Spain - Tax Guide for Freelance Contractors
Welcome to our guide to Spanish Taxation. You will find a wealth of information which will be useful if you plan to work in, or place consultants in, Spain.
Our tax guides give a general overview of the actual taxation rates and rules at the time of writing. There are of course many ways to legally reduce tax or social security burdens in Spain. Please contact us for more information or an actual breakdown of your situation, and to find out more about our range of payroll and contact management services in Spain.
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Spanish Income Tax
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Tax residents in Spain: are liable to pay Spanish tax on their worldwide income,
Non tax residents in Spain: are liable to pay tax on Spanish-source income and on capital gains.
Individuals will be regarded as tax residents:
- if they spend more than 183 days in a calendar year in Spain (including temporary absences),
- if their centre of vital interests (economic interests, business or professional activities) is in Spain.
Married persons may elect to file a single or a joint tax return. The joint tax return does not allow splitting of income.
Taxable income includes:
- employment income,
- income from movable and immovable capital,
- business income,
- capital gains,
- imputed income.
Certain deductions applicable to residents only are permissible for 2012 including:
- interest expenses for buisness activities,
- health insurance contributions up to EUR 500 per family member,
- social secuirty contributions up to EUR 300,
- alimony and child support payments,
- personal allowance of EUR 5'151 per year,
- child allowance of EUR 1'836 for the first dependent under 25 years old, EUR 2'040 for the second, EUR 3'672 for the third, and EUR 4'182 for further children.
Income tax rates for residents are progressive, for 2012:
- 24.75% on income up to EUR 17’707.20,
- 30% on income between EUR 17’707.20 and EUR 33'007.20,
- 40% on income between EUR 33’007.20 and EUR 53’407.20,
- 47% on income between EUR 53’407.20 and EUR 120'000.20,
- 49% on income between EUR 120'000.20 and EUR 175'000.200,
- 51% on income between EUR 175'000.20 and EUR 300'000.20,
- 52% on income over 300'000.20.
A tax rule for expatriates in Spain who are employed by a Spanish company or by a foreign company with a permanent establishment in Spain has been in force since 1 January 2004. These expatriates may choose to be subject to tax either at progressive rates with deduction of certain expenses and allowances, or as non-resident taxpayers at a flat tax rate of 24% with no deduction of expenses or allowances.
Tax returns are usually filed from the 1st of May to 30th June following the end of the calendar year.