Income Tax (Renta)
The tax year in Spain runs from January to December, and your tax return is due a year in arrears and you file your return between 1st May and 30th June. You have the option to pay 60% before the end of July and the balance later in the year. For most ex-pats, who are retired, this means paying your tax in one or two installments. Employees on the Spanish Equivalent of PAYE, will have tax deducted by their employers. Generally, "autonomos" or the self-employed will file a quarterly return.
At present, if your income is less than approximately €8,000 you do not have to file a return, but it is always worth checking this out with a tax accountant or independent financial adviser. Your worldwide income is taken into account, and even though those with UK civil pensions, such as Army, Navy and RAF, police and Civil Service have to pay their tax in the UK, credit will be given in Spain for tax already paid.
If you spend more than 183 days every year in Spain, you have to register as tax resident, you cannot choose to be taxed elsewhere.
There are personal allowances as in the UK, however, when it comes to the annual tax declaration, there are different ways to assess the most beneficial way to make your declaration, particularly when one party does not have sufficient income to warrant a declaration. Unlike the UK a joint husband and wife declaration does not give both the full personal allowances, and it can work out much less of a burden to declare jointly, but only using the income for the person, who earned or received income higher than the allowances. If a couple decided to declare all income jointly, only a small additional allowance would be given to the husband/wife, which could mean paying twice as much as not declaring the husband/wife's income.
It makes sense, therefore, to find out from someone who speaks your language, what is best for you.I am sure no-one wants to pay more than they have to, through not having the options explained to them.
Inheritance Tax
Spanish "Succession Tax" works in an entirely different way to the UK, particularly between husband and wife.
In Spain, your worldwide assets are transferred to your spouse on death, in accordance to your will and how the assets are owned.
For example if you jointly own a house with no mortgage valued at say €200,000, each party is deemed to own half.
If you are not registered as tax resident in Spain, which you must do if you live 183 days and more each year, you will only get €15,956 allowance against the inherited half of the house, so you will have to pay tax on €84.044, which will be approximately €9,838. If your in the Spanish tax system and have been for 3 years, you earn higher allowances, depending in which province you live. In Murcia you get an additional €50,000 on top of the €15,956. In Valencia, the basic allowance is now €40,000 and between resident spouses and resident children, there is an allowance of 99% against the tax due. So on the example above the tax liability would be approximately €70.
Non-married couples are treated as "friends" so do not get the full allowances UNLESS they obtain a certificate of civil partnership from the local town hall. I have heard that this can cost €2,000, but in the long run it could save even more tax for the survivor on first death.
The tax year in Spain runs from January to December, and your tax return is due a year in arrears and you file your return between 1st May and 30th June. You have the option to pay 60% before the end of July and the balance later in the year. For most ex-pats, who are retired, this means paying your tax in one or two installments. Employees on the Spanish Equivalent of PAYE, will have tax deducted by their employers. Generally, "autonomos" or the self-employed will file a quarterly return.
At present, if your income is less than approximately €8,000 you do not have to file a return, but it is always worth checking this out with a tax accountant or independent financial adviser. Your worldwide income is taken into account, and even though those with UK civil pensions, such as Army, Navy and RAF, police and Civil Service have to pay their tax in the UK, credit will be given in Spain for tax already paid.
If you spend more than 183 days every year in Spain, you have to register as tax resident, you cannot choose to be taxed elsewhere.
There are personal allowances as in the UK, however, when it comes to the annual tax declaration, there are different ways to assess the most beneficial way to make your declaration, particularly when one party does not have sufficient income to warrant a declaration. Unlike the UK a joint husband and wife declaration does not give both the full personal allowances, and it can work out much less of a burden to declare jointly, but only using the income for the person, who earned or received income higher than the allowances. If a couple decided to declare all income jointly, only a small additional allowance would be given to the husband/wife, which could mean paying twice as much as not declaring the husband/wife's income.
It makes sense, therefore, to find out from someone who speaks your language, what is best for you.I am sure no-one wants to pay more than they have to, through not having the options explained to them.
Inheritance Tax
Spanish "Succession Tax" works in an entirely different way to the UK, particularly between husband and wife.
In Spain, your worldwide assets are transferred to your spouse on death, in accordance to your will and how the assets are owned.
For example if you jointly own a house with no mortgage valued at say €200,000, each party is deemed to own half.
If you are not registered as tax resident in Spain, which you must do if you live 183 days and more each year, you will only get €15,956 allowance against the inherited half of the house, so you will have to pay tax on €84.044, which will be approximately €9,838. If your in the Spanish tax system and have been for 3 years, you earn higher allowances, depending in which province you live. In Murcia you get an additional €50,000 on top of the €15,956. In Valencia, the basic allowance is now €40,000 and between resident spouses and resident children, there is an allowance of 99% against the tax due. So on the example above the tax liability would be approximately €70.
Non-married couples are treated as "friends" so do not get the full allowances UNLESS they obtain a certificate of civil partnership from the local town hall. I have heard that this can cost €2,000, but in the long run it could save even more tax for the survivor on first death.
Everything in Spanish Financial Life is driven by Tax. Ignore it at your peril
Spanish Taxation
[Home] [Taxation] [Mortgages] [Investments] [Life Assurance] [Contact Us] [Useful Links] [Press Articles]
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
Address:
Buzon 143
Calle Mimosas 16
Montebello
Algorfa
03176
Alicante
Buzon 143
Calle Mimosas 16
Montebello
Algorfa
03176
Alicante