Have you submitted your Spanish income tax return yet? If you are tax resident here, you have until 1 July to declare the worldwide income and gains you earned in 2023.

Income tax rates and deductions

General and savings income are taxed differently in Spain, but you declare both on your personal income tax return. The progressive 2023 rates for general income (employment, pensions, rentals etc) in the Balearics start at 19% for income up to €10,000 then rise over many income bands to 49.5% for income over €300,000.

Spain provides a type of personal allowance for individuals and families, given as a tax credit against the total tax payable. For the national basic allowance is €5,500 if you are under 65, increasing to €6,700 up to age 75 and then to €8,100 (some regions have different levels). There may be other deductions available for your circumstances. The progressive rates for savings income range from 19% for income up to €6,000 to 28% for income over €300,000.

What you need to declare

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Tax residents are liable to Spanish income tax on their worldwide income and gains. The Spain-UK double taxation treaty establishes where you declare and pay tax on UK income. UK pension income is taxable only in Spain when received by a Spanish resident, except for UK government service pensions which remain taxable in the UK (though you still need to include it in your Spanish tax return). UK rental income and gains made on the sale of UK property are taxable in both countries, but the UK tax paid is offset against your Spanish liability. Capital gains on the sale of movable assets are exclusively taxed in your country of residence.

Wealth tax returns

Wealth tax returns are also due by 1 July. But you only need to submit one if your tax liability, after deducting all possible deductions and allowances, results in tax due. If you don’t have any tax to pay, you don’t need to file a return. If you are concerned about how much tax you’ve paid in 2023, take specialist tax and wealth management advice to see if you can improve your tax position for 2024 and beyond.

For questions about completing your tax return, speak to a tax accountant. For advice on effective tax planning in Spain, speak to a cross-border tax and wealth management specialist.

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Summarised tax information is based upon our understanding of current laws and practices which may change. Individuals should seek personalised advice.