Many will remember that happy day in December 2008 when the Spanish Government eliminated Wealth Tax, or so it was thought….!

The idea in 2008 was to make Spain a more attractive economy and do away with an archaic tax that has its roots in 1977 when inflation and interest rates were in double figures, the fledgling Spanish democratic state was crying for financial air and so an ‘extraordinary tax’ was born

From 1 January 2010, EU residents (whether individuals or companies) who rent their Spanish properties will pay 24% tax on the net rental income, instead of 24% tax on the gross rental income.

The Spanish Government intends to approve a number of changes in legislation to strengthen the tax office’s armoury against the black economy and tax fraud.  They propose to modify the Penal Code so that substantial tax fraud may be penalised with up to 6 years (currently four years) in jail.