Income tax in Spain

Taxation Researcher | October 28, 2019


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Residents are subject to tax on their worldwide income and assets. Resident couples may file their income tax returns jointly or separately.

For married couples married under the community property regime, their incomes, capital gains, and related deductions would be divided equally between them, whether they file jointly or separately. For married couples married under the separate property regime, their incomes, capital gains, and related deductions would be attributed exclusively to each individual earning the income.


Income is categorized into the following basic categories: (1) employment income; (2) income from movable capital; (3) income from immovable capital; (4) business income; (5) capital gains, and (6) imputed income (such as income from residences, other than the taxpayer´s primary residence).

Income is aggregated and taxed at progressive rates.


Up to €12,450 10%
€12,450 - €20,200 24% on band over €12,450
€20,200 - €35,200 30% on band over €20,200
€35,300 - €60,000 37% on band over €35,200
Over €60,000 45% on all income over €60,000
Source: Global Property Guide


Up to €6,000 19%
€6,000 - €50,200 21% on band over €6,000
Over €50,000 23% on band over €60,000
Source: Global Property Guide

Capital gains and investment income are taxed at progressive rates; the tax is 19% on the first €6,000 and 21% on the remaining amount. For 2012 and 2013, a supplementary levy has been approved: 2% extra for the first €6,000 (up to 21%), 4% extra for the next €12,000 (up to 25%) and 6% extra for the amount exceeding €18,000 (up to 27%).

Residents are entitled to personal allowances, several deductions and tax credits.

  • €5,550 general deduction for each taxpayer
  • additional €1,150 for taxpayer over 65 years old
  • additional €1,400 for taxpayer over 75 years old
  • additional €3,000 to €9,000 for disabled taxpayers, depending on their level of incapacity
  • additional deductions for dependants

Aside from personal allowances, residents are also entitled to some tax credits:

  • Rental tax credit in respect of habitual housing;
  • Child or dependent care;
  • Donations tax credits;
  • Investments tax credit made in the acquisition of the habitual residence.

Rental Income Tax

Income from properties is categorized as investment income in the Spanish tax laws. Resident individuals earning rental income are taxed at 15%, withheld by the tenant.

When resident individuals file their income tax returns, they can deduct income-generating expenses from the gross rent. The taxable income will then be taxed at progressive rates. Deductible expenses are maintenance and repair (except improvement expenses), mortgage interest and any other financial expense relating to the purchase or improvement of the property (up to the gross rent), local taxes and charges, the outstanding balance of any unsubstantiated doubtful debts, insurance premium, general debts; and annual depreciation allowance (3% of cost of property).

Imputed Income Tax

Imputed income tax is generally levied at 2% on all properties owned by a resident taxpayer. The taxpayer´s primary residence in Spain is exempted from this tax. The taxpayer´s properties located abroad are liable to the imputed income tax. No deductions are allowed but resident foreigners are entitled to foreign tax credits).

Local Income Tax/Income Tax Surcharge

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Residents must pay an annual registration fee to the Chamber of Commerce, Industry and Navigation. The surcharge is levied at progressive rates from 0.75% (for income up to €60,101.21) to 0.01% (for income over €24,040,484.18). The surcharge is deductible for income tax purposes.

Capital Gains Tax (Impuesto de Plusvalia)

Residents are liable to capital gains tax when they sell their properties. The capital gain or loss on property sale is computed as, transfer price less acquisition cost (acquisition price and related expenses) and less appropriate minimum depreciation. The acquisition cost is indexed by applying a coefficient published annually by the Budgetary Laws, based on the year of acquisition.


Up to €6,000 19%
€6,000 - €50,000 21%
Over €50,000 23%

Capital gains tax is generally levied at 19% on the first €6,000 and 21% on the remaining amount.


Up to €6,000 19%
Over €6,000 21%

The capital gain or loss on a property which was transferred as a gift or as an inheritance is computed as transfer price less acquisition price.

Residents may rollover the gain into a new home. They are exempt from the capital gains tax provided that the entire proceeds from the sale of the old dwelling is reinvested in the acquisition of a new dwelling within two years from the date of sale.

The capital gains derived by residents (who have lived in their primary residence for more than three years) who are 65 years of age or older upon the transfer are exempt from tax.

They may offset their short-term capital gains and losses against each other (excess losses may be carried forward for four years) and long-term capital gains and losses against each other.


Net Wealth Tax (Impuesto sobre el Patrimonio, IP)

In all autonomous regions except Guipuzcoa, which is a province of the Basque Country, the net wealth tax was temporarily suspended from January 2008 to January 2015.

From 2015 to 2016, the net wealth tax has been reactivated. Resident individuals are subject to net wealth tax, which is levied on their worldwide assets.

The net wealth tax rates range from 0.2% (up to €193,000) to 2.5% (for value exceeding €12,316,000). The tax base is net wealth, calculated as all assets less all documented liabilities (not including exempt assets) and personal allowances. The liabilities are valued according to their normal value on 31 December and are deductible only if they are adequately substantiated. Residents are entitled to a standard allowance of €204,000.

The residents´ income tax and net wealth tax liability may not exceed 60% of their total taxable income. If it exceeds the 60% limit, they may reduce their net wealth tax liability by the excess amount to a maximum reduction of 80% of the net wealth tax liability).

Real Estate Tax (Impuesto sobre Bienes Inmuebles, IBI)

The taxable base is the cadastral value, which is adjusted every eight years with respect to the property´s market value. The tax rates may be increased by the municipal authorities but they are generally 0.4% for urban properties and 0.3% for rural properties.

Property owners are generally liable to this tax but it may be charged to the tenant, if so agreed in the contract, and this is commonly done. Real estate taxes are deductible for income tax purposes.



Income and capital gains earned by companies are subject to corporate income tax at a flat rate of 28%. Taxable income is calculated by deducting income-generating expenses from the gross income.

Corporate income tax is levied at a flat rate of 30% in 2014. The corporate income tax rate will be reduced to 25% in 2016.


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