Tax in Spain

Spain Tax System Explained

Information on the tax system in Spain to give you a better understanding as to how the tax system in Spain works.

The tax office in Spain is known as the Hacienda, which is a part of the Ministerio de Economia y Hacienda. Each Spanish province has a head office or ‘delegacion’ and smaller local offices called ‘administracion’. The NIE or Numero de Identificacion de Extranjero is the tax reference number for a non-Spaniard. Tax returns need to be presented between 1st May and 20th June, and it is the responsibility of each individual to complete their tax return in Spain correctly.

The majority of people who live in Spain are elgible to complete a tax return. There are 3 types of tax return forms which are an abbreviated declaration (declaración abreviada), Form 103, which is used if you need to declare earnings from pensions or investments that have already been subject to withholding tax. A simple declaration (declaración simplificada), Form 101, which must be used if you have income from letting, certain business and agricultural income or capital gains from the sale of a permanent home where the total gain is to be reinvested in another property in Spain and finally an ordinary declaration (declaración ordinaria), Form 100, which is for all sources of income other than the above and covers all business and professional activities and capital gains

Tax Return in Spain

Research by the team at Terence Wright Spain have found that help is at hand to help you do your tax return in Spain either from your tax adviser or from your local tax office in the form of a recently introduced computer programme called the Personal Income Tax Return Help Progamme ( Programa de Ayuda a la Declaración del Impuesto sobre la Renta de las Personas Fisicas/PADRE). This has been introduced as a result of a major effort on the part of the tax authorities to help people in Spain declare their tax correctly.

To use the PADRE system, you can simply visit the tax office, where they will help you to enter your information into the system. As the tax offices in Spain are keen to promote the system, those who use it for their declaration will be the first to receive any tax refunds that are due to them. To do this you must phone 901 223 344 and make an appointment to see a specific member of staff at the tax office. In areas where there are large numbers of foreign residents, there may be a member of staff who speaks English.

When you arrive at the tax office for your appointment, you should take along your bank statements showing interest received and your average balance, any papers relating to stocks, shares, bonds and any property that you own in Spain or abroad, any declarations and receipts for taxes paid in another country and, of course, those vital documents, your passport, residence permit and NIE certificate.

You may discover that your bank has the PADRE programme and they may be able to enter your information directly via their computer, in which case a member of their staff should help you to make your declaration. However, if your tax position is complicated or if you prefer expert and independent help, it’s best to consult a tax adviser. Many of them have access to the PADRE programme and charge around €35 for a simple tax return and around €60 for a more complicated one.

You do not have to complete a Spanish tax return (even though you may be tax resident), if your income is from one source and is less than 22,000 Euros, and tax has been deducted at source. This exemption would not cover a pension income from overseas, as no tax has been deducted at source (unless it is less than 8,000 Euros).