Taxes in Spain: Tax Rates and Special Expat Taxes

Does anyone know if an award from a law suit (such as damages awarded from a car accident, or personal injury) is taxed in Spain? (It is not taxed in the USA). Thank you!

What is the threshold for subsistence payments (aka per diems) that are tax exempt?

Hi, Can anyone advise if it is possible to register for the Non Resident Income Tax after you have been working in Spain for 6 months? I have been working here for just over a year and was not aware of the scheme.

I have also heard that property rent can be written off. Is this the case?

Any other tips on managing my first year of tax would be much appreciated.

Thanks in advance.

Tom

If you leave Spain midway through the year and become a non resident, how do you complete your personal renta declaration? In fact more to the point, are you entitled to any of your tax back, if you were working for a Spanish company, and paid the normal income taxes?
I remember for example the other way around, coming to Spain, if you arrived after mid year in Spain you didn't used to have pay income tax unless you were in the country more than 6 months. Is that still in place or has that gone?

Ok the tax tables have been updated. It is important that residents do start to declare and pay tax in Spain otherwise they may not get the tax benefits regarding CGT etc.

If an expat qualifies for and selects the flat 25% expat tax rate, does this have any other side effects?

For example, in the US IRS' terms, is selecting this expat tax rate tantamount to declaring to Spain that the US person is NOT resident in Spain (and therefore is NOT eligible for the US-Spain double taxation exemption on Forms 2555/1116)?

Does selecting the 25% expat rate change the Spanish immigrations authorities' calculations of how long the expat has lived in Spain, against future desire to naturalize to Spanish citizenship?

Etc.

Thanks!
-Jay

Correction to my earlier post:

Sorry I was wrong the E101 is for people who are temporarily working abroad.

The FD9 is for people who have PERMANENTLY relocated and need to pay in Spain (as against UK)

My other points are correct (ref CGT) and also note the above tax table is out of date.

Am I required to pay Spanish income taxes if I am a resident but out of the country for more then 183 days a year.

Not sure if it makes any difference but all my income is derived from outside of Spain.

Will appreciate a clarification on this issue or a direction in which I can be pointed to.

Regards,

Tomas

With regard to the requirement to opt for non-resident tax regime (flat 25%, now flat 24%, as of Jan 2007) within the first 6 months of work in Spain, does anyone know if there's any way to appeal or submit the form and documentation AFTER the 6 months deadline ?

Do you know of anyone who's been able to pull that off ? Especially important, since the non-resident regime would apply for 5 years.

Thank you!

I am from the US and just started working here officially in January. My company is currently deducting my taxes at a much higher rate.

How and where does one find out more and apply for the 25% flat tax? I saw the note about consulting your tax advisor but are there any immediate risks that anyone has heard of. Many thanks, Kurt

The 130,000pds (no symbol on my Spanish keyboard!) is stated above:

Summary of Taxes on Property/Real Estate

Average cost of property: £130,000.

Another thing:
For British taxpayers now resident in Spain - To apply for UK tax exemption (under the double taxation agreement) and pay tax in Spain it is not the E101 but the Form Spain/Individual FD9

Hi Robi,

Sorry, not sure what you're referring to in regards to 130,000£ ???

Capital Gains Tax is NOW 18% for both residents and non-residents. If the proceeds are re-invested in another Spanish property within a 2 year period the CGT is not payable.

Also I think quoting an average property price of 130,000£ maybe very off-putting for some persons there are many new quality built legal properties in this area (Costa Blanca) below that price.

Note that the income from Isa's/Tessas is tax free in the UK. But not in Spain! So if you have such tax free savings that makes what you owe to the Spanish tax man even higher.

It's not exactly the sort of information that some sectors would want to push, I guess. But then it's our own responsibility, to be fair. I have to say that most estate agents and so on that I asked said there will be hardly any difference in the tax. That may be true for some people but I think we should all be aware that we may have to pay a lot more.

Now as to allowances: All I know of are: if you have a mortgage (I don't) you can I think get a 15% allowance of what you pay. If you have a pension from local government the Spanish tax man does not want any more tax on it (the UK tax is all you have to pay.) I know you get allowances for children etc.
If someone can show me how to reduce my bill I'd love to hear it!

I hope all this helps!

We are retired with no mortgage.
I now have my Spanish Residency, which I obtained in May 2005. I therefore had to submit a tax form before June 30th 2006 with information relating to 2005. This I did, with the help of a solicitor.
My tax free allowance in Spain was 3400 euros. Then the table above kicked in against the rest of my income.
My wife submitted a separate tax form and she too was given 3400 euros tax free before the above tax rates kicked in.

It doesn't matter what allowance the UK gives you in the first instance, because at the end you will have to pay the Spanish tax man the difference.
ALL of your income, from wherever, must be declared.

Add your pension together with the income from Isa's (say) - together with maybe income from a bond or bank account or whatever. Add it all up, show what tax you paid in the UK, and the solicitor works out what you should pay in Spain. You pay the difference.

There seems to be general agreement that personal taxation is far higher in Spain than UK. However, in UK you are allowed personal allowances before you pay tax. If you have to declare all your income for Spanish taxation, how does the UK personal allowances come into play.
Is it better to pay Spanish tax from the start or to keep UK tax with the personal allowances.

In reply to the questions about income tax. Yes, I'm sorry to say that income tax is MUCH higher in Spain than in the UK. Once you become a resident you have to pay the difference between what you have paid in the UK and what you should pay in Spain. Don't let anyone tell you otherwise. You have to declare ALL your income, wherever it is earned, and the result is considerably higher than in the UK for most people. This issue is very much brushed over by estate agents and the like. Work it out for yourself. It's not all about cheap wine!

I am confused about income taxes. Does Spain treat pension payments and U.S. social security payments to retirees as income and are these funds taxable?

we are thinking about retiring to spain in 18 months time in fact placed an initial deposit on a house.
personal tax seems high do the allowances in the above table relate to idividuals or do you have to put you pensions together as a married couple.

Hi, I am a pensioner now living in Spain, after looking at the tax chart, I am a little confused (probably my age) but is there a personal allowance? Or are you taxed from the first Euro, also is the chart per person, or joint man & wife, as my UK state pension + my wifes little State pension, does not add up to much. If we have to pay between 14 and 20% we would be skint.

Steve.