There are few tax changes to be aware of this year. While the biggest reform is the new solidarity tax, the good news is that it only affects very wealthy individuals.
Income taxes
Spain's State budget for 2023 included measures to ease the income tax burden on low earners for 2023 and 2024. At the same time it increased tax on higher levels of savings income by adding two tax bands. Your savings income (interest, dividends, capital gains etc) will be taxed as follows:
Up to €6,000 - 19%
€6,000 to €50,000 - 21%
€50,000 to €200,000 - 23%
€200,000 to €300,000 - 27%
Over €300,000 - 28%
Solidarity tax
The new, but temporary, 'solidarity tax on large fortunes' was approved at the end of December and applies for the 2022 and 2023 tax years (when it will be reviewed). In summary –
1. It only applies to net wealth above €3 million.
2. The progressive tax rates are 1.7% for wealth over €3 million, then 2.1% for wealth over €5,347,998 and 3.5% for €10,695,996 upwards.
3. Residents get a general €700,000 allowance plus €300,000 against the main home. Therefore, solidarity tax only really affects those with wealth over €4 million.
4. You can deduct the amount paid in the regular wealth tax from your solidarity tax liability.
5. A taxpayers’ combined solidarity, wealth and income tax liability cannot exceed 60% of the sum of the personal income taxable bases.
The start-up law – digital nomads and the Beckham law tax regime
The law for the promotion of the start-up ecosystem companies has finally been approved. The key new features relate to immigration and taxation. A new ‘digital nomad visa’ has been created and the ‘Beckham tax regime’ modified.
This special tax regime can apply to individuals who become resident through working in Spain and has been expanded to include teleworkers and entrepreneurs. Those eligible can be taxed as a non-resident for the year of arrival and following five years.
You can now apply if you were not tax resident here the previous five years (it used to be ten), and it’s available to non-EU/EEA employment contracts and nationals.
It is sensible to review your tax planning regularly in any case, but more so following tax reforms. Understand how the changes affect you personally and make sure you are making the most of Spain’s tax planning opportunities.
Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.
Keep up to date on the financial issues that may affect you on the Blevins Franks news page at www.blevinsfranks.com
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