Taxation of Non-Residents in Spain

How does the Spanish Tax Agency treat you as a non-resident in Spain? And how does it affect the level of the Spanish tax rate? This article explains it.
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Who is a non-resident in Spain for tax purposes?

The best way to address this question is to establish who is a tax resident in Spain.
The Spanish Tax Agency considers you a tax resident in Spain if:
you pass the physical presence test, meaning you are present in Spain for more than 183 days within a calendar year
You have Spain as your economic center, meaning that the majority of your income comes from Spain.
There is also tax residency based on family ties. If your spouse and dependent children are tax residents in Spain, you are likely to be considered a tax resident as well.

Tax obligations

As a tax resident in Spain, you will have three main tax obligations:

• Filing a personal income tax return on your worldwide income
• Paying a wealth tax on your worldwide assets, though not in the region of Andalusia, which abolished it in September 2022
• Reporting your assets abroad through tax form 720.

Residency determined by tax treaty

Spain has signed double taxation treaties with several countries, including the United States.
This is to promote foreign investment so that your investment in Spain is not taxed both by your home country and by the Spanish Tax Agency.
Double taxation treaties mean that your tax liability is halved instead of doubled.
The tax treaty between the U.S. and Spain applies when it comes to the following assets:

• IRA
• 401
• Government payments for people with disabilities.

All taxes paid outside the U.S. by tax residents in Spain are deductible from their continuing U.S. tax liability as American citizens.
When it comes to disability payments paid by the U.S. government to a person, they are tax-free in Spain. It may be necessary for a physician licensed in Spain to assess the payment form to assure the authorities that these are indeed disability payments. Spain has a rating system whereby a person is assessed according to their level of disability:

• Up to 33%
• Between 33%-65%
• 65% to 100%.

It is this official assessment carried out by a certified medical professional that will determine tax exemptions and other matters, such as the disability card for use of transport.

Tax registration in Spain for non-residents

If you are not a resident in Spain and spend fewer than 183 days a year in the country or if you do not receive the majority of your income from a Spanish source, you are still required to apply for a tax identification number known as the NIE.
The NIE is a personal, unique and exclusive number assigned to you as a foreigner who, for economic or professional reasons, resides in Spain.

Obtaining an NIE

You can apply for the NIE in Spain or at the Consular Office of your country of residence.
Applicants may submit their application in person or through a duly accredited representative.
Whichever route you choose, your physical presence or that of your representative is mandatory.
The required documents are as follows:
Original and copy of the EX-15 Standard Application Form, completed and signed by you or your representative.
Original of your valid passport and copy of the personal data page of your passport or identity document from an EU member state (original and copy, front and back)
Original and copy of your representative's ID or passport, together with a power of attorney expressly stating that the representative is authorized to apply on your behalf.
Document proving residence in the consular area
Completed Form 790, code 12.
The General Commissariat for Immigration and Borders, under the Directorate-General of the Spanish Police, assigns an NIE. The NIE is usually issued within two weeks.
Obtaining an NIE

Tax registration for entrepreneurs, professionals and income holders

You must register in the Tax Registry if you carry out a business or professional activity or if you pay income subject to withholding. Forms 036 and 037 are the necessary documentation. Once registered, you can change your details.

Non-resident income tax on income obtained without a permanent establishment

Non-resident taxpayers who obtain income in Spanish territory without a permanent establishment must pay tax on this taxable base.

Exempt income

There is a wide range of exempt income. Income which, under the Personal Income Tax Law (IRPF), is exempt and received by individuals, such as pensions for total permanent incapacity or severe disability and public subsidies.
Interest and capital gains from movable property obtained by residents of another European Union (EU) member state or the European Economic Area (EEA) through an effective exchange of tax information, or from permanent establishments of such residents located in another member state, are exempt with the following exceptions:
When the interest and/or gains are obtained through a tax haven.
When these are gains derived from the transfer of shares, interests or other rights in a company whose assets consist mainly of Spanish real estate.
In the case of natural persons, when these are gains derived from the sale of shares, interests or other rights in a company and the taxpayer, at some point in the 12 months prior to the sale, has held, directly or indirectly, at least 25% of the company's capital or net worth.
In the case of companies, the transfer does not meet the requirements for the application of the exemption provided for in Article 21 of the Corporate Income Tax Law.
Other exempt income includes:
Income from public debt
Income of non-residents from Spanish securities
Income from non-resident bank accounts
Income from the leasing, assignment or transfer of containers or of bareboat-chartered ships and aircraft used for international maritime or air transport.

Determination of the taxable base

Normally, the taxable base is the full amount earned and therefore it will not be possible to deduct any expenses.
However, it is possible to deduct certain expenses in the following cases:
Taxpayers resident in another European Union member state (Article 24.6 of the Non-Resident Income Tax Law) or in another European Economic Area state with an effective exchange of tax information.
In the case of individuals, the expenses provided for in the IRPF Law and, in the case of entities, those provided for in the Corporate Income Tax Law, provided it is proven that they are directly linked to the income obtained in Spain and that they have a direct and inseparable connection with the activity carried out in Spain.
Income from economic activities (Article 24.2 of the IRNR Law), personnel expenses and supplies.
The special obligation regarding Real Estate Tax for non-resident companies (Article 44 of the IRNR Law).
Residents of the EU, Iceland and Norway must pay income tax at 19.50% and other taxpayers at 24%.
Non-resident individuals in Spanish territory with a fixed-term contract for seasonal workers, as established in labor legislation, pay 2%.
The income tax rate for dividends and other income derived from participation in a company's capital varies according to the year of accrual. Since 2016 it has been set at 19%. The same applies to interest and other income obtained from the sale of capital to third parties.
Pensions and other similar benefits received by non-resident individuals in Spanish territory are taxed between 8% and 40%.
Income from reinsurance operations is taxed at 1.5%.
Airlines or shipping companies resident abroad whose ships or aircraft dock in Spanish territory are taxed at 4%.
Capital gains derived from the transfer or redemption of shares or interests representing the capital or net worth of collective investment institutions are subject to a capital gains tax of 19%.

Income Tax deductions for non-residents without a permanent establishment

Only the following can be deducted from the amount payable:
Deductions for donations under the same terms provided for by the IRPF law.
Tax withholdings that have been applied to the taxpayer's income.

Non-resident income tax on income obtained through a permanent establishment

Under Spanish legislation, income derived from an economic activity carried out through a permanent establishment in Spanish territory is interpreted as acquired in Spanish territory.
Under Spanish national legislation, a natural person or entity is considered to operate through a permanent establishment when the following is established in Spanish territory:
a head office
Branch
factories
workshops
Warehouses, shops or other establishments
mines
Oil or gas wells
Cave
Agricultural, forestry, livestock or any other place of exploration or extraction of natural resources.
Construction, installation or assembly works lasting longer than six months.

Permanent Establishment Taxes

Under Spanish legislation, non-residents who obtain income through a permanent establishment in Spain will pay tax on the total value of the income obtained through that permanent establishment, regardless of where it was obtained.
This taxable income is made up of the profits derived from economic activities or operations carried out by the permanent establishment, those derived from elements connected to the permanent establishment, and taxable capital gains or losses derived from those connected elements.
Capital gains or losses subject to tax are considered to be those reallocated within the three tax periods following the one in which they were realized.
Assets representing shareholdings in the capital of an organization are considered subject to capital gains or losses only when the permanent establishment is a branch registered in the Commercial Registry; these assets are reflected in the accounts of the permanent establishment and, being a permanent establishment that can be considered a parent organization, this permanent establishment has a corresponding organization of material and personnel resources available to direct and manage these activities.
The taxable base of the PE will be determined in accordance with the provisions of the general Corporate Income Tax system, with the following distinctive features:
Application of binding rules for transactions carried out by the permanent establishment with the head office, or with another permanent establishment of the same head office, and with other persons or organizations related to the head office or its permanent establishments, whether located in Spanish territory or abroad.
In general, the non-deductibility of payments made by the permanent establishment to the head office in respect of royalties, interest, commissions, technical assistance services and for the use or transfer of goods or rights.
Deductibility of part of the general management and administration expenses allocated by the head office to the permanent establishment, provided they are reflected in the accounts of the permanent establishment and are allocated continuously and rationally.
The difference between the market value and the book value of the following assets will be included in the taxable base:
Those linked to a permanent establishment located in Spanish territory that ceases its activity.
Those previously assigned to a permanent establishment located in Spanish territory that are transferred abroad.

Estimated expenses and income tax attributed for internal operations of a permanent establishment

In cases where, in application of the provisions of an international agreement to avoid double taxation signed by Spain, for the purposes of determining the income of a permanent establishment located in Spanish territory, the deduction of estimated expenses for internal operations carried out with the head office or with any of its permanent establishments located outside Spanish territory, the following shall be taken into account:
The general non-deductibility of payments made by the PE to the head office in respect of royalties, interest, commissions, technical assistance services and for the use or transfer of goods or rights does not apply.
Income attributed to the head office or to any of the permanent establishments located outside Spanish territory, corresponding to the estimated expenses mentioned above, shall be treated as income obtained in Spanish territory, without the intermediation of a permanent establishment.
The imputed income tax is due on December 31 of each year.
The permanent establishment located in Spanish territory is required to withhold and pay the imputed income.
The provisions of Article 18 of the Corporate Income Tax Law apply to internal operations carried out by a permanent establishment located in Spanish territory with its head office or with any of its permanent establishments located outside Spanish territory to which this additional provision applies.
PE tax rate
The corresponding tax rate applies from among those established by the Corporate Income Tax legislation.
The general rate is 25%.
Deductions and allowances for PE
Individuals may apply the same allowances and deductions to the gross tax as corporate income tax taxpayers, resulting in a net tax which, for tax periods beginning on or after January 1, 2022, may under no circumstances be negative.
For tax periods beginning on or after January 1, 2022, the minimum rate established by Article 30 of the Corporate Income Tax Law (generally 15% of the taxable base) will apply to those PEs with a net turnover equal to or greater than €20,000,000 in the 12 months prior to the start date of the tax period, for the purposes of determining the tax due. Therefore, after the application of deductions and allowances, the net tax due may not be reduced below this amount.
Tax period and reserved amount
The tax period coincides with the declared fiscal year, not exceeding twelve months. The tax accrues on the last day of the tax period.
Permanent establishments are required to comply with the same accounting, record-keeping and formalization obligations as resident entities.
PE filing
Permanent Establishments must file their return using the same Form 200 forms and within the same deadlines as resident entities subject to Corporate Income Tax. The deadline is 25 calendar days after six months from the end of the tax period.
Inheritance and gift tax for non-residents
If you are a non-resident in Spain and receive a gift or inheritance, you must self-assess the inheritance and gift tax with the Tax Agency.
A different self-assessment form (650, 651 or 655) will need to be submitted depending on whether it is an inheritance, a gift or an extinguished usufruct.
Form 650
If you are an heir, legatee or beneficiary of a life insurance policy and do not have your main residence in Spain, this is the form to complete for inheritance tax.
This concerns the acquisition of assets and rights through inheritance, legacy or any other succession, and the receipt of amounts by beneficiaries of life insurance contracts, when the policyholder is a different person from the beneficiary.
This Inheritance Tax self-assessment form, with payment already made if due, must be submitted to the National Office for the Management of Non-Resident Inheritance and Gift Tax of the Spanish public body.
Required documents:
Original and certified copy of the inheritance acceptance documents.
Failing that, the inventory of the estate and the heirs, in duplicate, containing the identification details of the person who made the bequest and of the heirs, an address for correspondence, a detailed list of the assets and rights included in the inheritance with the value of each at the date of death, together with the charges, debts or costs for which a deduction is requested
A copy of the death certificate.
Photocopy of the certificate from the General Registry of Wills
Photocopy of the will or declaration of heirs.
Non-resident taxpayers must appoint a tax representative in Spain and may use the Representation Form for procedures initiated by taxpayers, which must be submitted together with the self-assessment.
The representation must expressly state that it authorizes the taxpayer to act before the Tax Administration in relation to all their obligations relating to inheritance and gift taxes.
Additional documents to be submitted for this inheritance tax, where applicable:
Photocopy of the IBI (property tax) invoice and the property purchase deed or, failing that, the property registry certificate.
Copy of insurance contracts or certificate from the insurance company.
A bank certificate showing the account and securities balances held on the date of death.
Documentary proof of the expenses, debts, taxes and charges that may be deductible, together with the age of the heirs.
Copy of the passport, identity document or foreigner identification number (NIE) certificate of the heirs and of the tax representative in Spain.
Copy of vehicle documents (technical certificate, registration certificate)
Documentary proof of the taxpayer's disability by means of a certificate issued by the competent body
Documentary proof of the theoretical value of shares in the capital of legal entities whose shares are not listed on the stock exchange, providing a certificate from the entity's administrator indicating the number of shares of the entity, the number of shares owned by the deceased, and the theoretical value of each share.
Copy of the General Registry of Insurance Contracts Certificate of Death Coverage.

Form 651

The gift tax is intended for individuals not resident in Spanish territory in relation to assets and rights that are located, may be exercised or must be fulfilled in Spanish territory and that are acquired through a gift or any other free and inter vivos legal transaction.
The tax return must be filed within 30 business days following the day after the execution of the deed or contract.
Required documents:
Original and photocopy of the gift deed.
Failing that, the private gift deed, in duplicate, which must contain the identifying details of the donor and the beneficiary (name, tax ID and full address), an address for notifications, and a detailed list of the assets and rights subject to the gift, with an indication of their value
Copy of the beneficiary's identity document, passport or foreigner identification number (NIE).
Non-resident taxpayers must appoint a tax representative in Spain. They may use the Representation Form for procedures initiated by taxpayers, which must be submitted together with the self-assessment.
The representation must expressly state that the taxpayer is authorized to act before the Tax Administration in relation to all their obligations regarding Inheritance and Gift Tax.
Other documents to be submitted, where applicable:
Documentary proof of the theoretical value of shares in the capital of legal entities whose shares are not listed on the stock exchange, providing certification from the entity's administrator indicating the number of shares of the entity, the number of shares donated, and the theoretical value of each share.

Form 655

You must complete this Spanish non-residence tax form if you are consolidating ownership following the extinction of a usufruct established through a gratuitous transfer (inheritance or gift).
Required documents:
Original and photocopy of the notarial document proving the consolidation of ownership in the person of the first or subsequent bare owners.
Failing that, a duplicate of the private agreement proving the extinction of the usufruct and the consequent consolidation of ownership, containing the identifying details of the usufructuary (name, tax code, address), obtained from the title establishing bare ownership, identifying the usufructuary, the date of establishment, the date of extinction of the usufruct and the value of the consolidation, an address for notifications, and a detailed list of the assets and rights subject to the consolidation
Copy of the death certificate of the usufructuary, in the case of the extinction of a life usufruct.
Copy of the ID, passport or NIE certificate of the co-owner
Original or simple copy of the notarial document proving the separation of ownership.
Otherwise, a private document proving the separation of ownership.

Transfer and stamp tax for non-residents

For tax purposes, non-resident owners may need to self-assess transfer tax and stamp duty with the Tax Agency.
Within the Tax Agency, the National Tax Management Office oversees the tax accrued on the transfer of real estate in Spain and stamp duty for cases not referred to the relevant autonomous community.

Form 600

Non-residents pay the tax on the onerous transfer of property (TPO), excluding used vehicles.
The tax on onerous property transfers must be self-assessed when all kinds of assets and rights forming part of the estate of individuals or legal entities are transferred, as well as the establishment of real rights, loans, guarantees, leases, pensions, administrative concessions and inter vivos transfers.
This property tax does not apply when owners or business owners carry out transfers in the course of commercial or business activities, as these are subject to Value Added Tax (with the exception of certain transactions taxed but exempt from VAT on real estate).
The ONGT should never be self-assessed for rental income from real estate, as this is the responsibility of the autonomous community where the property is located.
You must also file the return when declaring onerous property transfers, loans, guarantees, leases, the establishment of pensions, when you, as the taxpayer, are a non-resident, as well as administrative concessions and titles of nobility.

Form 620

Non-residents who purchase a used vehicle, boat or aircraft in Spain must pay Spanish taxes using form 620.
If aircraft and boats need to be registered in the Movable Property Registry, taxes must be paid in the autonomous community where the Registry is located.
Here are the different tax rates:
Transfer of movable property or livestock: 4%
Transfer of credits and securities: Tax exempt
Establishment and transfer of real rights over movable property or livestock (with the exception of security interests): 4%
Real security interests: 1%
Establishment of simple loans: Tax exempt
Establishment of guarantees: 1%
Establishment of pensions: 1%
Administrative concessions: 4%.

Wealth tax for non-residents

In Spain, wealth tax applies to your net worth. Your net worth consists of all economic assets and rights you own, after deducting charges and encumbrances.
Unlike individuals resident in Spain who are taxed