Moving to Spain Guide – Chapter 5 – Taxation in Spain

Your responsibilities as a tax resident

Let’s face it — no one gets excited about paying taxes. And navigating a new country’s tax system can feel daunting. But with a bit of knowledge and the right support, managing your taxes in Spain doesn’t have to be stressful.

Whether you’re retiring, working, or running a business in Spain, understanding your tax residency status and obligations is key to staying on the right side of the law — and avoiding any costly surprises.

Who is a Tax Resident in Spain?

You are considered a tax resident in Spain if you:

✅ Spend 183 days or more in Spain during the calendar year (they don’t have to be consecutive),
✅ Or your main base of economic interests (e.g. business, investments) is in Spain.

If you meet either of these conditions, the Spanish Tax Authority — known as Hacienda — will expect you to file an annual tax declaration.

As a tax resident, you must declare your worldwide income and assets, not just those in Spain.

Double Taxation: Will You Pay Twice?

Good news: Spain has double taxation agreements (DTAs) with many countries, including the UK, the US, Canada, Australia, and most EU nations.

These agreements are designed to prevent you from being taxed twice on the same income — for example, on your pension or property income earned outside Spain.

However, how and where you’re taxed depends on the type of income and the specific terms of the agreement with your home country. It’s not always straightforward — so getting help from a tax professional is highly recommended.

Types of Income That May Be Taxed in Spain

Depending on your situation, Spain may tax:

• Employment income

• Pension income (state, private, and occupational)

• Rental income

• Investment income (dividends, interest, capital gains)

• Business or freelance income

Some types of income may be taxed at different rates, and allowances or deductions may apply, depending on your personal circumstances.

Non-Residents Also Pay Some Taxes

Even if you’re not a tax resident, you may still need to pay tax in Spain on Spanish-sourced income (like rental income from a property). You’ll be taxed as a non-resident, usually at a flat rate — and you still need to file a non-resident tax return. 

If you own property in Spain but live in another country, you are required to pay Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes – IRNR) annually.

There are two types of situations that affect how this tax applies:

1. You Own Property for Personal Use Only (Not Rented Out)

Even if you don’t rent out your property, Spain still considers you to receive a kind of “notional” rental income — and you’ll be taxed on it.

How it works:

• The tax base is 1.1% or 2% of the cadastral value of the property (found on your IBI bill from the Town Hall).

  • 1.1% if the cadastral value has been revised in the last 10 years.

  • 2% otherwise.

• You are taxed on that amount at a flat rate:

  • 24% for non-EU/EEA residents (e.g., UK, US)

  • 19% for EU/EEA residents

Example: If your property’s cadastral value is €100,000 and hasn’t been revised recently:

• 2% of €100,000 = €2,000

• €2,000 x 24% = €480 tax due annually

2. You Rent Out the Property

If you rent your property (long-term or holiday lets), you must declare actual rental income and pay tax on the net amount (gross income minus allowable expenses if you’re an EU/EEA resident; no deductions for others).

Tax rates:

• EU/EEA residents: 19% on net rental income (after expenses)

• Non-EU/EEA residents: 24% on gross rental income (no deductions)

Getting Help with Taxes in Spain

Tax rules can change — and every situation is unique. That’s why we strongly recommend speaking to a qualified tax advisor who understands both Spanish law and international tax issues.

You can also:

Visit the Agencia Tributaria (Hacienda) website for official guidance
See our guide General Tax Information

Keep good financial records — including proof of income, pension details, and residency documents