Taxes for foreigners in SpainJorge Mariñas Berenguer
When we decide to carry out an activity in another country or even move to another country, many of the factors that we take into account can be the climate, security, job opportunities… but it is also very important to analyse the remuneration and taxes that it has. Today we will try to understand the different situations and taxes for foreigners that exist in Spain.
Does it matter to have a residence permit to pay taxes?
The reality is that the importance lies in tax residency, i.e., you may not have a residence permit but you may be registered as a tax resident in Spain and therefore have to pay taxes like other citizens, but with some nuances that we will see below.
When is a foreigner considered a tax resident?
With what has been said above, we must then know what factors must be in place for a foreigner to be considered a tax resident and therefore face taxes. These 3 factors are:
- Residence in Spain for more than 183 days a year, regardless of whether they are consecutive or not.
- There is an economic interest in the country, whether self-employed or employed.
- One of your family members, such as spouse and/or children, is already resident in the country.
Personal income tax for foreigners resident in Spain
The tax for foreigners resident in Spain will in most cases be the IRPF, i.e. income tax. In this case, as you are considered a resident in Spain, you will have to pay tax in Spain on capital earned both inside and outside Spain. In this case it is a progressive tax, i.e. the tax rate increases depending on your earnings.
The different tax brackets are as follows:
|Less than 12.450€||will be taxed at 19%|
|Between €12,450 and €20,200||is taxed at 24%|
|Between €20,200 and €35,200||will be taxed at 30%|
|Between €35,200 and €60,000||is taxed at 37%|
|If the income exceeds €60,000||a flat tax rate of €45 is maintained|
However, there is a law that foreigners can take advantage of to avoid having to pay these taxes in Spain. This law is known as the Beckham Law (person who benefited from it).
How not to pay taxes for foreigners with the Beckham Law?
With this law, the foreigner will not have to pay taxes during the next 6 years that he/she benefits from it. It should be clarified that this is optional, i.e., you can opt in or opt out and if you do, you can stop doing so at any time.
In conclusion, foreigners will be treated as non-residents for tax purposes, although in reality they should be.
Beckham Law benefits
- No matter how much capital you earn, you will always pay tax at 24%.
- You are only taxed on income earned in Spain.
- You are only taxed on the wealth tax of the assets in Spain.
Requirements for taxation under the Beckham Law
In order to benefit from this law, the foreigner must fulfil a series of requirements:
- The applicant cannot have been considered a tax resident in Spain in the last 10 years.
- The main reason for moving to Spain must be work-related and must be rigorously justified.
- This work-related reason cannot be self-employed, i.e. as a freelancer.
- It must comply with a series of established deadlines that should be consulted with professionals in the sector.
Taxation in Spain for non-residents
In the event that foreigners are not considered tax residents because they do not meet the requirements, they will be taxed differently.
Taxes for non-resident foreigners will only apply to income obtained in Spain. Moreover, as we have mentioned in the Beckham Law, the tax will be a flat rate, in this case 25%.
In any case, you can apply for your Golden Visa with us and access the different benefits it entails. Do not hesitate to contact us if you have any questions, we will be happy to help you to get your residence in Spain!