Tax Rate on Personal Income in Spain

Tax Rate in Spain: The tax system in Spain consists of the two types of tax rates on the personal income of the individual. These are:

1) Personal income Tax Rates: It is for those people who reside in the country for tax purposes.

2) Non-resident Income Tax Rates: It is imposed on those individuals who are not resident in the country for tax objectives and who receive income in Spain.

Therefore, an individual who receives income in Spain is either subjected to pay Spanish NRIT or Spanish PIT.

The residents of Spain are usually direct to Personal income tax rate on their worldwide income, despite where it is produced, what is taxed, following statutory reductions at regular rates.

Non-residents are directed to Non-resident income tax rate only on their source income (Spanish).

There are two kinds of representations of payable income for Spanish Personal income tax purposes: saving taxable income and general taxable income.

Saving Taxable Income Comprises of Following Components:

  1. Income and other dividends produced from holding interests in firms.
  2. Income and interest produced form transferring the capital of the taxpayer to third parties. There is an exception to this when transferred capital of the related firm surpasses three times the equity of the party involved. The interest related to this surpass is taxed as general payable income.
  3. It includes the income produced from disability and life income insurance and capitalisation transactions.
  4. It also consists of the capital profits made from transfers of securities.

General Taxable Income Consist of the Following:

  1. All income which is not savings taxable income comes under it.
  2. Capital profits not produced from transfers of securities including lottery prizes.
  3. Income attributions, imputations or allocation as authorised by law.
  4. Income and other interest produced form transferring the capital of the taxpayer to the associated company when the capital surpasses three times the equity of the firm and for the part related to the excess.

Expatriates

PTI is not imposed on employment income received by individuals who are tax resident in the country for work activities carried out outskirts of Spain, up to 60,100 EUR (euros) limit, if the following requirements fulfilled:

  1. The worker is a resident of Spain for tax objectives.
  2. His work proceeds outside the country.
  3. The work proceeds for the entity, PE or company that is not resident in the country for tax purposes.
  4. The tax that is similar or identical to Spanish PIT is not imposed on the country where the worker carries out the work.

Income Tax Rates For Personal Income

The savings payable income is taxes at the rates mentioned below:

  1. For the first 6,000 EUR of taxable income, the tax is 19%
  2. For the following 6,000 EUR to 50,000 EUR of taxable income, the tax is 21%
  3. The tax rate for the amounts over 50,000 EUR is 23%

For general taxable income, regular tax rates are imposed. These are the aggregate of the applicable rate permitted by the state and the applicable rate permitted by every autonomous society of Spain in their regular tax rate scales. Therefore, tax liability or debts may change from one independent institution to another.

The table below shows the scale of tax withholdings permitted by the state. The same scale can be utilised as a guideline of the regular tax rates applied to the general payable base. For this reason, the scale which applies to the respective autonomous society of Spain should be used to measure the total regular tax rate.

Tax Scale For 2020 with Holdings

Taxable base (in euro) Tax liability (in euro) Tax rate in percent Excess of base
0 0 19 12,450
12,450 2,365.50 24 7,750
20,200 4,225.50 30 15,000
35,200 8725.50 37 24,800
60,000 17,901.50 45 Remainder

Non-Resident Income Tax Rates (NRIT)

For non-residents, the obtained income excluding PE is taxed at the given rates:

1) General tax rate 24%: For residents in EEA (European Economic Area) countries or other EU member states through which there is an active exchange of information regarding tax, the tax rate is 19%.

2) Rate 19%: For the capital profits produced from transfers of securities or assets.

3) Interest rate 19%: For EU residents the interest rate is tax-exempt. DTTs (double taxation treaties) generally establish lower rates.

4) Rate 19%: For dividends (double taxation treaties generally establish lower rates).

5) Tax 24%: For royalties (double taxation treaties typically establish lower rates).

6) Rate between 8% and 40%: For the pensions

The Bottom Line

One should be aware of all the tax rates which the government impose on the personal tax. It not only helps an individual but also comes under the characteristics of a well-informed citizen.

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