Taxes in Spain

Anglo-Spanish Chartered Accountants

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Taxes in Spain

Value Added Tax

The general rate of VAT is 18%. This is the rate charged on most supplies. There is also a reduced rate for certain products and services of 8% and 4%.

Registration is compulsory for companies or individuals making supplies which fall within the scope of this tax.


Stamp Duty

Taxable transfers of buildings and land are taxed at the rate of 7%, and other items are taxable at 4%. First transfers of property from the developer are subject to VAT instead of stamp duty at 7% for buildings and 16% for land.

Stamp Duty also arises at the rate of 1% on share capital, either at the incorporation stage or when share capital increases are made.


Corporation Tax

Taxable profits generated by companies are chargeable to corporation tax. The standard rate for the year 2008 is 32,5%. However, the taxable profits of companies with a turnover below €8 million are taxed at 25% for the first €120,202 and at 30% for the remainder of the profits.

Payments on account may be required and the total of the corporation tax charge is due within the six months and 25 days after the end of the financial year.


Income Tax

This tax arises when individuals have any the following sources of income:

  • Income from employment
  • Income from current assets (interest, dividends, etc)
  • Income from property (rentals)
  • Income from economic activities (business profits)
  • Capital Gains
  • Deemed income (on the benefits derived from certain assets)

Residents are taxed at a maximum of 18% on certain types of income such as savings income and capital gains. On the remaining sources of income the minimum tax rate is 24% and the maximum is 43%.

Resident taxpayers are entitled to a minimum personal allowance of €5,150, this amount increases after the taxpayer reaches the age of 65. Further allowances can be claimed for dependants.

Other deductions may also be available. It is worth noting that a deduction may be made for the amounts paid for the purchase of your main residence, up to a limit of €9,015 per year. This also applies to the amounts paid in relation to the mortgage obtained when acquiring the house.

Payments on account may be required for sole traders and the total income tax for each calendar year is due by 30th June of the following year. 40% of the remaining payment due may be postponed until the following November.


Inheritance and gift Tax

This tax arises when individuals receive an inheritance or a life time gift. The tax payable depends on the wealth of the recipient as well as on the value of the transfer. The impact of this tax is considerably less on residents given the reliefs available.


Local Taxes on Property

In addition to the above there is council tax due on the ownership of urban property. This tax is calculated on the rateable value of the property (valor catastral) and the rates range between 0,4% and 1,3%.

Local tax also arises when the property is sold, this charge considers the rateable value increase during the period of ownership.


Local Taxes on Businesses

Business rates may also be payable to the local authorities. However, at the present time small and medium sized companies are exempt from this tax.

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