Non-Lucrative Visa holders in Spain must pay taxes on income earned both inside and outside the country, including rental properties and investments.
Non-Lucrative Visa holders in Spain are subject to specific tax obligations, particularly if they qualify as tax residents. Here’s an overview of the key tax implications:
1. Tax Residency Status
- 183-Day Rule: Non-Lucrative Visa holders who spend more than 183 days in Spain during a calendar year are considered tax residents. As a tax resident, you are subject to Spanish taxes on your worldwide income, not just income generated within Spain.
- Non-Resident Status: If you spend fewer than 183 days in Spain, you are considered a non-resident for tax purposes. Non-residents are only taxed on income earned within Spain, such as rental income from Spanish properties or other local sources of income.
2. Income Tax
- Global Income Taxation: As a tax resident, you must declare all your global income, including salaries, pensions, investment income, and rental income, in Spain. The tax rates are progressive, ranging from 19% to 47%, depending on your income level.
- Double Taxation Agreements: Spain has double taxation treaties with many countries to prevent the same income from being taxed twice. If you pay taxes on your income in another country, you may be able to claim a credit or exemption on your Spanish tax return.
3. Wealth Tax
- Applicable Wealth Tax: Spain imposes a wealth tax on residents whose net assets exceed a certain threshold. This tax applies to your worldwide assets if you are a tax resident. The rates range from 0.2% to 2.5%, depending on the total value of your assets. Each individual has a tax-free allowance, which varies by region but is generally around €700,000, with an additional €300,000 allowance for a primary residence.
4. Capital Gains Tax
- Sale of Assets: If you sell assets such as real estate, stocks, or other investments while being a tax resident, you are liable for capital gains tax in Spain. The rates for capital gains tax range from 19% to 23%, depending on the amount of the gain.
5. Property Tax
- Real Estate Owners: If you own property in Spain, you will be subject to local property taxes, known as IBI (Impuesto sobre Bienes Inmuebles). These taxes are calculated based on the cadastral value of the property and vary by municipality.
6. Inheritance and Gift Tax
- Inheritance and Gifts: Spain imposes inheritance and gift taxes, which apply to both residents and non-residents. The rates vary significantly depending on the region, the relationship between the donor and recipient, and the value of the inheritance or gift.
7. Reporting Foreign Assets
- Modelo 720: If you are a tax resident in Spain and hold assets abroad valued at over €50,000, you are required to report these assets to the Spanish tax authorities using the Modelo 720 form. Failure to do so can result in significant fines.
Summary
Non-Lucrative Visa holders in Spain who become tax residents are subject to Spanish taxes on their worldwide income, wealth tax on global assets, and capital gains tax. They must also comply with local property taxes and, possibly, inheritance taxes. Non-residents are taxed only on income generated within Spain. Understanding these obligations and consulting with a tax advisor is crucial to ensuring compliance and optimizing your tax situation.