other country with a sound economy, Spain has a tax on the sale of real estate: sellers of a property must pay the state 19% of the property's cadastral value.

It is also worth noting that Spanish residents may qualify for tax relief and deductions that can lower their overall tax liability. In addition, people living in certain regions of Spain may benefit from lower tax rates.

Help from MIRBEZVIZ and why it's worth reaching out to us

MIRBEZVIZ provides professional assistance to people planning to immigrate to EU countries, as well as to those looking to broaden their horizons.

Once you obtain a residence permit in Spain, you can stay in the country 365 days a year without needing to leave every 90 days. You will also be able to open bank accounts, use lending services including mortgages, and travel freely across the Schengen countries. Down the line, you can look into applying for Spanish citizenship.

Our work with clients seeking a residence permit or citizenship in Spain begins with a thorough analysis of their needs and personal circumstances.

Thanks to the extensive experience and professionalism of our licensed specialists, every stage of the immigration process is worked through in detail. Every step is set out in a written agreement, which ensures transparency and reliability throughout. We aim to make the residence-permit process as clear and secure as possible.

Our services come with a range of advantages. The MIRBEZVIZ team:

Supports you at every stage of the procedure, from filing documents through to receiving the final document.

Provides support at every step, resolving issues as they come up and offering professional guidance. We take care to ensure documents are prepared correctly and that confidentiality is maintained throughout our work together, backed by the relevant agreements.

We take on a case only when we are confident we can offer real, professional help. Our recommendations are always based on a detailed analysis of the specific situation, which allows us to propose options suited to your goals and priorities.

We have deep knowledge of the real estate market across different countries and keep our information and statistics up to date. We work closely with partners and real estate specialists in Spain, which allows us to offer some of the most attractive and liquid properties available.

We closely track document submission deadlines and respond promptly to requests from government authorities. We are available around the clock to answer any questions during the application process. Our main goal is to make the process of obtaining citizenship or a residence permit as easy as possible for you.

Working with MIRBEZVIZ specialists gives you a reliable partner who will support you at every stage, providing professional assistance along the way. We know how to make the immigration process comfortable and successful.