Hi everyone! As we continue with this new "season" of relocations to Spain, I wanted to share 10 essential tips to help you navigate Spanish legislation and make your transition a little smoother:
If you're planning to live in Spain or already do, here are 10 essential tips to help you navigate Spain’s legal and tax system as an expatriate:
1. Are you a tax resident?
If you live in Spain for more than 183 days a year or have your main economic interests here, you’re considered a tax resident and are obligated to pay taxes on your worldwide income.
2. Selling Property Abroad? It’s Still Taxable in Spain
As a tax resident, any profit from the sale of property outside Spain is subject to Spanish taxation. You can benefit from double taxation treaties to avoid paying taxes twice on the same income.
3. Declare Property at Market Value
When selling property, always declare a realistic market value. If you underreport, the Spanish Tax Agency may re-assess the value and apply penalties.
4. Keep your Residency Status Transparent
If you’re living in Spain long-term, make sure your residency status is clear. Living in Spain for more than 183 days means you’re automatically considered a tax resident, regardless of nationality.
5. Spouse Not a Resident? No Joint Tax Benefits
If your spouse isn’t a tax resident in Spain, you cannot benefit from the joint tax filing system. However, any income your spouse generates in Spain will still be taxable.
6. Take advantage of Double Taxation Treaties
Spain has agreements with many countries, including the U.S., UK, Ireland, and others, to avoid double taxation. Be sure to check if you can claim relief on foreign income under these treaties.
7. Foreign pension income? Declare it in Spain
Pensions from abroad are taxable in Spain. Thanks to double taxation treaties, you might be able to reduce your tax burden, but make sure to declare all foreign pension income accurately.
8. Understand Spain´s Inheritance Laws
Spain has strict inheritance laws, including the legítima, which requires a portion of your estate to go to certain heirs. This can affect how you plan your estate if you own property in Spain.
9). Declare foreign assets with the Modelo 720
If you own assets abroad, including bank accounts, you must declare them with the Modelo 720. Failing to do so can result in hefty fines and penalties.
10. Keep Your Residency Documents Updated
Stay on top of your residency paperwork. Make sure your NIE (Foreign Identification Number) and empadronamiento (municipal registration) are up to date to avoid any issues with legal status or accessing public services.