SPAIN Law and Practice Contributed by: Álvaro Paniagua Rico and Borja López Pol, Anaford Abogados
1. Tax 1.1 Tax Regimes
Once the net income is calculated, the taxable base is divided into two categories, to which different tax rates are applied: • general taxable base, which encompasses employ - ment income, business income, income from real estate assets, presumed income and some rev - enue from movable property; and • savings taxable base, which encompasses divi - dends, interests, capital gains and losses, and other income from movable property. The tax liability is calculated by applying a general (national) rate and a regional (the applicable autono - mous region) rate. Therefore, the final maximum mar - ginal rate will depend on the marginal tax rate estab - lished in the autonomous region of residence. By way of example, the PIT rates applicable in Madrid in 2025 range from 18% up to 45% for income included in the general taxable base (the maximum rate applies to income exceeding EUR300,000), and from 19% up to 30% for income included in the savings taxable base (the maximum rate applies to income exceeding EUR300,000). On the contrary, non-Spanish tax residents are subject to Non-Resident Income Tax (NRIT) only on income obtained in Spanish territory. Wealth Tax The WT is levied on the net wealth of the taxpayer, comprising their worldwide assets and rights minus debts. The value of assets, rights and debts has to be determined as at 31 December of each calendar year according to the rules set out in the Wealth Tax Law. There are specific rules for calculating the value to be declared depending on the nature of the assets; in the absence of a specific rule, assets must be declared at their market value. The autonomous regions partially rule WT and there - fore its regulation may differ according to where the taxpayer lives. On the contrary, non-Spanish tax residents are sub - ject to Spanish NWT only for the rights and assets located in Spain owned by the taxpayer at 31 Decem - ber of each year. In this case, they can only deduct
Individuals in Spain are taxed according to whether or not they are tax residents in the country. Essen - tially, tax resident individuals are taxed on their world - wide income and assets under the Personal Income Tax (PIT) and Wealth Tax (WT) rules, whilst non-resi - dent individuals are only taxed on income or assets obtained or located in Spain. Double taxation relief is available for income and assets obtained or located abroad, through the application of either a double taxation treaty or Spanish domestic regulations. The official tax year runs from 1 January to 31 December, and the period for filing PIT and NWT returns is, gener - ally, from May to June of the following year. Personal Income Tax PIT is levied on the worldwide income obtained by tax resident individuals during a calendar year. The law divides income into five groups, as outlined below. • Employment income, which includes salaries and bonuses, unemployment benefits, pensions and other remuneration paid in cash or in kind. • Business income, which is the income obtained from the production or provision of goods or ser - vices as a self-employed person. The leasing of real estate is treated as a business activity as long as one full-time employee is involved in the man - agement of the activity. • Income from capital, including rental income and other consideration derived from the lease of real estate and income from movable property (eg, dividends, interest and returns on capitalisation transactions). • Capital gains and losses. • Deemed income. The PIT Law presumes an income of 2% of the cadas - tral value of urban real estate when the owner does not lease it or does not use it as a permanent resi - dence. The rate is reduced to 1.1 % if the real estate’s cadastral value has been recently reviewed. The 1.1 % rate is applied to half of the acquisition value if the real estate is not located in Spain.
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