If you’ve dreamt of a life in Spain, you’ve probably imagined it as a paradise. It certainly is, but you must also prepare for a rather complex tax system that the country is notorious for.
However, Spanish taxes don’t have to be intimidating, and they don’t have to be burdensome. Whatever your situation is, you want to make taxes in Spain work for you rather than against you.
This quick guide will cover the basics of Spanish taxes so you can prepare for the big move.
Here’s what you need to know:
Personal Income Tax
For most expatriates, you’ll work for a local or multinational company in Spain. You want to find a job that helps you lower your tax burden or make it as efficient as possible.
You can consider using PEO services to help place you in a company or help with your business structure in the country. You can check it out to see how it works for you.
Tax rates in Spain depend on what region you live in. As a general rule, you’ll pay around 26% for a salary above 200,000 Euros. However, some regions, such as Catalonia, can go close to 50% as your salary increases. As a result, you want proper tax planning to reduce your tax burden.
Property Tax
If you’re looking to settle permanently in Spain, you’ll have to pay property tax to your local region.
There’s no set rate or amount for your property tax. Rather, it’s the cost of your actual or potential rental income multiplied by a tax rate that gets set by the local tax authorities.
If you sell your property, you’ll have to pay a transfer tax as well. This is also determined by the local authorities, so you’ll have to research the rates before buying your property.
While tax rates can always change, it’s established that Catalonia is known for higher taxes, while the Canary Islands are known for lower taxes. You might want to focus on an area with many expatriates, such as Marbella, to save on property tax.
Tax Brackets
The final step is to look at the tax brackets, which vary on region and the type of tax you have to pay.
For example, as a general rule, you might have to pay a wealth tax between 3-4% if you have assets valued at 10 million Euros.
Likewise, Spain has high capital gains tax rates. They start, in most cases, at 19% for capital gains of 6,000 Euros.
Make sure you work with a great accountant to manage your affairs to make the tax system work for your needs.
These Are the Taxes In Spain
Now you know how taxes in Spain work and how to reduce your burden while enjoying your time in the country.
Personal income taxes can go up to 26% if you earn 200,000 Euros. You want to use PEO services to help you structure your affairs to lower your tax burden.
Your property tax will depend on the local rates in your region. Choose a region that’s expat-friendly to reduce your rates. Make sure to research the various tax brackets for each type of tax.
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