Taxes in Spain

Working in Europe | Taxation/salaries | Spain

The Agencia Tributaria (Inland Revenue) is in charge of implementing the State tax system. Its website (http://www.agenciatributaria.es) is very detailed, can be consulted in English and has a specific section devoted to non-residents in Spain.

For more information, you can consult:

  • Agencia Tributaria

Servicios Centrales

 c/ Infanta Mercedes, 37

 28020 Madrid (Spain)

 Tel.: (+34) 91 583 70 00

 Basic tax information: (+34) 901 33 55 33

Direct and indirect taxation 

There are two types of tax in the Spanish tax system:

-      Direct: applied to income and assets:

  • Personal Income Tax (IRPF)
  • Non-Residents’ Income Tax (IRNR)
  • Corporate Tax
  • Inheritance and Donations Tax and Wealth Tax.

-      Indirect: levied on goods and services and the transfer of goods and rights in general:

  • Value Added Tax (VAT, or IVA in Spanish)
  • Special Taxes (IIEE)
  • Insurance Premiums Tax
  • Wealth Transfer Tax (ITP).

Foreign researchers who come to Spain for a limited period of time will probably have to pay IRPF or IRNR (both income tax), depending on their residence status, VAT when making purchases, IIEE (special taxes) and, in rare cases, Wealth Tax, ITP (wealth transfer tax), etc.

IRPF and IRNR

These taxes are applied to income earned by individuals depending on their residence status.

Residence

Individuals must pay Personal Income Tax (IRPF) or Non-Residents’ Income Tax (IRNR) depending on whether or not they are residents of Spain.

Individuals are considered to reside regularly in Spain when they remain in the country for over 183 days (6 months) during the calendar year. Sporadic absences are taken into account when determining a presence in Spain, unless they certify their residence for tax purposes in another country.

However, there are certain considerations, such as their family's place of residence, close personal relationships and economic ties, country of origin or where they normally work. People in this situation must, in principle, pay income tax on all income anywhere in the world. It is therefore a good idea to seek out information on your tax status when you come to work or research in Spain.

In Spain, tax is levied per calendar year (from 1st January to 31st December) and the condition of resident or non-resident will apply to each one-year period.

Special IRNR Tax Plan

Natural persons (in this case researchers) who establish residence for tax purposes in Spain as a result of their travels to this country may choose to pay IRNR, maintaining their IRPF taxpayer status, for the tax year in which they move their residence and the following five tax periods. This is possible provided that:

  • they have not been resident in Spain during the ten years prior to this new displacement to Spain;
  • the displacement occurs as a consequence of an employment contract;
  • the work is actually carried out in Spain for a company or entity residing in Spain or for a permanent establishment in Spain for an entity that does not reside in this country;
  • the compensation for the work done in conjunction with this employment relationship is not exempt from IRNR tax;
  • and that the foreseeable payment gained from the work contract in each tax year in which this special regime is applicable does not exceed the amount of €600,000 per year (this condition is only applicable to taxpayers displaced to Spain as of 1st January 2010).

NB: Any researchers opting for this tax system have limited tax liability for Wealth Tax. It is possible to apply to withdraw or be exempted from this regime (using Model 149).

Table. IRPF e IRNR income tax

 

Certification of residence for tax purposes

A person can have a residence permit or administrative residence in a country without being considered a resident for tax purposes. To be a resident for tax purposes in a particular country (in this case, Spain), the person must be subject to taxation on income earned anywhere in the world. Residence for tax purposes is accredited by a certificate issued by the country's Tax Authority. These certificates are valid for one year.

Agreements to avoid double taxation

If the researcher is a resident of a country with which Spain has signed an Agreement to avoid double taxation, the terms of the agreement will apply, since, in some cases, the tax is lower, and in others, under certain circumstances, the income cannot be taxed in Spain. In these cases, the non-resident researcher must certify residence in the country with which Spain has signed the Agreement by means of a residence certificate issued by that country's Tax Authorities. 

To find out what types of agreements Spain has signed, and with which countries, visit the website of the Ministry of Finance and Public Administrations (http://www.minhap.gob.es/es-ES/Normativa%20y%20doctrina/Normativa/CDI/Paginas/cdi.aspx), available only in Spanish, and the “Non-Residents” section of the Agencia Tributaria website (http://www.agenciatributaria.es), available in Spanish and English. 

Spain has signed 98 agreements to date to avoid double taxation, 84 of which are in force. The other 14 are at various stages of being processed (Argentina, Azerbaijan, Belarus, Cyprus, the Dominican Republic, Kuwait, Namibia, Nigeria, Oman, Peru, Qatar, Senegal, Syria and Uzbekistan). Agreements with Austria, Canada, India, Switzerland, the United Kingdom and the United States of America are being renegotiated.

Countries with Double Tax Agreement

Countries with Double Tax Agreement / Source: Ministry of Finance and Public Administrations

Key

  • Green: Countries with which Spain has a double taxation agreement.
  • Pink: Countries with which the double taxation agreement is being negotiated.
  • Orange: Countries with shich Spain does not have a double taxation agreement.
  • Red: Spain.

 

Deductions for international double taxation

If the foreign researcher residing in Spain is required to pay IRPF tax and has had income (yields or capital gains) outside of Spain, an international double taxation deduction may be applied to keep the income earned abroad from being subject to the IRPF in Spain and to a similar tax abroad. 

 

Special plan for researchers (taxpaying) with residency in other European Union Member States

Investigadores del IEO

Researchers at the Spanish Institute of Oceanography, IEO.

Public Research Organisation

Foreign researchers who are IRNR taxpayers and certify their residency in another EU country, except countries and territories officially enshrined in legislation as tax havens, when at least 75% of their income for the tax period is the sum of employment earnings and economic activities during that period in Spain (and IRNR taxes have actually been paid on those earnings), may apply for a special plan so that their taxes in Spain are calculated according to the IRPF rules without losing their IRNR taxpayer status.

 

Tax-exempt grants:

a) IRPF taxpayers

If the researcher is an IRPF taxpayer, the grant is considered employment income and is subject to the IRPF. However, pursuant to relevant legislation[1], the following grants are exempt from tax:

  • State grants
  • Grants awarded by certain not-for-profit bodies[2] in order to undertake regulated studies in Spain or abroad, at all levels and degrees of the educational system. The amount that is exempt will cover the costs of matriculation, or amounts paid for an equivalent concept in order to take the course, and insurance for bodily injuries and medical care the grant holder – and, when applicable, his/her spouse or children – should require, provided they do not have Social Security cover.

Public grants and those given by not-for-profit entities for research included in the provisions of Royal Degree 63/2006, dated 27 January, which approves the Statute of Research Personnel in Training, as well as those given by entities whose purpose is research to civil servants and other employees of Public Administrations and to university teaching and research staff, are also exempt. Under no circumstances will amounts received under a work contract be considered grants.

[1] Law 35/2006 of 28th November on Personal Income Tax (BOE no. 285 of 29th November 2006), in force since 1st January 2007
[2] These are governed by the special regulated regime in Title II of Law 49/2002 of 23rd December on the tax regime for not-for-profit bodies and tax incentives for sponsorship

 

b) IRNR taxpayers

However, if the researcher is an IRNR taxpayer, the grants are considered to be income from work earned in Spain and are therefore subject to the IRNR tax. This is the case providing that this income is the result of personal activity carried out on Spanish soil or public payments received from the Spanish Government, unless work is performed entirely abroad and the income is subject to personal taxation in another country.

Although the grants are subject to IRNR, they may be exempt (according to IRNR regulations), in the following cases:

▪       Grants that are exempt pursuant to IRPF regulations.

▪       Grants and other amounts received by individuals, paid by Public Administrations by virtue of international agreements for cultural, educational and scientific cooperation or by virtue of the annual international cooperation plan drafted by the Council of Ministers.

Value Added Tax (VAT)

Value Added Tax (VAT, or IVA in Spanish) is an indirect consumer tax levied on three types of transactions: delivery of goods and provision of business or professional services, intra-community acquisition of goods and imports. The tax is applied to the end consumer and not the business owners and professionals, who are responsible for collecting the tax from their clients and depositing it in the Public Treasury with declarations submitted to the Agencia Tributaria (Spanish Inland Revenue).

In the first case, VAT is paid when acquiring any product or service.

In the second case, VAT is applied to the entry of goods (excluding personal belongings) from one EU Member State to another. In the third case, it is applied when goods are imported from other countries.

There are three VAT rates[3]: general (21%), reduced (10%) and super-reduced (4%); the latter is applied to basic or primary need products. For more specific information on the goods and services included in each category, visit the FAQ section (INFORMA) of the Agencia Tributaria website, http://www.agenciatributaria.es.

[3] The figures shown have been in force since 1st September 2012.

Special taxes

Special taxes are applied to the consumption of very specific goods: hydrocarbons (oil derivatives), coal, alcoholic beverages and tobacco. This category also includes the Special Tax on Certain Modes of Transport, which applies to vehicle registration. Remember that all vehicles (cars, motorcycles, etc.), both new and second-hand, to be used by Spanish residents must be registered in Spain.

  • Local taxes

The taxes described above apply at the national level. However, there are also certain local taxes that are managed entirely by the municipal governments. The most significant are:

  • Property tax

Applied to the value of real estate property (houses, flats, apartments, etc.) and paid by the owners or property rights holders.

  • Motor vehicle tax

Replaces the former Traffic Tax. It applies to all motor vehicles used on public streets.

IGME

Headquarters of the Spanish Geology and Mining Institute, IGME.

Public Research Organisatio