Tax and Saving in Spain
This is an introduction to the differences between the UK and Spanish tax systems and an introduction to a European ISA equivalent. It has been produced to help answer two regularly asked questions. : “What is the difference in taxation between Spain and in the UK?” – followed by “Is there a tax free savings account in Spain similar to an ISA?”.
For those of you not from the UK, I hope that the Spanish part of the table below will still be useful in allowing you to compare it with your home country tax situation.
|Tax Year Dates
|| 6th April – 5th April
|| 1st January – 31st December
|Income Tax Allowance
||€9250 up to age 64
€10,400 age 65+
€11,800 age 75+
|Capital Gains Tax Allowance
|| N/A but some gains can be offset against some losses
|Savings Tax Rates (interest and capital gains)
Income Tax and CGT calculated separately
|19% to €6,000, then 21% for the next €44,000 and 23% above €50,000
|Tax Free Interest
|Tax Free Dividends
Falling to £2,000 in 2018/19
|Annual ISA Allowance
(see Euro ISA below)
|Pension Contributions Limits
|| 100% of your earnings
up to £40,000 pa
| €8,000 pa
|| Above £325,000 at 40% plus possible allowance against main residence of £125,000 in 2018/19
||Autonomous community rules.
Catalonia and Madrid have large discounts for immediate family
|Wealth Tax Limit
|| N/A at present
|| Autonomous community rules. Catalonia: over €500,000 with a €300,000 allowance for main residence, rates from 0.21% to 2.75%
The main differences are in Wealth Tax, Inheritance Tax and the way savings are taxed.
Wealth Tax in Spain
In the UK there is not currently any Wealth Tax. There is in Spain and the rates and method of calculation are set by the autonomous communities. In Catalunya the rate is banded, starting at 0.21% and rising to 2.75%.
Inheritance Tax in Spain
In the UK, the estate of the deceased person is taxed as a whole, whilst in Spain, the person receiving the bequest is taxed based just on the amount they personally receive from the estate. The allowances and method of taxation also differ. The rates of inheritance tax in Barcelona and the Costa Brava are the same but will be very different if you live in Andalucia. For more information, please see Inheritance Tax in Catalunya as an example.
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 “European ISA”. 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 “European ISA” you can do! Unlike a UK ISA, the European ISA 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 European ISA. So if you have a Euro ISA 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. Specifically, the tax will be calculated and multiplied by 2/10ths. An 80% tax saving!
NOTA PÁGINA WEB RELATIVA AL SERVICIO DE ATENCIÓN AL CLIENTENOTA PÁGINA WEB RELATIVA AL SERVICIO DE ATENCIÓN AL CLIENTE