Taxes in Spain: the complete overview for Germans

Anyone emigrating to Spain or owning a property there cannot avoid the Spanish tax system – and it's more complex than many expect. Taxes in Spain differ fundamentally from German regulations: there is no joint spousal taxation, responsibility is shared between the state and the autonomous regions, and even the question of whether you are tax-resident at all determines whether your entire worldwide income is taxed. In this guide you'll learn from when you become liable to pay tax in Spain, how IRPF and IRNR differ, which forms and deadlines really matter, what the double taxation agreement with Germany means in practice, and what to watch out for regarding pensions, wealth and property purchases. By the end, you'll know what steps to take next and where to get professional support.

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• Taxes & Finance: the entire guide section

When do you become liable to pay tax in Spain?

The decisive factor in Spanish tax law is tax residency, the so-called residencia fiscal. It determines whether you are only taxed in Spain on your Spanish income or on your worldwide income. Two criteria are enough for the Spanish tax authority, the Agencia Tributaria, to classify you as resident – and just one of them is sufficient.

Many emigrants underestimate exactly this point: someone who, for example, regularly spends several months a year on Mallorca but remains officially registered in Germany can still become liable to pay tax in Spain without realising it – until a letter from the authority lands in their letterbox.

Attention: The 183-day rule for tax residency is not identical to the 90/180-day rule for visa-free stays for non-EU citizens. Both regulations serve different purposes and should not be confused. More on this in the guide on the 90/180-day rule.

If you want to live in Spain permanently, there's no way around the Residencia and the Empadronamiento there's no way around it anyway – both registrations are closely linked to your tax situation.

IRPF and IRNR: the two tax worlds

Spanish income tax law recognises two fundamentally different systems, depending on whether you are considered resident or not.

• IRPF (Impuesto sobre la Renta de las Personas Físicas) is the income tax for tax residents. It covers your worldwide income and is levied progressively.
• IRNR (Impuesto sobre la Renta de No Residentes) applies to people who receive income from Spain – for example from renting out a property – but are not resident there.

The progressive IRPF burden for ongoing income such as pensions starts at around 19–20% and can rise to 45–48% for very high incomes. Important: the amount of income tax also depends on which autonomous region of Spain you live in, since the state and the regions share responsibility for it. Details on ongoing taxation as a resident can be found in the guide Taxes as a resident; for non-residents there is a separate in-depth guide at Non-resident tax Spain.

The double taxation agreement between Germany and Spain

So that the same income is not taxed twice, Germany and Spain have concluded a Double Taxation Agreement (DBA). It was signed on 3 February 2011 in Madrid; approval by the German legislator followed through the law of 16 January 2012. The agreement itself regulates which state has the right to tax which type of income, and prevents you from being charged twice for one and the same income.

Note: The DBA determines which state is entitled to the right of taxation – however, it does not automatically exempt you from the obligation to declare income in both countries. The actual crediting takes place via your respective tax return.

Especially in the case of pensions, salaries with a foreign connection, or capital income from Germany, it is worth taking a close look at the agreement. If you receive a German pension and live in Spain, you can find the most important details for your specific case in the guide Taxing German pensions in Spain.

The most important tax forms and deadlines

The Spanish tax year corresponds to the calendar year and runs from 1 January to 31 December. For taxpayers resident in Spain, the annual income tax return, the Modelo 100, must be submitted between 3 April and 1 July of the following year. Anyone who owns assets abroad worth more than €50,000 must additionally report these via the Modelo 720.

Attention: The reporting obligation via the Modelo 720 has been in force since March 2013 and applies to accounts, securities and property abroad from €50,000. Failing to correctly declare foreign assets can, according to expert advisors, lead to significant consequences. More on this in the guide on Modelo 720.

If you work as a self-employed person (autónomo), further ongoing obligations apply – you can find details in the guide on Modelo 303 & 130 as well as on Accounting as an autónomo.

Pension, capital income & salary: how your income is taxed

One point that surprises many German pensioners: German pensions are generally fully taxed in Spain, provided you are tax-resident there. The actual burden, however, depends on several factors – the amount of your pension income, your autonomous region, the timing of your pension start, the type of pension, and any other income.

Interestingly, Spain can even be more favourable than Germany when it comes to capital income: while in Germany the withholding tax including the solidarity surcharge is around 26.4%, capital income in Spain is often taxed at only 19–21%.

Note: Unlike in Germany, the Spanish system does not have a concept of spousal income splitting. Couples with very different income levels moving to Spain should factor this difference into their planning.

Anyone who also works remotely for a foreign employer or has multiple sources of income should also look into the concept of Pluriactividad and into Remote Work auf Mallorca.

Wealth tax and inheritance tax on Mallorca

Alongside income tax, wealth tax is also relevant for many expats and property owners on Mallorca. In recent years, the allowances in the Balearics have been raised significantly, meaning that a growing share of owners now fall below the relevant thresholds. At the same time, inheritance tax for close relatives in the Balearics has been reduced so much that in practice it barely matters for many families.

Note: Whether wealth or inheritance tax applies to you, and at what level, depends heavily on your individual asset structure, your residency status and the current allowances. A blanket statement cannot be made responsibly here – get individual advice.

Anyone wishing to arrange their estate planning early on will find further information in the guide on the Spanischen Testament. The guide on Todesfall auf Mallorca also helps with practical questions in an emergency.

Taxes when buying property on Mallorca

Anyone buying a property on Mallorca should realistically budget for the additional purchase costs. As a rule of thumb, you should factor in an extra 11 to 15 % on top of the purchase price for taxes, notary, land registry and lawyer's fees – the exact amount depends heavily on whether you are buying a new-build or a resale property.

These taxes apply regardless of whether you buy as a resident or non-resident. For the ongoing annual obligations as an owner – for instance if you don't live in Spain – it's worth taking a look at the guide on non-resident tax Spain.

Beckham Law: tax advantage for newcomers

For employees who move to Spain and take up employment there, the so-called Beckham Law can be attractive. Under certain conditions, it allows for a flat-rate taxation of Spanish income instead of the progressive IRPF scale.

Note: The Beckham Law is not suitable for everyone – anyone with substantial foreign investment income or working as a self-employed person (autónomo) should carefully work through the rule with a tax advisor. Details can be found in the guide on Beckham Law Spain.

Taxes for non-residents & landlords

Anyone who owns a property on Mallorca but does not live there is subject to limited tax liability (IRNR). It also becomes relevant if you rent out your property to holiday guests: since 1 July 2016, the Balearic Islands have applied the Impuesto sobre Estancias Turísticas (ITS), colloquially known as Ecotasa. It applies to overnight stays in hotels, holiday flats, agrotourism establishments and also campsites.

Note: The guest bears the economic burden, not the landlord – however, the tax is collected by the landlord or hotel operator, correctly recorded and paid to the tax authority. The rates are uniformly regulated across all inhabited Balearic islands; there are no municipal surcharges.

If you're planning to rent out your property, you should also familiarise yourself with the tax reporting obligations as a landlord. A Spanish bank account is also practically indispensable for day-to-day handling – find out more in the guide Opening a bank account in Spain.

Most common mistakes

• The 183-day rule is ignored. Anyone who regularly lives in Spain for long periods but remains officially registered in Germany still becomes tax resident – often without realising it, until a letter from the Agencia Tributaria arrives.
• Modelo 720 is forgotten. Foreign assets exceeding 50,000 euros must be reported – even if there is no tax on them in Spain itself.
• Double taxation is assumed where none exists. The DTA (double taxation agreement) clearly regulates many cases – yet some people mistakenly declare their full income in both countries.
• Pensions are considered tax-free. German pensions are, in principle, fully taxable in Spain if you are resident there.
• Regional differences are overlooked. Income tax can vary by up to 4% depending on the autonomous region – this also affects location decisions within Spain.

What comes next?

Once your tax residency has been clarified, the following steps usually follow: registering for the Residencia and the Empadronamiento, applying for a digital certificate for electronic dealings with authorities, opening a Spanish bank account and – if relevant – registering as an Autónomo. In parallel, you should check whether your health insurance cover is sufficient in Spain.

• Applying for Certificado Digital & Cl@ve
• Finding a tax advisor for expats in Spain
• Health insurance in Spain

Checklist: registering taxes correctly in Spain

1. Check whether you exceed the 183-day threshold or whether your economic centre of activity is in Spain.
2. Register with the Residencia and Empadronamiento as soon as you live permanently in Spain.
3. Apply for a digital certificate so you can submit tax returns online.
4. Clarify with a tax advisor whether the Beckham Law applies to you.
5. Check whether a reporting obligation under Modelo 720 applies to your foreign assets.
6. Submit the Modelo 100 on time, between 3 April and 1 July.
7. If you own property, clarify whether IRNR, ITP/IVA or ongoing rental obligations (Ecotasa) are relevant.
8. Keep all your German tax documents so you can correctly apply the DTA.

Conclusion

Taxes in Spain follow their own logic, which differs considerably from the German system – from the 183-day rule to the interplay between IRPF, IRNR and the double taxation agreement, through to special regimes such as the Beckham Law. Anyone who clarifies early on whether and how they become tax resident, which forms and deadlines apply, and how pensions, capital gains or property ownership are affected, avoids nasty surprises. Since many details – for example regarding wealth tax or inheritance tax – depend heavily on the individual case, individual tax advice is worthwhile in most cases before you make any major decisions.

Official sources

• Agencia Tributaria (AEAT) – Spanish tax authority: https://sede.agenciatributaria.gob.es
• ATIB – Agencia Tributaria de les Illes Balears: https://www.atib.es
• Federal Ministry of Finance – Act on the DTA Germany-Spain (BGBl. 2012 Part II No. 2): https://www.bundesfinanzministerium.de
• Boletín Oficial del Estado (BOE) – Spanish official gazette: https://www.boe.es