Do You Pay Tax On Savings In Spain?
Tax in Spain on savings income Residents are taxed on their worldwide savings income and non-residents on their Spanish savings income at a fixed rate.
How much tax do I pay on my savings in Spain?
Personal income tax (PIT) rates – Savings taxable income is taxed at the following rates:
- 19% for the first EUR 6,000 of taxable income.
- 21% for the following EUR 6,000 to EUR 50,000 of taxable income.
- 23% for the following EUR 50,000 to EUR 200,000 of taxable income.
- 26% for any amounts over EUR 200,000.
For general taxable income, progressive tax rates are applied (which are the sum of the applicable rate approved by the state and the applicable rate approved by each autonomous community of Spain in their progressive tax rate scales). Tax liability may therefore differ from one autonomous community to another. The following tables show the tax scale for withholdings approved by the state. This scale can be used as a guideline of the progressive tax rates applicable for the general taxable base. Tax scale for withholdings applicable in 2021:
| Taxable base (up to EUR) | Tax liability (EUR) | Excess of taxable base(up to EUR) | Tax rate (%) |
| 12,450 | 19 | ||
| 12,450 | 2,365. 50 | 7,750 | 24 |
| 20,200 | 4,225. 50 | 15,000 | 30 |
| 35,200 | 8,725. 50 | 24,800 | 37 |
| 60,000 | 17,901. 50 | 240,000 | 45 |
| 300,000 | 125,901. 50 | Remainder | 47 |
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What is the tax-free limit in Spain?
Save money in your income tax return Renta in Spain
Personal tax free allowance
| Age | Tax-Free Personal Allowance |
|---|---|
| Under 65 years | €5,550 |
| 65-74 years | €6,700 |
| Above 75 years | €8,100 |
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Do British pensioners pay tax in Spain?
UK Inheritance Taxes IHT – Lump sum payments out of pension plans after death are no longer taxed if the dependants are under 75 years of age, as specified by new rules in 2011. However, there are still many situations when pension payments will be subject to the UK inheritance tax or other taxes.
- If the dependant is 75 years of age or older, lump sums will be taxed at 45%. Lump sums paid after draw-down has started are also taxed at the same rate. In either situation, there is no further inheritance tax liability after the 45% has been paid.
- Draw-downs received by the dependant after 75 years of age may be subject to a 40% inheritance tax if they are not spent before death.
- If the death occurred before age 75, and no draw-downs or lump sums had been withdrawn previously, the lump sums after death are not subject to tax.
A new UK/Spain DTA took effect in 2015. Under this agreement, pension funds are only taxable in the country where the recipient has tax residency. Spanish residents with UK pensions are now only subject to Spanish income tax, meaning there is no UK pension tax in Spain. This principle also applies to similar remuneration paid to residents of Spain.
What tax do expats pay in Spain?
Expat Taxes in Spain: Current Rates – Non-residents are generally taxed at 24%. If you’re a tax resident of Spain, your worldwide income will be subject to personal income tax at a progressive rates, which vary by region. The highest rates in Spain peak at 49% in the Cataluñu and Andalucía regions. For instance, here are the rates for the residents of the Madrid region:
| Earnings in Euro (EUR) | Rate Applicable to Income Level (%) |
| 1-12,450 | 19% |
| 12,450-20,200 | 24% |
| 20,200-35,200 | 30% |
| 35,200-60,000 | 37% |
| 60,000+ | 45% |
However, the different regions can alter the statutory rates, though Spain does impose property taxes at varying levels.
Why do Brits retire to Spain?
For years, Brits have found in Spain the perfect paradise for retirement. Places like Marbella, Málaga, or even the Balearic and the Canary Islands are full of British citizens who decide to enjoy a new stage of their lives after many years of hard work. Nevertheless, with the entrance of 2021 things changed drastically. The new Brexit rules that came into force on the 1st of January made all those Brits who before could legally establish themselves in the country easily, now need to find alternative ways to achieve this same goal.
What is the equivalent of an ISA in Spain?
Tax Free Savings in Spain – In the UK, since January 1987 with the introduction of Personal Equity Plans (PEPS), we have been used to having tax free savings. Peps are now called ISAs and the allowance is now £20,000 per annum. If you live in Spain and have an ISA please note it is taxable in Spain.
- The fact that it is tax free in the UK does not transfer to Spain and you should look at the alternative below;
- Spain does not have an ISA system as such but there is a similar investment, sometimes known as the “Spanish Compliant Bond”;
It is tax free whilst invested and has a very beneficial low taxation basis, especially if you require income from your investment. It is a little more restrictive than the UK ISA but is still worthwhile. The two big advantages are that there is no limit and it is portable to other countries.
If you would like to invest 10,000,000 euros in one year in the “Spanish Compliant Bond” you can do! Unlike a UK ISA, the Spanish Compliant Bond can go with you if you move country (not to all countries).
If you return to the UK, the tax will be proportional to the amount of time you have been in the UK against the time you have had the Spanish Compliant Bond. So if you have a Spanish Compliant Bond for 10 years in total and have moved back to the UK for the last two years of the 10 years, the tax will be reduced.
What is earned income allowance?
What is the earned income tax credit (EITC)? – The earned income tax credit, also known as the EITC or EIC, is a refundable tax credit for low- and moderate-income workers. For the 2021 tax year, the earned income credit ranges from $1,502 to $6,728 depending on tax-filing status, income and number of children.
- In 2022, the range is $560 to $6,935;
- People without kids can qualify;
- If you fall within the guidelines for the credit, be sure to claim it on your return when you do your taxes;
- And if you didn’t claim the earned income credit when you filed your taxes in the last three years but you think you qualified for it, the IRS encourages you to amend prior tax returns so you can get that money back;
The $1. 9 trillion American Rescue Plan Act changed some of the rules around the EITC. These changes are noted below.