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Can someone explain the Spanish tax scheme to me please.

Posted: Wed Jul 03, 2019 7:38 pm
by booboo14
Say I make 30k. How much would take home be? I have found conflicting info online regarding income tax and social security. And I have to declare foreign assets, that worries me.


Posted: Fri Jul 05, 2019 3:41 am
by PsyGuy
Short Answer: 24% tax and 4.7% social security is 28.7% on €30K is €8610, you take home €21390/yr which is €1783/mth

Long Answer:
The tax year runs January too December, assuming youre on a western AY for your IS. Your first year you will be considered non resident, as you need to have 183 days of residency in a single year (where some ITs have had problems is thinking that they have to be continuous 183 day periods, and summer holiday breaks it up, it doesnt, any 183 day period of residence in Spain in a tax year makes you a resident, and they count a "day" as any portion of a day).

Your first year as a non-resident you will pay 24% (or 19% if an EU citizen) on only your Spanish income, there are no deductions.

After that your tax is based on two types of income general income (such as you get from your salary) and saving income (which include interest on account, dividends from stocks, etc, probably the biggest one for ITs is any income generated from rental property, as opposed to the sale of property which would be a capital gains tax)). They serve as the basis of essentially two ladders of income (as opposed to lumping them all together, and reaching higher tax brackets faster). Each of these ladders general and savings income have a national rate and a regional rate, but in most cases the rates are the same (possibly giving you 4 ladders: national general, regional general, national savings, regional savings), but thats an uncommon scenario so Ill leave it at 2.

As a resident you qualify for a personal allowance of €5500 if your married and filing together your spouse will add another €3400 (you can choose to file separately and each claim the €5500 allowance). You also will get an allowance for each child, the first is €2400, the second €2700, €4000 for the third and €4500 for the fourth) there are other allowances but they likely dont apply to an IT.
At the end of the year you add up your income for both ladders (general and savings) minus allowances for each ladder. The tax rates then for each ladder are as follows:


So thats the regular tax scheme, however theres another one that is available to ITs, the foreigner tax scheme. Within your first 6 months you must register for this tax scheme and you can maintain it for up to 10 years of residency. Its a flat tax of 24%, but there are no allowances. Its generally available if you work for an IS but not if you work in a municipal IS. You are only taxed under this option on income derived in Spain not world wide income.

So if you make €30K/yr, and you only have yourself your better off registering under the foreigner tax scheme at 24%.

Social security payments in Spain are about 28% overall, your employer pays 23.6% and you pay 4.7%

So adding it all up, 24% tax and 4.7% social security is 28.7%. On a €30K salary this is €8610 in tax, you take home €21390/yr, which is €1783/mth.

You must declare all foreign assets and income in Spain and youre taxed on all world wide income as a tax resident (though you generally do not pay tax twice). However, if you select the foreigner tax scheme while you do not pay tax on outside income or savings you must still declare them (as their is a limit of €600,000 at which point the tax rate is 45%). Its up to you how your going to report your foreign income, there really isnt a way for Spains tax authority to determine you have rental property income, dividends or even interest. Basically declare a foreign bank account with almost no balance and the saving income will be next to nothing.

Re: Can someone explain the Spanish tax scheme to me please.

Posted: Tue Jul 09, 2019 9:57 pm
by booboo14
Thanks for the response. Its the declaration of foreign assets that gets me. My savings are relatively small but I do have some dividends and for the Spanish government to tax them irks me. Anyways thanks for the detail. At least I can get a general idea of my pay now.


Posted: Wed Jul 10, 2019 11:06 am
by PsyGuy

If you go with the special foreigner tax scheme you only pay tax on Spanish sourced income, though you still have to declare, and in 10 years youll then have to deal with the standard tax scheme.
Again, you could just not declare, Spain isnt really interested in some IT theyre looking for big time wealthy tax avoiders.