Tax Guide Spain

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If you’re a UK national living in or thinking about moving to Spain, it’s important to review your financial planning. This should look at tax efficiency and how your estate planning, investment strategies and pensions can work most favourably for you and your new life in Spain.

With personalised financial advice from Callaghan Financial Services, you can make the most of what you have while keeping up with the complex tax rules in both Spain and the UK.

How you’re taxed in Spain

The Spanish tax regime is quite unlike the UK’s, and at present includes an annual wealth tax  that doesn’t appear in most other countries. You’ll need to understand how the Spanish tax system works and how it will concern you, as well as how you can take advantage of the rules.

As the regional governments in Spain can change some of the tax rules and rates, what you’ll pay in tax can vary depending on where you live. Once resident, you could potentially pay:

• Income tax at a top of rate of 45% to 48%, depending on region
• Up to 23% income tax on savings
• Tax on capital gains made on property and investments
• An annual wealth tax   of between 0.2% and 3.5% on your worldwide assets

Even if you’re not a resident, you could be liable for Spanish taxes, for example, when buying or selling property in Spain.

Although Spanish taxes can look relatively high, with bespoke advice, Spain can be a very tax-efficient place to live. This is especially the case for retirees.
The importance of tax planning

If you don’t look over your tax planning once you move to Spain, you could potentially end up paying more tax than what is obligatory. It’s extremely important to take personalised, professional tax advice, considering with the Spanish government’s stringent approach to tax evasion. It’s easy to get it wrong without realising it and face costly consequences.

Since 2012, it’s the law that everyone resident in Spain must report any overseas assets worth over €50,000 to the authorities by completing the Modelo 720 form. There are severe penalties for failing to declare assets correctly.

The tax office will receive information on all your overseas financial assets under the new ‘global automatic exchange of information’ regime. It’s also able to analyse information from hundreds of sources to assess if your declared residency status and tax returns are correct.
With our guidance, our clients are able to use compliant arrangements in Spain to enjoy favourable tax treatment and make sure they’re meeting all their tax declaration obligations.

Help with your UK pension planning

There’s more choice than ever for accessing your UK pension savings. Callaghan Financial Services can advise you on the pros and cons of each option, including QROPS, as well as the local tax implications in Spain, so you can make a fully informed decision on the best solution for you.

This article is provided as a guideline and we recommend that you seek specialist tax advice. Tax rules change and this article is published only as a guideline.