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In Spain, Social Security contributions are made on salaries and salaries under the general system. For 2024, the minimum and maximum contribution bases are 1,323 euros and 4,720.50 euros per month, respectively.
Employed workers: They contribute 6.47%, depending on the type of contract.
Employers: They contribute 30.48%, in addition to a variable rate per work accident (for example, 1.50% for office work).
Certain people may be exempt from paying Social Security contributions in Spain if the following conditions are met:
To benefit from this exemption:
Since 2023, the contribution system for self-employed workers has changed, establishing an income-based model.
As of January 1, 2023, this mechanism applies to the common contingency contribution base for retirement pension coverage. For 2024, the percentage of the intergenerational equity mechanism is 0.70 percentage points, distributed as follows:
VAT in Spain taxes the delivery of goods and the provision of services carried out within Spanish territory, as well as imports and intra-community purchases of goods and services. There are three types of VAT depending on the type of good or service:
General Indirect Canary Tax (IGIC): In the Canary Islands, IGIC applies instead of VAT. The ordinary type of IGIC is 7%, with other types of 0%, 3%, 9.5%, and 15% (20% for tobacco). Unlike VAT, the IGIC includes exemptions such as those established for telecommunications services. Imports of goods into the Canary Islands are subject to the IGIC.
Sales Tax: In Ceuta and Melilla, sales tax is applied instead of VAT, with a different tax structure adapted to these autonomous cities.
Wealth Tax taxes the global net worth of tax residents in Spain and the assets and rights of non-residents who are located, can be exercised or must be fulfilled in Spain. This tax applies to assets owned by the taxpayer as of December 31 of each year.
With Law 38/2022, of December 27, which establishes Temporary Taxes on Energy and on Credit Institutions and Financial Credit Establishments and creates the Temporary Solidarity Tax on Great Fortunes, individuals subject to Wealth Tax have been expanded. Since the 2022 tax period, shareholding has been subject to this tax when at least 50% of the company's total assets are constituted, directly or indirectly, by real estate located in Spain. For these purposes, the value of real estate assets is not based on the book value declared by the company, but on the value resulting from the specific rules of Wealth Tax, the greater of the acquisition value, the cadastral value and any other value assessed by the Tax Administration for tax purposes.
Exempt Minimum: Each autonomous community in Spain can set its own exempt minimum for the tax. If they do not, the exempt minimum established by Spanish law, which is 700,000 euros, will apply.
Tax Non-Residents: They have the option of applying state or regional regulations that regulate the territory in which the highest value of their assets and rights located in Spain is located. This includes the application of the exempt minimum, bonuses and tax rates.
Exemption for Regular Housing: Regular housing is exempt from taxation up to a limit of 300,000 euros.
Exemption for Participations in Family Businesses or Business Equity: They can benefit from a tax exemption if they meet certain requirements.
The Wealth Tax tax rate is calculated by applying progressive tax rates established by the autonomous communities on the net tax base (after applying the corresponding tax rebates).
If an autonomous community does not establish its own progressive rate scale, the state scale will be applied, to which it is as follows:
The autonomous communities have the power to establish their own bonuses or reductions to the Wealth Tax. Some communities have already expressed their intention to apply a full discount on this tax, which implies that, in those regions, taxpayers may not be required to pay the tax.
However, taxpayers must file their Wealth Tax return if their tax contribution is positive or if their net worth, whether exempt or not, exceeds 2 million euros.
The property tax is a local rate that applies to owners of properties located in Spain.
The amount to be paid is calculated as a percentage of the property's tax base, depending on the type of property (rustic or urban) and the municipality in which it is located.
Each municipality has the power to establish its own tax rates, within a minimum and maximum range, which may be slightly increased if certain specific requirements are met.
The tax on the increase in the value of urban land is a local rate that is applied when urban real estate is transferred, taxing the theoretical increase in the value of the property. The tax base for calculating this tax considers both the cadastral value of the property and the duration of the property.
On May 11, 2017, the Spanish Constitutional Court declared the legal provisions that imposed this tax unconstitutional and, therefore, null and void in cases where there was no increase in the value of the urban assets transmitted. Consequently, taxpayers who have paid incorrect amounts of tax in such circumstances can request the refund of the amount paid within the statute of limitations through a special procedure that begins with the submission of an application to the Tax Administration.
Later, on November 9, 2021, Royal Decree-Law 26/2021, of November 8, was published in the Official State Gazette (BOE), which introduces a new assumption of non-subjection for cases in which there is no increase in value between the dates of transmission and acquisition of said land.
This tax is paid by the transferor of the property, provided that the transfer is not made as a donation.
In addition, Law 31/2022, of December 23, increased the maximum amount of the applicable coefficients on the value of the land at the time of accrual, depending on the period in which the increase in value was generated. Subsequently, Royal Decree-Law 8/2023, of December 27, reduced these coefficients as follows:
When a taxpayer ceases to reside fiscally in Spain due to a change of residence, they must declare non-imputed income in their last RPF return. Alternatively, you can file a supplementary return to include such income, without penalties, late payment interest or surcharges.
In the event that the taxpayer transfers their residence to another member State of the European Union, they have the option of including the income not yet charged in their last personal income tax return or, if they prefer, to file a complementary return each time one of the income to be reported is obtained. This declaration is also submitted without applying penalties, late payment interest or surcharges.
When taxpayers resident in Spain transfer their tax residence to another country and have been resident in Spain for at least ten of the fifteen tax periods preceding the last period for which they must file their personal income tax return, the taxation of latent capital gains derived from shares or shares in companies or Collective Investment Institutions is advanced. This advance is applied depending on the value of these shares (4 million euros) or the percentage of participation (25% starting from 1 million euros).
The payment of this tax may be postponed if the transfer of residence is temporary for work reasons or if it occurs to a country or territory with which Spain has an Agreement to Avoid Double Taxation that includes an information exchange clause. If the taxpayer recovers their status as a tax resident in Spain within the following five years (extendable for another five years in the case of a temporary transfer for work reasons) and without having transferred the shares or shares, the deferred tax debt, together with the accrued interest, will be forgiven by the Tax Administration. Under these circumstances, the taxpayer may request the rectification of the self-assessment and the refund of the taxes paid.
In addition, special rules apply in case of changes of tax residence to another member State of the European Union or to a country in the European Economic Area.
A special tax of 20% is established on prizes obtained in the following situations:
1. Prizes received in lotteries and games organized by the State Lotteries and Gambling Society, as well as by regional bodies or entities. Also included are the draws organized by the Spanish Red Cross and the types of games authorized by the Organization of the Spanish Blind.
2. Income derived from lotteries, games and raffles organized by public bodies or entities in other member States of the European Union, provided that these entities carry out non-profit social or welfare activities and pursue business objectives similar to those of the bodies mentioned above.
As of 2020, the net amount exempt from tax for lotteries and games is 40,000 euros.
The taxable base for this special tax is calculated on the amount of the prize that exceeds the exempt amount. The applicable tax rate is 20%, and is applied on the taxable base after deducting withholding and on-account payments made.
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