There are quite a few things to learn when relocating to Spain. If you’re moving there to work, then knowing how to deal with income tax is absolutely essential. At Remitly, we know it can be a complicated issue to delve into, which is why we’ve put together this quick guide to the main things you need to know.
Who needs to file a tax return in Spain?
As someone living long term in Spain, you’ll be expected to pay tax on both your ‘general’ income (such as your salary), and savings (such as dividends and payments from investments). Since the tax thresholds for your general income are determined on both a national and regional basis, the precise amount of income tax you have to pay will depend on where in Spain you live.
Your employer will deduct the general income tax amount from your salary payments. This amount is an estimate of what you’ll owe in tax over the course of the financial year. If the amount of tax your employer deducts turns out to exceed what you actually end up owing, you’ll be entitled to a refund from the Spanish tax authority. If not enough has been withheld, you’ll have to make up the difference after filing your tax return (if you need to file a return, that is).
Everyone is expected to file a tax return in their first year of residency. After this, you won’t need to file a tax return if:
- Your total income is less than €22,000 per year and comes from one source (for example, your Spanish employer)
- Your total income is less than €14,000 per year and comes from more than one source (for example, if you have two jobs)
- Your total income from more than one source is less than €22,000, if the amount from the other sources doesn’t exceed €1,500 in total
You’ll need to fill in the Modelo 30 form to become registered with the Agencia Tributaria, which is the Spanish tax authority. The form can be submitted online, put in the mail, or submitted to a local tax office in person.
When does the tax return need to be filed by?
In Spain, the financial year exactly mirrors the regular calendar year, so it runs from 1 January to 31 December. The tax return which covers your income for the previous financial year must be filed during a set window period. The start date for this window period can differ from year to year, but the deadline is always 30 June.
How can the tax return be filed?
Once a particular year’s window period for filing your tax return has begun, the easiest way to do it is online here.
To access your draft tax return, simply follow the on-screen prompts, entering some personal details including your foreigner identity number, or NIE.
You’ll be able to look over any pre-filled income data that may have already been provided by third parties such as your employer or bank. You should confirm it’s all accurate, and make any changes necessary before submitting.
It’s also possible to download the Agencia Tributaria mobile app and go through this process on your iOS/Android phone or tablet.
Alternatively, you can have Agencia Tributaria staff amend and/or file your tax return over the phone or during an in-person consultation. Contact details to make an appointment can be found here.
As a Spanish taxpayer, you’re entitled to claim certain tax deductions and allowances. At the time of writing, the personal allowance for those under 65 is €5,550.
You can claim the following additional allowances for children under 25 living with you:
- €2,400 for the first child
- €2,700 for the second
- €4,000 for the third
- €4,500 for the fourth
- €2,800 for any child under three years of age
You can claim the following allowances for an elderly relative living with you, if your household income is under €8,000:
- €1,150 if they are over 65
- €2,550 if they are over 75
You may also claim tax credits on other things, including:
- Charitable donations
- Social security contributions
- Investments in shares of newly-created companies
- Contributions to political parties
- Spanish pension contributions
What happens after the tax return is filed?
By completing your tax return, you’ll see whether you’re due a tax refund, or you owe the Spanish government money. If it’s the latter, you can pay by bank card, bank transfer or Direct Debit through the Agencia Tributaria website. You can also choose to pay over the phone, as long as you have your tax account details to hand so you can verify yourself to the operator.
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