Taxes for expatriates in Spain: basic guide
Moving to Spain to work or live involves understanding which taxes expatriates must pay and how the country’s tax system works. Depending on whether a person is considered a tax resident or a non-resident, tax obligations can change significantly.
In this guide, we explain which taxes affect expatriates in Spain, when tax residency is acquired, and which special tax regimes exist for international professionals.
What is considered an expatriate for tax purposes?
An expatriate is a person who lives and works temporarily or permanently in a country other than their country of origin. From a tax perspective, what matters is not nationality but tax residency, since this determines where taxes must be paid. In Spain, an expatriate may fall into one of two categories:
- Tax resident in Spain
- Non-tax resident in Spain
Each situation involves different tax rules.
When are you considered a tax resident in Spain?
A person is considered a tax resident in Spain if they meet any of the following criteria:
- They remain in the country for more than 183 days during a calendar year
- Their main center of economic or family interests is located in Spain
When a person meets these conditions, the Spanish tax authorities consider them a tax resident, and they must pay taxes in Spain on their worldwide income, meaning income earned both inside and outside the country.
Taxes paid by resident expatriates
If an expatriate is considered a tax resident in Spain, they will generally have to pay the following taxes.
Personal income tax (IRPF)
This is the main tax for residents. It applies to:
- Salaries
- Professional income
- Investment income
- Rental income
- Investments
Personal income tax in Spain is progressive and can reach approximately 47% depending on the level of income and the autonomous community.
Wealth tax
Some autonomous communities apply this tax to the total value of a person’s assets. This includes assets such as:
- Real estate
- Financial investments
- Other personal assets
This tax may vary depending on the autonomous community.
Inheritance and gift tax
This tax applies when a person receives:
- Inheritances
- Gifts
The rules and tax rates also depend on each autonomous community.
Taxes for non-resident expatriates
If an expatriate is not a tax resident in Spain, they will only have to pay taxes on income earned within the country. The main tax is:
Non-resident income tax (IRNR)
This tax applies to income such as:
- Salaries earned in Spain
- Rental income from properties in Spain
- Capital gains obtained in the country
The IRNR regulations govern the taxation of individuals or companies that generate income in Spain without being tax residents.
The special tax regime for posted workers (Beckham Law)
Spain has a special tax regime designed to attract international talent, commonly known as the “Beckham Law” or the posted workers regime. This regime allows certain expatriates to be taxed as non-residents for several years, even if they live in Spain. Some of its main advantages include:
- A fixed tax rate of approximately 24% on employment income up to €600,000
- No taxation on income earned outside Spain
- Application for up to 6 years
To qualify for this regime, it is generally necessary to:
- Not have been a tax resident in Spain during the previous five years
- Move to Spain under an employment contract
- Apply for the regime within the first six months after relocation
This system is especially used by:
- International executives
- Technology professionals
- Multinational company executives
Double taxation treaties
Spain has tax agreements with many countries to prevent individuals from paying taxes twice on the same income. These double taxation treaties determine:
- In which country taxes must be paid
- Which income must be declared in each jurisdiction
- Which deductions or exemptions may apply
For this reason, it is important to check whether the expatriate’s home country has a tax treaty with Spain.
Tax tips for expatriates
Before moving to Spain or starting work in the country, it is advisable to keep several recommendations in mind.
Check tax residency status
The 183-day rule is key to determining where taxes must be paid.
Review international tax treaties
This can help avoid double taxation.
Analyze whether the Beckham Law can apply
This regime can significantly reduce the tax burden.
Consult a tax advisor
International taxation can be complex, so many people rely on specialists to manage their obligations.
Frequently asked questions about taxes for expatriates
When does an expatriate start paying taxes in Spain?
Usually when they become a tax resident, which generally occurs after spending more than 183 days in the country during the year.
Does an expatriate have to declare income earned outside Spain?
If they are tax residents, yes. If they are non-residents, they generally only declare income earned in Spain.
What is the Beckham Law?
It is a special tax regime that allows certain foreign workers to pay taxes at a reduced rate of 24% for several years.
Can an expatriate have double tax residency?
Yes, this can happen if they meet the conditions in two countries. In these cases, double taxation treaties apply.
Do expatriates have to declare assets held abroad?
If they are tax residents in Spain and exceed certain thresholds, they must declare foreign assets through informative filings such as Form 720.
