Spain is one of the top destinations for foreign nationals, not only for its tourist appeal, but also as a place of residence, investment, or retirement. However, navigating the Spanish tax system can be complex if you’re not fully aware of which taxes apply and under what circumstances.
For this reason, this alert provides an overview of the tax obligations affecting foreigners in Spain, whether they live here on a regular basis or simply have certain economic or property interests in the country.
Tax residence: the starting point
The key factor determining your tax obligations in Spain is whether you are considered a tax resident or a non-resident. Under Spanish law, you are regarded as a tax resident if you meet any of the following criterio. For example, if you spend more than 183 days in Spanish territory during the calendar year, or your main base or centre of economic interests is located in Spain.
Anyone meeting one of these criteria is taxed on their worldwide income. In contrast, non-residents are only taxed on income earned within Spain.
IRPF or IRNR: which tax applies?
Tax residents must pay Personal Income Tax (IRPF), which applies to all types of income—salaries, business income, rental income, capital gains, and other sources of income, both from Spain and abroad. This is a progressive tax, with rates in 2025 ranging from 19% to 47%, depending on the autonomous region.
Non-residents, on the other hand, are subject to Non-Resident Income Tax (IRNR), which only applies to income obtained within Spanish territory—such as rental income from property in Spain or gains from the sale of Spanish assets or shares.
The general IRNR rate is 24%, although it is reduced to 19% for residents of EU or EEA countries with a tax information exchange agreement. In addition, double taxation treaties signed between Spain and other countries may apply.
Wealth Tax
This tax applies to an individual’s net wealth (assets minus debts). Tax residents are subject to Wealth Tax on their worldwide assets, while non-residents are only taxed on assets located in Spain.
The national law provides for a general exemption of €700,000, although each autonomous region may modify both the exemption threshold and the applicable tax rates. In 2025, rates may reach up to 3.5%.
This tax is particularly relevant for foreigners with significant real estate holdings or investments in Spain.
Inheritance and Gift Tax
Both residents and non-residents may be liable to pay Inheritance and Gift Tax (ISD) if the deceased, the donor, or the assets are located in Spain. The habitual residence of the parties involved will determine the applicable legislation and any available tax reliefs.
In recent years, several regions—such as Madrid, Andalusia, and the Valencian Community—have introduced significant tax reductions, especially for transfers between close family members.
VAT and other indirect taxes
Foreign individuals conducting business or professional activities in Spain must consider Value Added Tax (VAT). This indirect tax applies to the supply of goods and services and requires prior registration in the Spanish Tax Agency’s register of businesspersons.
You may also be subject to Transfer Tax (ITP) or Stamp Duty (AJD) when purchasing property or incorporating companies, among other situations.
Opportunities and risks
Spain’s tax regime for foreigners can be attractive—especially when approached with careful planning. There are special regimes available, such as the “Beckham Law” (officially the special expat tax regime), which allows qualifying individuals posted to Spain to be taxed only on Spanish-source income at a flat rate of 24%.
Double taxation treaties may also offer additional benefits.
That said, misclassifying your residency status, failing to declare foreign-held assets (Model 720), or neglecting registration obligations can lead to severe penalties.
At LEIALTA, we help our international clients assess their personal and financial situation, meet all tax obligations in Spain, and make the most of the opportunities available within the Spanish tax system—safely and strategically.
