Andalucía Lawyers’ guide to Spanish income tax for Spanish residents. Find out about the Spanish RENTA: what it is, how it affects you and how to declare your income tax in Spain.
Am I a Spanish resident?
Individuals become officially resident in Spain for tax purposes if they live more than 183 days of the calendar year on Spanish territory or if the principal centre of activity or physical base of their economic interests is in Spain.
For more detailed information on how tax residency is established or if you are unsure about whether or not you are a Spanish resident, read our article How Do I Know if I’m a Spanish Resident or Non-resident for Tax Purposes?
What is the RENTA?
The IRPF (Impuesto sobre la Renta de Personas Físicas) is Spain’s nearest equivalent to personal income tax. Every year, Spanish residents must declare their annual income from the previous calendar year from 1st April to 30th of June. – this is called the RENTA.
Must I submit the RENTA?
You are only exempt from declaring if your income falls below these established thresholds:
- You earn a sole income of €22,000 as an employee already subject to employer deductions.
- You can benefit from a reduced limit if your income is earned from more than one employer and is under €12,000.
- Your bank interest and other investment income is under €1,600.
- Your rental income is under €1,000.
- You receive income from employment, investment capital, economic activities or capital gains up to a combined limit of €1,000 annually or you have capital losses below €500.
However, please note that it’s compulsory to submit your tax return in the first year of your tax residency in Spain. Therefore, if you became a Spanish tax resident in current year you must file the RENTA 2021 income tax declaration between 1st Arpril and 30th June of current year no matter what your income level is.
What earnings do I have to declare?
As a Spanish resident you are taxed on your worldwide income. Therefore, you must declare all earnings, regardless of where they come from. This includes pensions from your home country (except for some civil service pensions). These rules apply even if your income is not paid into a Spanish bank account. A deduction for double taxation is applicable to all earnings that are taxed abroad thanks to double taxation treaties that Spain holds with other countries. As a result you will not be taxed twice on the same income.
How do I register for tax in Spain?
First you will need to get your NIE (foreigner’s identity certifcated) from the local foreigners’ office (Oficina de Extranjeros) or police station. You must notify the tax authorities in your home country that you have moved to Spain and register as a Spanish tax resident before the Spanish tax authorities (Agencia Tributaria) through the tax form 030. Our fees to complete form 030 for you are €50 plus VAT (21%) per person:
SPANISH TAX REGISTRATION SERVICE
€50 + VAT
What are the Spanish income tax allowances and deductions?
Various tax allowances and deductions are available for Spanish residents depending on their personal situation. Below we have listed some of the Spanish income tax allowances and deductions, please contact us if you’d like to consult with us about your particular situation.
Personal Allowance
- Individual: €5,550.
- 65 years old and upwards: €6,700.
- 75 years old and upwards: €8,100.
Married Couple Allowance
- Individual allowance of €5,550 for the first spouse and €3,400 for the second spouse in a joint return.
Married couples can make either a joint or a separte return. Tax implications resulting from this decision can be very significant. This is why it is very importatn to check which is the best option for your personal situation. Contact us if you would like us to help you with that.
Disability Allowance
Calculated according to a graded scale of disability:
- Grades 33-65: €3,000.
- Grades 65-100: €9,000.
- An additional allowance of €3,000 if third party care is needed.
Child Allowance (Under 25 years Old)
Child allowance for under 25s with an income below €8,000 living at home with you:
- First child: €2,400.
- Second child: €2,700.
- Third child: €4,000.
- Each additional child: €4,500.
Child Allowance (Under 3 Years Old)
- For each child under 3 years old: €2,800.
Dependent Relative Allowance
Applicable if a parent or grandparent with an income under €8,000 lives with you:
- Over 65s: €1,150.
- Over 75s: €2,550.
Dividends
- The exemption on the first €1,500 of dividends does no longer exists.
- The exemption on up to €12,000 of equity income remains under certain circumstances.
Rental Income
- The 100% deduction for rental income from young tenants has been withdrawn.
- All landlords will now be taxed on 40% of net rent income – this includes any lettings income from outside Spain but not short-term holiday lets.
Deductions
You can claim deductions for:
- Payments into the Spanish social security system.
- Pension contributions.
- The costs of buying and/or extending your main residence.
- Charitable donations.
- Some deductions applied by local governments – these vary from region to region.
What are the Spanish applicable tax rates ?
Your income is divided into general income (renta general) and savings income (renta del ahorro) for tax purpose. Their sum produces the taxable base (base imponible). Once any allowances or deductions have been applied to this, the resulting figure is the net payable base (base liquidable).
Differences Between Spanish State and Regional Tax Bands and Rates
It is important to be aware that tax rates in Spain vary from one autonomous community to another. The State sets its income bands and respective tax rates, but since 2011 each autonomous government has been permitted to set its own bands and rates. Consequently, the final tax bands and rates affecting taxpayers in each region are calculated from a combination of the two. Thus, you will get applied the rates of the region where you are registered as a tax resident.
Spanish General Income Tax Rates 2021
Below are the State bands and rates applied to general taxable income. As a Spanish resident you are taxed on your worldwide general income. This includes anything that doesn’t fall into the savings category i.e. all your earned income such as your salary, income gained from self-employment, your pension, rental income, royalties, imputed income and income not resulting from the sale or transfer of assets e.g. gambling.
| Income band |
2021 |
|
| Up to €12,450 |
19% |
|
| €12,450-€20,200 |
24% |
|
| €20,200-€35,200 |
31.6% |
|
| €35,200-€60,000 |
37.2% |
|
| Over €60,000 |
45.4% |
|
As stated above, it is important you check the rates for the region of your fiscal residence as they can vary from the State rates. For example, here are the 2019 general income tax rates for Andalusia, calculated from the state and local rates:
| Andalucía |
State |
Region |
Total 2021 |
|
|
|
|
| €0-€12,450 |
9.5% |
9.5% |
19% |
| €12,450-€20.200 |
12% |
12% |
24% |
| €20.200-€28,000 |
15% |
15% |
30% |
| €28,000-€35,200.00 |
15% |
15.6% |
31.6% |
| €35,200.00-€50,000 |
18.5% |
18.7% |
37.2% |
| €50.000-€60,000 |
18.5% |
18.9% |
37.4% |
| €60,000-€120,000 |
22.5% |
22.9% |
45.4% |
| Over €120,000 |
22.5% |
23.7% |
46.2% |
|
|
|
|
Spanish Savings Income Tax Rates 2021
As a Spanish resident you are taxed on your worldwide savings income. This includes any income from interest, dividends, life insurance, purchased annuities and capital gains on the sale or transfer of assets.
| Income band |
2021 |
|
| Up to €6,000 |
19% |
|
| €6,000-€50,000 |
21.% |
|
| Over €50,000 |
23% |
|
Submit your Spanish Income Tax Return for 2021(RENTA 2021)
Don’t forget to submit your tax return for the 2021 calendar year during April and June of 2021 – the deadline to submit your RENTA 2021 tax return is 30th of June 2022. If you would like advice about your tax situation or you’d like us to take care of your Spanish income tax return on your behalf, please get in touch.
Our Services
We offer a resident tax advice service for a set annual fee:
tax return
Related Articles by Andalucía Lawyers