Expatriate tax ebook - Spain

Facts and figures

Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
Employers of non-EU citizens are usually required to apply for a resident and work permit prior to the employee taking up employment in Spain. Nevertheless it is important that the expatriate’s employment contract and benefits package is structured tax efficiently before the contract is submitted to the Labor Authorities in Spain.

Employment visas
Foreign individuals who want to enter into the Spanish territory must comply with a number of requirements, which may include a Visa.

EU and EEA citizens do not need to hold a residency card to stay and work in Spain. However, other foreign individuals who want to stay in Spain should obtain a Spanish residency permit in addition to a Visa, if so required.

Tax returns and compliance
Individuals who are Spanish residents for tax purposes must file their tax return during May and June each year. There are neither personal income taxes nor corporate income tax extensions available. Fines are due for late filing.

Individuals who are not Spanish residents must file their “non- resident” tax forms, depending on specific situations, during the same tax period, even when tax has already been withheld at source from Spanish payers.

Tax year
The Spanish tax year for individuals runs from January 1st to December 31st. Legal entities can choose a different fiscal year from the calendar year, although it is not common to elect a different one.

Income tax rates
To calculate the income tax rates a progressive tax scale is applied on the taxable income. There are two scales based on the portion attributable to both National/Central Spanish Revenue and specific Spanish Regions which have to be aggregated/added when calculating and filing the respective tax returns.

This is the aggregated rates scale:

Non-resident expatriates are subject to a fix rate of 24% on the gross income derived from their work in Spain. Only certain expenses may be deducted. Nevertheless net (and not gross) income will be considered as tax basis for European Union tax residents (i.e. Social Security, Professional Associations fees…).

Specific tax rates are applicable to pensions received by non-resident expatriates from Spanish sources.

Specific tax rules may apply for tax residents in the Basque Country and Navarra regions. Please contact Grant Thornton Expat Tax Team to further information.

For fiscal year 2011, certain regions have introduced certain changes whereby the highest marginal rates may be above the 43% “national· rate. Therefore, it is essential tax planning before non resident individual arrival to Spain.

Sample income tax calculation
For further information and a pre-calculation of each specific tax liability (depending on each specific Spanish region where the expatriate is tax resident) please contact Grant Thornton's Expat Tax Team.

Information about Spain:

• introduction
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities