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.
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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
For more information and personalised advice, contact Blevins Franks on +34 971 719 181.
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Blevins Franks Financial Management Limited (BFFM) is authorised and regulated by the Financial Conduct Authority in the UK, reference number 179731. Where advice is provided outside the UK, via the Insurance Mediation Directive from Malta, the regulatory system differs in some respects from that of the UK. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts and companies. Blevins Franks Tax Limited provides taxation advice; its advisers are fully qualified tax specialists. This promotion has been approved and issued by BFFM.
This article was written on the 05th of February, 2015.