Who has to pay taxes in Spain and how?

Understanding the Spanish Tax System

Taxes in Spain are regulated by the Agencia Tributaria, which is responsible for the management, inspection and collection of state taxes. The Spanish tax year covers the period from 1 January to 31 December.

If you are living or employed in Spain, it is essential to understand your tax obligations, including the specific taxes that apply to you and the amounts you are required to pay. Generally, this will depend on your residency status, whether you own property, and any other investments you hold.

If you have income from employment in Spain or operate a business, you are required to pay tax on your earnings or profits. For the majority of employees, tax is deducted automatically from their pay.

Income tax in Spain is distinctive because the applicable rate combines the rate established by the central government with the rate set by your regional government.

National, regional and municipal taxes

• National taxes in Spain include capital gains tax, corporate tax and VAT. 
• Regional and local taxes include property taxes and wealth taxes
• Tax rates and inheritance tax obligations vary from region to region.

Recent tax changes in 2025

From 1st January 2025, savings income exceeding €300,000 will be subject to a personal income tax rate increase from 28% to 30%. This also applies to beneficiaries of Beckham's Law.

There have also been reforms to corporation tax for smaller companies in Spain, with government plans for a gradual reduction in tax rates for companies with turnovers below €1 million and those with turnovers between €1 million and €10 million. More information can be found in our dedicated article on corporate tax in Spain.

Small and medium size entities (SMEs) and micro-enterprises

The government plans to gradually reduce tax rates for companies with sales of up to €1,000,000, a tax rate applies: 21% on the first €50,000 of taxable income. This percentage will be 19% in 2026 and 17% in 2027.

With effect for tax periods starting on or after 1 January 2025, a reduction in the tax rate applicable to SMEs and to micro-enterprises (those with a net turnover in the previous tax period of less than EUR 1 million) is envisaged, although its implementation is expected to be carried out progressively, over a period of three years for micro-enterprises and five years for SMEs.

In addition, in the case of micro-enterprises, the tax rate is broken down into two brackets, with a lower rate being levied on the taxable income up to EUR 50,000, when the tax period is one year, or up to the corresponding proportional amount when the tax period is shorter. Specifically, the tax rates would be as follows:

Applicable rates for emerging businesses or startups

The 2022 Startup Law extended the 15% reduction in the corporate tax rate for emerging companies. These companies will be able to pay 15% for the first tax period in which they have a positive tax base and for the following three, i.e., for a total of four years . This measure benefits businesses that qualify as emerging companies, which must be innovative and present a risk of technological or industrial failure. Thus, startups that make a profit from 2024 onwards will be able to pay 15% until 2027, as long as they maintain their emerging company status.

Requirements to be considered startups

• Be newly established or have been registered in the Commercial Registry for no more than five years. This period can be extended to seven years for companies such as energy, industrial, or biotechnology.
• Not having arisen from a merger operation
• Have registered office or domicile in Spain
• 60% of the workforce must have an employment contract in Spain.
• Develop an innovative entrepreneurship project
• Not distributing or having distributed dividends
• Not listed on a regulated market
• Those who are not up to date with their tax and Social Security obligations will not be eligible.

Applicable rates for “recently created” businesses

The 15% tax rate reduction applies to newly created businesses during the first fiscal year in which they earn a profit and the following fiscal year. The Central Economic and Administrative Court clarified that this reduction only applies to consecutive fiscal years in which the company has achieved a positive result, regardless of whether there was a profit or loss in the second fiscal year.

How do I know if I am resident in Spain?

You will be considered a tax resident if you meet one of the following three requirements:

• You live in Spain more than 183 days per year (note that the days do not have to be consecutive to count as effective).
• You have economic interests in the country, which means that you carry out your professional activity in Spain, either working for a company or working as a self-employed person.
• Your spouse and/or children live in Spain.

Spanish tax residents must pay tax on income obtained from employment and self-employment, rental properties, capital gains and savings. Their taxable income is after deductions for social security and contributions to pensions, personal allowances and professional expenses.

Do expats pay taxes in Spain?

Yes, expats in Spain need to pay taxes. If you reside in Spain for less than 183 days in a calendar year, you will be classified as a non-resident and will only be taxed on income sourced from Spain. Rather than the standard progressive rates residents pay, income tax for non-residents applies at a flat rate with no allowances or deductions.

Firstly, you need to know whether you are a resident for tax purposes or not, in order to determine exactly what specific taxes you will have to pay in Spain as a foreigner and how much they will be.

This distinction is purely fiscal and has nothing to do with the residence permit you may need to live legally in the country. This means that you may or may not have obtained a formal residence permit, but if you meet the requirements discussed below, you will still be considered a resident for tax purposes.

Non-residents will be taxed at a rate of between 19% and 24%, depending on the type of income and country of residence. The calculation is based on income obtained in Spain from economic activities, ownership of a second residence, pensions and income from capital gains on real estate, among other factors.  Tax rates for income tax for non-residents

What taxes do non residents in Spain have to pay? 

1 - Earnings derived from economic activity

2 - Earnings from work

3 - Pensions and other similar benefits.

4 - Remuneration of directors and members of the Boards of Directors, of the Boards that act in their place or of representative bodies 

5 - Income from movable capital .

6 - Earnings from real estate (real estate assets)

7 - Income imputed to individual taxpayers who are titleholders of urban real estate not performing economic activities

8 - Capital gains

The most basic tax that expats must pay in Spain is the income tax. The income tax is calculated upon the expat’s worldwide income. However, if you are a Spanish non-resident, the income tax is calculated just upon the income generated in Spain.

In the following link you can see all in detail about the income obtained in Spain subject to Income Tax for Non-Residents  Income Tax for Non-Residents 

To avoid double taxation, Spain has signed numerous tax agreements with other countries. These agreements ensure that individuals and legal entities do not pay taxes twice on the same income, both in Spain and in their country of origin. The Spanish Tax Agency keeps an updated list of these agreements.

Do I need a Spanish tax identification number?

To register your obligation to pay taxes in Spain, you can fill in form 30 Modelo 30 as a resident or non-resident for the first time, or to update your details.

First you will need a ID numbers in Spain: NIE, DNI, NIF, and social security. You can obtain this from your local Foreigner’s Office (Oficina de Extranjeros) or police station within 30 days of arriving in Spain.

NIE

Reason for applying for a NIE: To obtain a NIE as a non-resident, you need to provide a reason, such as the purchase or sale of a property or the incorporation of a company.

NIE for students: If you are in Spain with a study permit, the application process is similar, although you must present your study permit and other necessary documents.

Provisional NIE: This is an option if you need to establish your identity in Spain for a short period of time, for example, to carry out banking procedures.

• The NIE can be requested directly in Spain or at the Consular Office of the place of residence of the interested party.
• The application can be made in person or through a duly accredited representative.
• The physical presence of the applicant or their representative is always mandatory.
• The procedure carried out through Consulates is a NIE certificate (PDF document) that is not valid for residence or study purposes and does not include the issuance of a card with a support number or IDESP that allows online procedures. The card is only issued in Spain.

NIF

For foreign nationals who do not have a NIE and are not required to have one (mainly because they do not reside in Spain and have no intention of doing so), they must obtain their NIF by submitting the corresponding application to the tax authorities.