Rates, allowances and declaration thresholds for Spanish income tax ("La Renta")

Introduction

Spanish tax returns submitted in May/June 2011 relate to income earned during the 2010 calendar year.  The returns are due by 30th June.

Most foreigners will be considered Spanish tax resident if they were in the country for 183 or more days during 2010.  They must complete a tax declaration including all their worldwide income unless their income is lower than the thresholds described below.  Anyone becoming tax resident for the first time (because they moved to Spain in 2010) must file a tax declaration regardless of income levels.  Related article: Do you need to do a Spanish tax return?

Married couples can make a joint return or declare separately.  The tax implications of separate taxation versus joint taxation are significant and couples should make sure they calculate the best option though often it is obvious - see related article: Spanish taxation of married couples

Changes this year

> The taxation rate for capital gains and savings and investment income has increased from 18% to 19-21% (see below)

> In 2008 and 2009 there was a 400€ tax deduction to help with the economic crisis.  This has been abolished for people earning over 12.000€.

> The deduction for rental income has increased from 50% to 60%

> The declaration threshold has been tightened for those with income from more than one source (see below)

> The 2.500€ payment to parents of new babies ended at the end of 2010

New higher rates of tax for high earners don't come in until 2011 - rates will rise to 44% and 45% for two new thresholds of income - 120.000€ and 175.000€.  Also some autonomous regions including Andalucia have announced additional tax surcharges for their regions.

 

Tax rates applicable for 2010 tax returns

Rate for capital gains and investment income  - 19% for income up to €6.000 and 21% above €6.000

Rate for other income after allowances and deductions

€0-€17.707 24%

€17.707-€33.007 28%

€33.007-€53.407 37%

Above €53.407 43%

Personal allowances

Individual €5.151

65 and over €6.069

75 and over €7.191

Disability allowance

Grade 33-65 €2.316

Grade 65-100 €7.038

Add if 3^rd party care required €2.270

Additional allowances for children (less than 25, living in and income less than €8.000):

First child €1.836
Second child €2.040 
Third child €3.672 
Fourth & additional children €4.182

Add for child under 3 €2.244

Additional allowances for mother or father living in (conditional on their income being less than €8.000):

Over 65s €918

Over 75s €1.122

Earned income allowance (includes pension income)

Earnings up to €9.180 €4.080

Earnings over €13.260 €2.652

(sliding scale applies for income between the two limits)

Dividends receivable tax free €1.500

Declaration thresholds

Allowable levels of income before a declaration must be made:

Earned income already subject to employer deductions €22.000

(and other income less than 1.500€)

Reduced limit if earned from more than one employer  €10.200

Bank interest and other investment income €1.600

Rent €1.000

To see all our income tax articles please go to the Advice page and select Personal Tax from the drop down box