The Word on the Street

Special Tax Edition - May 2012


News and Information from Spain


Welcome to our resident extra on the taxes you should be paying as a person who lives more than 183 days in Spain.

We know that there is so much confusion about resident taxes in Spain that we thought it was time we dedicated a newsletter to the subject. Hopefully, with this bulletin we will be able to clarify for you what you do and don't need to pay.

The good news on property taxes

The good news for residents is that you only have one tax related to your property. IBI (sometimes known as Suma) is the Spanish equivalent of rates or council tax and is payable by residents and non-residents.

However, residents are not required to pay the property income tax that non-residents are required to but they do have to declare their worldwide income to the Spanish tax authority and may be taxed on it according to current tax legislation.

The resident tax declaration, deadline June 30th

This is the annual declaration that as a resident in Spain you must make if:

- You receive one or more pensions from abroad that total more than 11,200€ per year (some civil service pensions are exempt).

- You are an early retiree with an income through interest of more than 1,600€ a year or you have a rental income of more than 1,000€ a year.

The economy and taxes

Most people recognise that when a country needs to boost its budget increasing the rate of tax is one way of doing it. The route that Spain has chosen at this point in time is not to increase IVA (VAT) but to increase the percentage of income tax.

The Spanish government intends to do this through an additional income tax to the 24% (minimum) that residents already pay. The tax is on a sliding scale according to how much your income is:

Tax range
Increase in income tax
€53.407 - €120.000


Frequently asked questions

Here are some of the queries that residents are asking us daily about. Perhaps one of these relates to you?

I live in Spain do I need to take out residencia?
Yes. If you are in Spain for more than 183 non-consecutive days in the year then you are legally required to register yourself as a resident here.

I have one modest pension of 11,000€ per year. I've been told I don't need to complete an annual tax declaration. Is that true?
Yes. It is true that you don't have to complete the tax declaration. However, we do still recommend that you complete one because it acts as proof of your fiscal residency in Spain.

Being a fiscal resident comes with benefits. It means that you:

- do not have 3% of the sale price retained if you sell your home

- do not have to pay inheritance tax if your husband or wife should die

Some people confuse the green residency certificate with fiscal residency. They are not the same. The green certificate is your civil residency. It does not prove that you are living in Spain for tax purposes and without a certificate of fiscal residency you still might find that you are classed as a non-resident!

How do I obtain a fiscal residency certificate?
This is issued, when required, by your local tax office and the Notary will want to see it if you are going to sign a sale or inheritance deed as a resident. If the tax authority doesn't have you on record because you are not presenting a tax return each year (even a zero one) it is very complicated to convince them to accept you are actually a resident in order to obtain the certificate.

As a resident in Spain can I choose to pay my taxes in my homeland?
You cannot 'choose' where you pay your taxes. If you live for more than 183 days in Spain then you must pay your taxes here. The only exception is for those who have a civil service pensions and in some countries this has to be taxed at source.

I've been told that as my income is less than 22,000€ a year I do not need to make an annual tax declaration.

This is only for those people who are employed in Spain and only have one employer. They are already paying tax as they earn through their employer.

The fiscal fraud plan

There is an increase in activity from the Spanish Tax Authority. They have been sending out letters to residents and non-residents who haven't made a tax declaration since 2007.

The letter is providing people with an opportunity to put their house in order before an official investigation takes place. If you do receive one of these letters you should contact your fiscal representative immediately for advice. If you don't have a fiscal representative, Ábaco will be happy to take the matter up with the Spanish Tax Authority on your behalf.


Stop Press!
Prescriptions - information taken from the British Embassy in Spain web-site

A co-payment system of contributing towards the cost of prescriptions will be introduced before the summer. Most people, including UK pensioners, will be required to pay a percentage of the cost of their prescription medication.

The amount each person pays will depend on annual income and individual situation. The table below provides a basic overview of what residents will be expected to contribute. Details have not yet been released about how income will be assessed or how payments will be capped.

This table is a guide only and more detailed information can be found on the Ministry for Healthcare, Social Services and Equality's website.

Annual income
Social situation
% of contribution
Capped at:
Less than €18,000
Working Age
State Pensioner
Between €18,000 and €100,000
Working Age
State Pensioner
Over €100,000
Working Age
State Pensioner

It remains to be notified by the Spanish government what kind of proof will be required to demonstrate your income bracket but it could well involve production of your Spanish tax return.

Put your tax affairs in order

If you would like a FREE consultation with one of our friendly team of English speaking tax advisers at our Torrevieja office please contact our Customer Care department on:

Tel. 96 670 37 48

09.00 to 14.00

Mon. - Fri.


To ensure that the advice you receive is provided by our qualified tax specialists the customer care department are unable to answer tax queries by telephone. However, if you are keen to put your tax affairs in order before the June 30th deadline you are most welcome to visit our offices for a personal appontment. We look forward to meeting you.



Ábaco Asesores: (+34) 96 670 3748

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