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How are taxes assesed in Spain and what is more recommendable in terms of tax set up?

Tax Law

Francisco Garcia Ramirez

18th of June 2000

Q. How are taxes assesed in Spain and what is more recommendable in terms of tax set up?


    A. Dear Sir, If you are a resident, taxes are assesed differently depending on whether you are salaried, self-employed or incorporate a company. In the first two cases, taxes may go up to 60% for earnings over 72,000 € approx., and with a company your tax liability islimited to a corporate tax figure of 35% on the net gain. With earnings of over 42,000 € p.a., one should start considering incorporating a company in order to invoice the employer, when one is providing services on a self-employed basis. There is a tax band with different percentages applied to different incomes: currently, under three million pesetas of annual earnings your tax is almost inexistent. Taxes are paid annually and you can benefit from a number of tax relief deductions. Note that being a resident means that you are taxed in Spain for your worldwide income.

    If you are non-resident, then you do not pay taxes in Spain other than those derived from an activity you are conducting in Spain at a given time. Other than that, you will two taxes on your property (Property income tax and Property wealth tax), and a local council rate. This is just a brief summary of the system in Spain. If you need more help let us know.

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