Living in Spain also has tax implications
Living in Spain does not only mean a change of address, but also a change in your tax obligations. Many foreign citizens, especially Europeans, are unaware that they may be subject to the Spanish tax system even if they maintain ties with their home country. At Prius Abogados, we help you identify your situation and plan properly to avoid penalties and optimize your taxation.
Are you a tax resident in Spain?
You are considered a tax resident in Spain if you spend more than 183 days in Spanish territory during the calendar year or if you have the main center or base of your economic activities or interests in Spain.
The Spanish Tax Agency may consider someone a tax resident even without an NIE or formal registration if these conditions are met.
Main taxes that may affect you:
Personal Income Tax (IRPF): if you are a tax resident, you are taxed on your worldwide income
Non-Resident Income Tax (IRNR): if you are not a resident, you are taxed only on income obtained in Spain
Wealth Tax: applicable in regions such as Andalusia, with certain exemptions
Inheritance and Gift Tax: if you receive assets in Spain
Non-Resident Income Tax (IRNR): applicable to real estate, financial income, and professional income obtained in Spain, among others
Double taxation agreements
Spain has signed agreements with many countries to prevent the same income from being taxed twice. Finland, for example, has an active agreement.
Correct application of these treaties is essential to avoid improper withholdings or double taxation. At Prius Abogados, we review each case to apply the appropriate agreement and justify tax residency when necessary.
Form 720: declaration of assets abroad
If you are a tax resident in Spain and hold assets abroad exceeding €50,000, you must submit this informative declaration.
It includes bank accounts, real estate, shares, life insurance, among others. Failure to file can lead to serious consequences if not properly regularized. A new filing is also required if previously declared assets increase by more than €20,000.
Rental income from properties in Spain
Non-residents are taxed on income generated in Spain. If the tenant is an individual, the landlord must file quarterly IRNR returns. Residents include this income in their IRPF declaration.
Taxation of pensions and foreign income
Depending on the country of origin, pensions may be exempt or taxable in Spain. In the case of Finland, public pensions are taxed in Finland, while private pensions may be taxed in Spain.
Attention should be paid to certain treaties where the tax rate is calculated based on total worldwide income, even if part of that income is exempt in Spain.
Tax advice and planning
At Prius Abogados, we offer analysis of your personal and financial situation, tax calculations and deadline management, coordination with accountants and tax authorities, and representation before the tax authorities if you do not reside permanently in Spain.
Our goal is for you to understand your tax situation and to plan ahead.
Advantages of working with Prius Abogados
Service in Finnish, English, and Spanish
Experience with foreign residents in Andalusia
Clear communication without unnecessary technical jargon
Legal rigor and a preventive approach
Our commitment to you
Living in Spain can also be a smooth experience from a tax perspective. At Prius Abogados, we ensure that you understand your obligations, avoid risks, and make informed decisions.