Personal Income Tax in Spain:
Tax rules are always changing. This article has now been superseded by changes in tax rules in Spain. However, you can get the latest information by downloading the very latest version of our Guide to Tax in Spain
General Tax Rates 2015
In 2015, personal and family allowances are slightly increased while reductions for employees and entrepreneurs are slightly cut. On balance, the changes are GOOD NEWS!!
Tax rates are reduced in nearly all income brackets. We have included the table for 2014 for comparison. The system has been “simplified” too and as from 2015 there are only 5 bands not 7.
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It should be noted that the 17 autonomous regions in Spain can modify the tax rates that apply to half of the Personal Income Tax rate. Some Autonomous Communities, such as Catalunya, do have additional tax, so in 2014, for example the top rate of tax in Catalunya was 56%.
A word of warning though, if you and your immediate family own in total more than 25% of the shares in your own company. There are special and complex rules that apply to this situation. The business income can be treated as personal income in some cases. In others, you can register as a “professional” providing you meet certain conditions. This then gives all sorts of allowances and discounts. It is complex and a really good tax lawyer is needed for advice if you have your own company.
In addition to the Beckham scheme there is a scheme which allows a trabajador (employee) to not pay tax on income for work he has completed outside Spain. The first point to note is that this is for an employee ie. a person with a contract of employment, not the self-employed (autonomo). Again, some conditions need to be met but this is a useful allowance for many working international clients. Why? Because you can have up to 60,000€ pa tax free from this overseas income. AND, you can claim for work done in the last 4 years. Furthermore, whilst the Beckham rule is only available to people who have not lived in Spain in the last 10 years, this scheme is available to all employees no matter how long you have lived in Spain.
It is our experience that the approach to tax in Spain is changing. The collection and enforcement part of the Hacienda is being reinforced and indeed is quite efficient. As examples, new computer systems to allow information to be exchanged between Spain and 17 other countries have been introduced. Also there will be 700 more investigating officers in the Hacienda in 2015. We continue to recommend that people run their affairs in a compliant manner.
On balance, these changes with lower tax rates, some special allowances and easier understanding of what is correct should make tax in Spain, well, less taxing.