In order to understand the Spanish tax system, it is important to know the political map of Spain.
Spain comprises 17 Autonomies (including the Balearic Islands and the Canary Islands), as well as the enclaves of Ceuta and Melilla in Northern Africa.
The Basque country and Navarra have their own income tax systems.
PERSONAL INCOME TAX
Individuals are subject to income tax levied on behalf of the state and the autonomous regions. No separate capital gains tax exists.
Residence
An individual is a resident of Spain for tax purposes if:
- he/she stays in Spain for more than 183 days in any calendar year (art. 9 IRPF)
- his/her centre of vita interest, i.e. his/her economic interest or business or professional activities, is in Spain .
In the absence of proof to the contrary, a married individual is deemed to be resident of Spain if the permanent home of his spouse and dependent minor children is in Spain.
Individual who move their residence into Spain may elect to be taxed under the rules of individual income tax on residents or the rules of income tax on non-residents in the tax year in which he/she moves to Spain and the following 5 tax years whenever the following conditions are met:
- he/she has not been resident in Spain any time during the preceding 10 years;
- he/she moves to Spain because of an employment contract;
- he/she works physically in Spain for a company or entity resident in Spain or for a Spanish permanent resident of a non-resident entity; and
- his/her salary income is not exempt from non-resident income tax.
Therefore, residents are liable to income tax on individuals (IRPF) in respect of their worldwide income. Non-residents are liable to income tax on non-residents (IRNR) only on their Spanish-source income.
(IRPF – Impuesto sobre la Renta de las personas físicas)
(IRNR – Impuesto sobre la Renta de no residentes)
Taxable period
The taxable period for individuals is the calendar year.
Tax returns and assessment
Resident taxpayers may elect to file a single or a joint tax return. Resident taxpayers who are members of the same family unit have the option to file a joint tax return for the household. A family unit consists of husband and wife, their minor children (under 18 years of age) and their disabled children regardless of age and, in the case of legally separated spouses or de facto unions, the father or the mother and the children living with either of them. Joint tax returns do not allow splitting of income.
The annual return for a tax year must be filed and any outstanding tax paid in the period 1 May to 30 June following the end of the tax year. It may be paid in two instalments, 60% by 20 June and the remainder by 5 November of that year.
Entrepreneurs and professionals are required to file quarterly returns and make advance payments by 20 April, 20 July and 20 October of the current year and 30 January of the next year on account of final income tax liability for the current year.