Residents

If your main tax residence is in Spain ("Resident"), you will generally be considered as having limited tax liability in Germany, as you are now subject to taxation on your worldwide income in Spain. The resulting tax obligations can generally be summarised as follows:

1. Tax returns: All individuals subject to unlimited tax liability in Spain (residents), regardless of their nationality, must file annual tax returns. For private individuals, particular attention must be paid to the Personal Income Tax return (IRPF) and the Wealth Tax return (IP), which remains applicable in certain cases.
2. Gifts and inheritances: If you receive gifts or inheritances, the corresponding Gift and Inheritance Tax (ISD) must be paid, which varies depending on the Autonomous Community.
3. Information obligation regarding assets abroad: Since 2012, Spanish tax residents have been required to report their assets located abroad. This obligation is fulfilled by filing a specific information return separate from the income tax return.
4. Special taxation for 5 years under the "Beckham Law" (Article 93 of the Spanish Personal Income Tax Law).

As Spanish tax advisors, we not only take care of filing your tax returns, but also represent you before the Spanish Tax Agency through our firm as your appointed tax representatives. Through this appointment, we receive all relevant notifications electronically at our office and can directly represent you in all matters.

In this section you will find detailed information about the different taxes (Modelos), our service agreements, as well as information on how to determine whether you are considered a tax resident in Spain.

1. Personal Income Tax (IRPF)

Since in these cases taxation may occur both in the country of residence and at source, we carefully analyse the relevant Double Taxation Agreements (DTA) in order to prevent double taxation of income generated outside Spain.

Regarding the advice and filing of the annual Personal Income Tax return (IRPF), we generally distinguish four levels depending on the complexity and workload involved:

1. You only receive income from employment (e.g. salary or pension):
2. You receive income from capital investments:
3. You receive rental income from real estate:
4. You receive income from business or professional activities.

Our services:

• Sending our client information questionnaire.
• If required, electronic application for your digital certificate through our firm.
• Tax representation before the Spanish Tax Agency through our firm and receipt of notifications for one year included.
• Analysis of the different sources of income.
• Analysis of whether your assets or income generate additional tax obligations:
  • Wealth Tax
  • Solidarity Tax on Large Fortunes
  • Reporting of assets abroad (Modelo 720).
  • Reporting of cryptocurrencies held abroad (Modelo 721).
• Inclusion of taxes paid abroad in order to avoid double taxation.
• Filing of Modelo 100 (Personal Income Tax return), optionally with direct debit from the client's Spanish bank account or through our client account.
• Electronic delivery of all submitted tax returns for your records.

2. Declaration of assets abroad (Modelo 720)

Reporting obligation regarding foreign assets held by Spanish tax residents

Spanish tax residents have been required since 2012 to report assets located abroad. This obligation is fulfilled by submitting a specific information return separate from the tax return and may result in exceptionally high penalties in case of non-compliance and if the legally established thresholds are exceeded.
The reporting obligation generally includes three categories:

1. Foreign bank accounts with balances exceeding EUR 50,000: Regarding bank accounts, it must be taken into account that not only the balance as of 31 December of the previous year is relevant, but also the average balance during the last tax year must be calculated. If either of these amounts exceeds the EUR 50,000 threshold, this category must be reported. An exception applies to accounts opened and closed within the same tax year before 31 December, as they no longer exist on that date.
2. Securities, shares, investments, company participations, insurance policies or pension rights exceeding EUR 50,000: This category only needs to be reported if the total value of all the mentioned assets exceeds the EUR 50,000 threshold. For example, if you only hold a life insurance policy valued at EUR 30,000 and shares valued at EUR 10,000, there is generally no obligation to report this category.
3. Real estate located abroad or rights over such properties exceeding EUR 50,000: In addition to direct ownership of real estate, this category also includes all types of rights over properties, such as purchase options or usufruct rights. Regarding the valuation of real estate, both the value as of 31 December and the acquisition value must generally be taken into consideration. In cases of partial ownership or community property regimes, the total value of the property, rather than the individual ownership percentage, must be considered. This aspect is particularly relevant in matrimonial community property regimes, as both spouses must report the total value if it exceeds the EUR 50,000 threshold.

How, when and where must the declaration be filed?

The declaration must generally be filed between 1 January and 31 March for the previous tax year and can only be submitted electronically to the Spanish Tax Agency. As mentioned above, all categories are included in the same form, meaning that only one document must be submitted (Modelo 720).

3. Wealth Tax (Solidarity Tax on Large Fortunes)

Whether and to what extent Wealth Tax applies in Spain depends on the Autonomous Community. Following the abolition of Wealth Tax in certain Spanish regions, the Spanish State introduced a new "Solidarity Tax on Large Fortunes", which applies whenever no Wealth Tax is payable and the net assets exceed EUR 3,000,000 (EUR 3,700,000 including the exempt allowance).

However, Wealth Tax may already apply in certain regions from EUR 500,000 onwards. Further information about this tax can be found in the article: Wealth Tax and Solidarity Tax in Spain .

Note for non-residents: This tax may also need to be filed by non-residents if their assets located in Spain exceed EUR 500,000 (net value) or EUR 2 million (gross value).

Our services:

• Sending our client information questionnaire.
• If required, electronic application for your digital certificate through our firm.
• Tax representation before the Spanish Tax Agency through our firm and receipt of notifications for one year included.
• Analysis of the different assets.
• Analysis of whether your assets or income generate additional obligations.
• Inclusion of taxes paid abroad in order to avoid double taxation.
• Filing of Modelo 714 (Wealth Tax return) and/or Modelo 718 (Solidarity Tax return), optionally with direct debit from the client's Spanish bank account or through our client account.
• Electronic delivery of all submitted tax returns for your records.

4. Other taxes for resident companies

Specific taxes applicable to companies:

• Self-employed individuals (Autónomo)
• Companies (Sociedades)

5. Beckham Law with 24% (Modelo 149)

Tax regime applicable to individuals relocating to Spain

Regarding the application for the special taxation regime as a non-resident (Beckham Law), the corresponding application form Modelo 149 must be submitted before the Spanish Tax Agency. Although this procedure may appear simple, in practice many applications are rejected due to insufficient evidence proving compliance with the legal requirements. A carefully planned documentary strategy, the electronic receipt of notifications from the Tax Agency and a quick response in the event of requests for additional information or submissions are some of the factors that significantly increase the chances of approval of the application.

Once the application has been approved, the Spanish Tax Agency issues a certificate valid for the current tax year and the following 5 tax years, allowing your employer to apply withholding tax at the reduced rate of 24%. Furthermore, in the following year you must file a special Personal Income Tax return. It is essential to note that this return is not filed using the standard Modelo 100 form, but rather through Modelo 151.

Check our article [Beckham Law: Fixed 24% tax rate for expatriates] to determine whether you meet the requirements for applying.

Our services:

A) Application for the special taxation regime under Article 93 of the Spanish Personal Income Tax Law:

Analysis of the tax consequences of permanent residence in Spain.

Review of the general and specific requirements for applying the taxation of employment income as a "Non-Resident" through the application of Article 93 of the Spanish Personal Income Tax Law.

Review and preparation of the documentation required for the application process and filing of Modelo 149, including legal representation before the Spanish Tax Agency in the event of the need to appeal an initial rejection.

Representation before the Spanish Tax Agency, receipt of all notifications from the Tax Agency at our offices, and processing and acceptance of the corresponding power of attorney are included.

B) Representation before the Tax Agency and international tax advice

In addition to administrative support, advisory services play a particularly important role in our firm. Through our multidisciplinary team of lawyers, tax advisors and business consultants, together with our extensive experience in international taxation, we provide continuous advice not only on international tax matters, but also regarding tax optimisation, company incorporations and other related matters.

We represent our clients directly before the Spanish Tax Agency, acting as their appointed representative and automatically receiving all notifications issued by the Tax Agency on their behalf. Representation for one year is included in this service.

C) Filing of the first special tax return (Modelo 151)

Once the special taxation regime as a Non-Resident has been approved, we officially represent you before the Spanish Tax Agency until the filing of the first tax return and, as part of our services, we submit your first special Personal Income Tax return (Modelo 151) on your behalf.

We prepare the first tax return based on your salary income and, where applicable, request the refund of any excess employment income tax withholding.

We prepare the first tax return based on your salary income and, where applicable, request the refund of any excess employment income tax withholding.