Taxes in Spain - Retirement Village Spain

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Taxes in Spain

Personal Tax
At the best of times can be complicated and there is no difference in Spain. You will be required to make a self assessment tax return to the government tax collector. The tax year will run from 1st Jan to 31st Dec each year and your return will need to be in by the 20th June of the following year.

Unlike the UK, Spain does not have accountant in general and so most tax returns are handled by your solicitor and a Gestor, who is an official form completer. They will help guide you through the tax return to ensure it is completed correctly and on time.

Documents you will need are:

  • NIE number
  • Year end bank statements
  • A recent IBI statement. 2% of the property value is added to the income of a non resident. A resident does not have to pay this.
  • Receipt for tax paid in UK or any other country

Income Tax
A Spanish Resident is one who spend more than 6 months a year in the country, who has a residencia and has notified the tax authorities back home of their departure on form P85.

A number of allowances can be deducted and you will be given advice on your personal circumstances from your solicitor. Taxation for residents is on a sliding scale from 15% to 30% depending on your income.

Capital Gains Tax
This applies to non residents and residents alike and is payable on profits from the sales of assets such as property, stocks and share etc.

If as a resident you have owned for less than 2 years then gains will be added to your income tax but if you have owned for more than 2 years, a sliding scale based on inflation will be used. Allowance will be made on the purchase of any new property and those over 65 will not have any tax to pay in relation to capital gains.

Inheritance Tax
This is one of the most complicated of all taxes and we strongly suggest you take advice from your solicitor as soon as possible.

Some key points:

  • Inheritance tax is paid if the recipient is a resident or the assets being passed on death are a property in Spain.
  • The tax is paid by the beneficiaries and not by the deceasedís estate.
  • The tax starts on a sliding scale after a fixed allowance of Ä16,000 per recipient.
  • There is no exemption between husband and wife for joint ownership of a property.
  • They are deemed to own equal shares and if one dies the tax must be paid on the other portion of the assets.

As a general rule we would recommend that as soon as you have purchased your property, make arrangements to spend time with your solicitor and organise your tax affairs. The solicitor will be very helpful and experienced in achieving the lowest level of taxation, understanding that no one likes to pay tax.

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