Though life in Spain might seem a perpetual holiday for expats, the reality is that there are mundane but crucial obligations that shouldn’t be ignored: the Spanish taxes.
In Spain, both residents and non-residents are subject to income tax, known as IRPF and IRNR respectively.
Income Tax for Residents:
Individuals who reside in Spain for more than 183 days in a calendar year are considered tax residents and are subject to the Personal Income Tax (IRPF). This means that if you are working, studying, or simply living in Spain for more than half a year, you are required to declare your worldwide income and pay taxes accordingly. Typically, the deadline to file for IRPF is by the end of June. However, some residents must also fill out «Form 720» by the end of March.
Income Tax for Non-Residents:
Individuals who spend less than 183 days in Spain but own a property, receive rental income, or have any other source of income in our country are subject to the Non-Resident Income Tax (IRNR). IRNR must be paid before December 31st.
As a resident in Spain, you are obligated to pay taxes on your worldwide income, while non-residents only pay taxes on their Spanish-sourced income.
Unfortunately, many non-residents are unaware of this obligation and fail to file their tax returns on time. This not only results in penalties and interest charges but can also lead to legal consequences.
Shakira vs the Spanish Tax Agency
As you may have heard, the Spanish «Hacienda» has taken action against global superstar Shakira for failing to pay her taxes in Spain.
The Colombian singer was involved in a legal battle with the Spanish Tax Agency for several years. She was accused of evading taxes by claiming to reside in another country while spending most of her time in Spain. The case was finally solved when both parties made a deal: the artist pleaded guilty and paid 7 million euros, but she avoided the risk of being sent to prison, as there would be no trial.
This is an extraordinary case, but it is a clear example of the serious consequences of not fulfilling your tax obligations in Spain.
As independent lawyers specialising in real estate and taxes in Spain, we highly recommend seeking professional advice to avoid any legal complications if you are not familiar with your tax obligations in Spain.
The team at LS Solicitors will be glad to guide you through the complex Spanish tax system, making the process as smooth and stress-free as possible.
If you need our help with your Spanish taxes, contact us at email@example.com and we will be glad to assist you.