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Spain, officially the Kingdom of Spain is a country in Southwestern Europe with some pockets of Spanish territory across the Strait of Gibraltar and the Atlantic Ocean.
Spain's capitalist mixed economy is the 14th largest worldwide and the 5th largest in the European Union, as well as the Eurozone's 4th largest.
In 2005 the Economist Intelligence Unit's quality of life survey placed Spain among the top 10 in the world. Spain's geographic location, popular coastlines, diverse landscapes, historical legacy, vibrant culture, and excellent infrastructure has made the country's international tourist industry among the largest in the world. In the last five decades, international tourism in Spain has grown to become the second-largest in the world in terms of spending.
Highlights
Residency Programs (2)
Cost of Life
Taxation overview
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Tax system
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Residence-based taxation
Countries with a residence-based taxation levy tax from your worldwide income for as long as you're a tax resident of that country. This is the most common taxation system.
Tax residence definition varies from country to country. General rule is you're a tax resident of a country if you spend 183 days or more in it in a year.
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Tax summary
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Personal income tax (PIT) (Impuesto sobre la renta de las personas físicas, IRPF)
- Resident: Progressive tax up to 47%. This is the maximum progressive scale of withholdings rate (final taxation will vary depending on the autonomous region where the taxpayer is resident; in some of them, the headline PIT rate reaches 54%).
- Non-resident: 24%. 19% for residents in other EU member states or EEA countries with which there is an effective exchange of tax information.
Corporate income tax (CIT)
25%
Value-added tax (VAT) (Impuesto sobre el Valor Añadido, IVA)
21%
Social security contributions
Under the general regime, social security contributions are paid on salaries and wages. Minimum monthly base is €1,050 ($1,250) and maximum is €4,070 ($4,845). Average contribution rates are 6.35% paid by employees and 29.90% paid by employers + a variable rate for occupational accidents (e.g. 1.5% for office work). For Self-employed, the general rate is 30.3% applied between a monthly base €944 ($1,124) and €4,070 ($4,845), but persons may choose the level of contributions they wish to pay within their income bracket and get corresponding benefits.
Withholding tax (WHT)
- Resident WHT rates: 19% on Dividends, 19% on Interests, 24% on Royalties
- Non-resident WHT rates: 19% on Dividends, 19% on Interests, 24% on Royalties
Capital gains tax (CGT)
- As Corporation: subject to standard Corporate income tax (CIT) rate
- As Individual: 26%. 19% for non-residents from capital gains generated as a result of a transfer of assets
Net wealth/worth tax
3.5% according to the state tax scale, which is applicable if the autonomous community has not approved its own tax scale.
Inheritance and Gift tax
34% according to the state tax scale, which is applicable if the autonomous community has not approved its own tax scale.
Controlled foreign companies (CFCs)
- Controlled by Corporation: Yes
- Controlled by Individual: Yes
Spanish companies pay Spanish CIT on income obtained by a non-resident subsidiary upon meeting certain requirements, including, specifically, that the Spanish parent company must own, individually or together with other related companies or individuals, over 50% of the non-resident subsidiary's share capital, equity, profits, or voting rights, and the CIT payable by the non-resident subsidiary must be under 75% of the tax that would be payable in Spain. CFC rules are not applicable to EU resident companies if they are set up for economic reasons and carry on a business activity.
Disclaimer: This tax summary is for information only and shall not be construed as tax advice. Every situation is different. Should you consider moving to Spain, we highly recommend you liaise with a local tax advisor to confirm your future tax regime.
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Year of Assessment
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YA 2021