Early in a new year is always a good time to review your tax planning, to check that it is up to date and that you are using all the opportunities available in Spain to reduce tax liabilities for yourself and your heirs.
It is even more important this year since there are a number of changes for Spanish taxation in 2015.
The Regulation on Personal Income Tax has been amended for 2015. The government explains that it lowers tax for all taxpayers, but does more for those on low and medium incomes, and those with large families or who care for someone with a disability.
There are now five tax bands for general income, as opposed to seven, and the tax rates have been modified. Last year the starting tax rate was 24.7% for income up to €17,700. In 2015 it is 20% for income up to €12,450. The top rate of tax is now 47% compared to 52% last year, but the income threshold for this rate has dropped from €300,000 to €60,000. Last year income between €53,400 and €120,000 was taxed at 47%, so there is little improvement here.
For peace of mind about your tax residency status speak to an experienced advisory firm to British expatriates Blevins Franks […] Where are you tax resident – Spain or the UK?
The savings income rates and thresholds are also a little lower. The rates are now 20% for income up to €6,000, then 22% for income up to €50,000 and 24% after that.
For non-residents who earn income in Spain, the tax rate is reduced from 24.75% to 24%, but for EU/EEA (European Economic Area) residents it falls to 20%.
While this is obviously welcome news after the tax rates over recent years (Spain had the third highest marginal tax rate in Europe!), if you have savings and investments you still need to protect your income and gains from tax. With the right tax planning Spain can be very tax efficient for retired expatriates, so contact the tax specialists at Blevins Franks to find out how much tax you can save.
When wealth tax was reinstated in 2011, it was meant to apply for 2011 and 2012. However it keeps being extended, and remains in place for 2015.
Spanish residents pay wealth tax on the value of their worldwide assets as at 31st December. Rates rise progressively from 0.2% to 2.5%. There are however reductions available, ranging from €700,000 to €2million, depending on whether you own your home and if you are single or a married couple.
This is a tough tax for wealthy residents, so much so that some consider leaving Spain because of it. Blevins Franks may well be able to help you reduce this liability, rather than having to move, so contact us for personal advice.
Are you tax resident in Spain? This tax guide from Blevins Franks explains the tax rules in Spain and how it will affect your tax situation. […] Spain’s Residence Tax Rules
Our next article will look at capital gains tax, succession tax and Spain’s new exit tax that could affect investors leaving Spain.
As always, it is very important to understand how all the tax changes affect you and your family personally, and seek expert advice on the most suitable solutions to protect your wealth from taxation.
Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.
For the South of Mallorca contact Peter Worthington, Senior Partner at Blevins Franks, on +34 971 719 181 or firstname.lastname@example.org.
To keep in touch with the latest developments in the offshore world, check out the latest news on Blevins Franks Tax & Wealth Management Specialists.
Related articles to tax for foreigners living in Spain.
Blevins Franks has launched the 11th edition of their ‘Guide to Living in Spain’. Get your copy now! […] The Blevins Franks Guide to Living in Spain
Blevins Franks Mallorca specialises in giving advice for tax-driven, wealth management investments. […] Blevins Franks Tax & Wealth Management Specialists
Written by Peter Worthington, Senior Partner, Blevins Franks.