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

Introduction

2012 Spanish tax returns relate to income earned during the 2011 calendar year.  The returns are due by 30th June 2012.

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 2011) 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 top rate of tax, which was 43% in 2010, is now 45% or more in some areas (see below)

> The 400€ tax deduction to help with the economic crisis has been scrapped

> The deduction for cost of principal residence was originally meant to have been scrapped for all taxpayers with income greater than 24.000€ but a recent announcement has cancelled this so the deduction is still available for 2011

> Increased deduction for income earned from rent (landlords were taxed on 50% of rent received, now 40%)

Note: significant "temporary" tax rises have been announced for the tax years 2012 and 2013 which will, for example push the top rate of tax to 52%  These will impact tax returns made in 2013 for tax year 2012 but anyone who pays withholding tax or Spanish "PAYE" will notice the increase this year.

Extra taxes in the regions

For the first time people in different regions will pay different rates of income tax in 2011.  Local surcharges have been added by autonomous regions such as Andalucia and Cataluna.  For example, the income tax rate in Andalucia will be 1% higher than the rates in the table below for incomes above €80.000, 2% above €100,000 and 3% above €120,000 giving an effective top rate in this area of 48%

In Catalonia the top rate, payable on income over 150,000€, will be even higher at 49%

Selected other top rates:  Asturias 48,5%  Cantabria and Extremadura 48%

Madrid and Valencia actually have slightly lower rates of tax than the national scale below

Tax rates applicable for 2012 tax returns (relating to calendar year 2011)

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%

€53.407 - €120.000 43%

€120.000 - €175.00 44%

More than €175.000  45%

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):

One child €1.836
Two children €2.040 
Three children €3.672 
Four or more 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