The general rate of VAT is 21%. This is the rate charged on most supplies. There is also a reduced rate for certain products and services of 10% and 4%.
Registration is compulsory for companies or individuals making supplies which fall within the scope of this tax.
Taxable transfers of buildings and land are taxed at the rate of 8%, and other items are taxable at 4%. First transfers of property from the developer are subject to VAT instead of stamp duty at 10% for buildings and 21% for land.
Taxable profits generated by companies are chargeable to corporation tax. The standard rate for the year 2019 is 25%.
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.
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)
Deemed income (on the benefits derived from certain assets)
Residents are taxed at a maximum of 19% on certain types of income such as savings income and capital gains. On the remaining sources of income, the minimum tax rate is 19% and the maximum is 45%.
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.
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.
It is a declaration of overseas assets held outside of Spain. This includes details about:
bank accounts in financial entities abroad
balances, incomes, insurance and taxes deposited, managed or obtained abroad
real estate and any profits coming from real estate outside of Spain
Tax residents in Spain who own assets outside of the country with a total value of more than 50,000 euro on 31st December must submit Form 720. It must be submitted between 1st January and 31st March of the following year to that which the information pertains. Although the declaration is merely informative, the Modelo 720 penalties for 2019 that may result from failure to submit, late submission, or submission of false information can be very serious for all those who are obliged to declare, however, it should be pointed out that as of 2019, the European Union considers Spain to be breaking EU law with these sanctions for people who file the Modelo 720 late.
Inheritance and gift Tax
This tax arises when individuals receive an inheritance or a lifetime 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. Any autonomous region has its own regulation, consequently, an analysis of each case is advisable.
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.