Income tax in Spain (Impuesto sobre la Renta de las Personas Físicas, IRPF) is paid by individuals who are resident in Spain on various types of income from employment and business activities. In other words, taxpayers include employees, entrepreneurs, founders and co-founders of companies, owners of residential and commercial property that is let out, and many other categories of people.
What income tax is paid in Spain: rates
Income tax in Spain is charged on a progressive scale: the higher your annual income, the more tax you will have to pay. Part of the tax goes to the central government budget and part to the budget of the autonomous community. Tax rates can differ significantly from one autonomous community to another, and there is a whole system of national and regional tax allowances and deductions.
The 2019 tax campaign in Spain has just ended. Income tax in Spain in 2020 on income earned in 2019 was charged at the following minimum and maximum rates:
| Region | Minimum rate | Maximum rate |
| Extremadura | 19% | 48% |
| Madrid | 18.5% | 43% |
| Castilla-La Mancha | 19% | 45% |
| La Rioja | 19% | 48% |
| Aragón | 19.5% | 47.5% |
| Andalusia | 19.5% | 48% |
| Castilla y León | 19% | 44% |
| Cantabria | 19.5% | 48% |
| Canary Islands | 19% | 46.5% |
| Galicia | 19% | 45% |
| Valencian Community | 19.5% | 48% |
| Balearic Islands | 19% | 47.5% |
| Asturias | 19.5% | 48% |
| Catalonia | 21.5% | 48% |
| Murcia | 19.5% | 46% |
| Ceuta | 19% | 45% |
| Melilla | 19% | 45% |
Using the Valencian Community as an example, let us show how the progressive income tax scale works in Spain:
National portion of income tax in Spain
| Taxable base from: | Taxable base up to: | Rate |
| €0.00 | €12,450.00 | 9.50% |
| €12,450.00 | €20,200.00 | 12.00% |
| €20,200.00 | €35,200.00 | 15.00% |
| €35,200.00 | €60,000.00 | 18.50% |
| €60,000.00 | and above | 22.50% |
Valencian Community portion of income tax in Spain
| Taxable base from: | Taxable base up to: | Rate |
| €0.00 | €12,450.00 | 10.00% |
| €12,450.00 | €17,000.00 | 11.00% |
| €17,000.00 | €30,000.00 | 13.90% |
| €30,000.00 | €50,000.00 | 18.00% |
| €50,000.00 | €65,000.00 | 23.50% |
| €65,000.00 | €80,000.00 | 24.50% |
| €80,000.00 | €120,000.00 | 25.00% |
| €120,000.00 | and above | 25.50% |
Thus the top income tax rate in the Valencian Community is 48%. In Madrid the top rate is slightly lower, only 43.50%, in Catalonia it is 48%, and in Andalusia 48%.
Income tax in Spain on savings income is calculated at different rates. Here, too, the tax is split into a national and a regional portion. On average, the combined tax rate will be:
| Taxable base (up to, €) | Fixed amount, € | Remaining taxable base (up to, €) | Tax rate, % (national portion + regional portion) |
| 0 | 0 | 6,000 | 19.00 |
| 6,000.00 | 1,140.00 | 44,000 | 21.00 |
| 50,000.00 | 10,380.00 | and above | 23.00 |
Income tax in Spain: the tax return
Not every taxpayer is required to file an income tax return in Spain: it all depends on the amount of income and its sources.
You do not have to file a return if:
- You have one source of income and your annual income does not exceed €22,000.00.
- You have two or more employers, your annual income does not exceed €22,000.00, and the “secondary” employers (the second and any further ones) pay you no more than €1,500.00 a year. This rule applies to working people as well as to pensioners and unemployed people receiving benefits.
- You have two or more employers, each of them pays you more than €1,500.00 a year, but your total annual income does not exceed €14,000.00.
- Your income from movable assets or from the sale of property does not exceed €1,600.00 a year.
- Your income from real estate and certain types of public aid and subsidies does not exceed €1,000.00 a year.
Income tax allowances and deductions in Spain
When calculating the tax base, you need to take tax-free allowances into account. The personal allowance per taxpayer is €5,550.00 a year and increases by €1,150.00 at the age of 65 and over and by €1,400.00 at the age of 75 and over.
There are also a number of tax deductions that apply depending on family composition, single-parent status, degree of disability, the type of return filed (individual or joint) and so on. In any case, you can get a general idea of the possible deductions and allowances by using the calculator on the tax agency’s website (no digital certificate required).
If the final amount on the return is positive, you will have to pay it to the state. As a rule, it is debited directly from the taxpayer’s account stated in the return. If the final amount is negative, the taxpayer will instead receive the overpaid tax back from the state.
In any case, all the calculations can be done in advance by requesting a draft return before filing it. If you cannot prepare the return yourself, we recommend turning to professionals: tax advisers (asesor/gestor).
Income tax in Spain: the tax campaign
The income tax campaign in Spain lasts three months, from April to June. At the very start of the campaign you can obtain a draft return calculated by the system on the tax agency’s website and check your tax details (address, bank account, whether or not you own property, etc.).
The return itself can be filed (confirmed) online, by phone, at a local tax office or through a tax adviser.
