Rates and allowances

These notes are intended as a guideline to income tax in Spain and should not be used as a substitute for proper professional advice. Please contact us and we will be happy to assist you.

1.

Income Tax Rates for the year ended 31st December 2017

From (Euros) To (Euros) State tax % Regional tax % Total tax %
0 12,450 9.50 9.50 19.00
12,450 20,200 12.00 12.00 24.00
20,200 35.200 15.00 15.00 30.00
35,200 60,000 18.50 18.50 37.00
60,000 + - 22.50 22.50 45.00
2.

Capital Gains Tax Rates

Residents
First 6,000 Euros: 19%
6,000 - 50,000 Euros: 21%
50,000 + Euros: 23%
Non-residents 19%
3.

Company Tax Rates

Please see our company tax page.

4.

Wealth Tax (Impuesto sobre el Patrimonio)

After having been previously abolished in Spain on 1st January 2009, Wealth Tax then re-introduced on a temporary basis for the years 2012 and 2013, and then again from 2015 onwards.

The intention of the Government is to abolish this tax again from 2017 onwards, however given their past actions one cannot be sure what to expect ! The current tax-free allowance is 700k Euros plus a further 300k Euros agains the value of the taxpayer´s main residence.

5.

Allowable Depreciation

Straight line method can be used for any depreciable asset. Reducing balance method can be used for new tangible assets with estimated useful life of at least 3 years



Maximum straight Line rate % Maximum Useful Life years
Buildings and other constructions 3 68
Tools 30 8
Motor vehicles 16 14
Fixtures & Fittings / Office Equipment 10 20
Machinery 12 18
Computers 25 8


Depreciation must be recorded in accounts to be deductible. And within above limits, except: Accelerated allowance may be granted for new assets located in Spain, where it can be demonstrated that actual depreciation took place.

6.

Other significant taxes

For holding companies of Spanish real estate which are resident in non-treaty countries, an annual "penalty tax" is payable which is calculated as 3% of the cadastral value of the property.

7.

Income Tax Declaration threshold

If either of the limits below are exceeded, the taxpayer must file an annual tax return.

Income from employment: 22,000 Euros
Capital gains and savings income: 1,600 Euros
Rental income: 1,000 Euros
8.

VAT (IVA - Impuesto sobre el Valor Anadido)

Standard rate (Tipo General) 21%
Reduced rate (Tipo Reducido) 10%
Super-reduced rate (Tipo Superreducido) 4%
  • Payment is quarterly, in general within 20 days of the month end;
  • A monthly regime applies for businesses with turnover above 6 million Euros.

There is a pro-rated partially exempt calculation for businesses making both taxable and exempt supplies.

Exemptions

  • Public services
  • Financial transactions
  • Public postal services
  • Insurance Transactions
  • Medical and health service
  • Conveyance of land designated as not for housing
  • Welfare
  • Resale of property
  • Education
  • Private lettings
  • Sport
  • Exemptions for internal transactions
  • Certain cultural activities
  • Exemptions for exports

Deductibility of VAT

VAT incurred in relation to taxable goods and services is recoverable.

Non-recoverable VAT

In the case where a motor vehicle has mixed business and personal use, 50% of the motor vehicle cost and related expenditure is not recoverable for Spanish VAT purposes. VAT on travelling expenses which are not deductible for corporation or income tax purposes is not recoverable.

Special Systems

  • Agriculture, stock breeding and fishing
  • Second-hand goods, art objects and antiques
  • Travel agents
  • Retail trade - recargo de equivalencia - under this system, net VAT is paid to suppliers, rather than the Spanish Tax Office.
9.

VAT on property

New homes - VAT
AJD (stamp duty)
Second hand homes - ITP (property transfer tax)
AJD
Commercial premises & plotsVilla plots from promoter - VAT
AJD
ITP/ AJD rates can vary according to area (Comunidad Autónoma).

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