Unlike some other countries, individuals who live in Spain are always required to file an annual income tax declaration, unless specifically exempted.
The Spanish tax year is the calendar year and the filing deadline runs between 1 April and 30 June.
However, individuals are exempt from the filing obligation in the situations described below:
A) In the case that total earnings from Spanish employment do not exceed 22.000 euros if paid by a single Spanish employer. This exemption will also apply if there are several Spanish employers/sources and
- total earned from the second and other employers does not exceed 1.500 euros.
- total income from social security, insurance companies, pension schemes and other similar passive sources do not exceed 1.500 euros
B) In the case that earnings from employers (Spanish or otherwise), including pensions, that do not exceed 14.000 euros and
- there is more than one source of earnings from employment and the second or other employers exceeds 1.500 euros.
- income in the form of maintenance received from a spouse
- the employer/payer is not subject to withholding Spanish income tax (PAYE). This includes pensions paid by non Spanish state systems and former non Spanish employers.
- income is taxed at source in Spain at fixed rates (directors fees, public speaking, authors, late paid salaries)
C) In the case of income from investments and capital gains that do not exceed 1.600 euros, always that such income was taxed at source in Spain.
D) In the case that imputed income from second homes, untaxed Spanish Treasury Bonds, capital grants from public sources, do not exceed the limit of 1.000 euros.
E) In no case will an income tax filing be required if income or capital gains from whichever sources do not in total exceed 1.000 euros and capital losses from the disposal of assets do not exceed 500 euros.
It should also be said that for a foreigner it can be desirable to file an income tax declaration, even if not strictly required because:
- In the case of having a 5 year temporary TIE or residencia, the zero tax declaration provides useful proof of a) compliance with tax rules and b) presence in Spain for more than 6 months each year. To obtain a permanent TIE at the end of the 5 years such proof may be required by the immigration officials.
- In the case of selling a home it provides strong proof of your home address and tax residence, to support claims for capital gains tax exemptions for the over 65s and those reinvesting to buy a new home.
Typical Q and As
Q: Karl receives a pension of 13.000 euros a year from the social security system of Germany. He has savings in a Spanish bank deposit account which pays him a further 1.000 euros a year.
A: Under rule B) Karl does not have to file a tax declaration but should do because the Spanish bank has withheld tax at 19% of over 200 euros which he will only get back if he files a tax declaration.
Q: Rose received a salary of 15.000 euros from one temporary job where she worked for 7 months and then another 1.200 euros from another job where she worked for 1 month.
A: Rose does not have to file a tax declaration under rule A) but, just like Karl, she should do so because she has almost certainly paid some tax via the deductions her two employers had to make from her salary
Q: John receives a UK pension of 9.500 euros and has a property in the UK that produces 4.000 euros net income.
A: Although John’s income is below the 14.000 euros he is not exempted under rule B) because he has property income which cancels all exemptions.
Q. Michelle lives in Spain but works for a UK company receiving a salary of 21.000 euros.
A. Michelle is not exempt under rule A) because the 22.000 euro limit only applies if the salary is received from a Spanish employer.
Q. Tom was working as self employed for January and February 2020 and had income of 800€ and then he stopped work altogether because of ill health. He had no other income and lived from savings.
A. As explained in rule E) he does not have to file a tax declaration because his income was below 1.000 euros.