As a rule, all expats in Spain are subject to some form of local taxation. Your exact taxation in Spain will be dependent on your specific situation. In general, however, expats will need to familiarize themselves with the tax implications relating to personal income tax (IRPF), wealth tax, capital gains tax as well as inheritance tax:

1. Personal income tax (IRFP): In Spain, personal income tax applies to your pension, salary or dividends, and is progressively charged from 19% to 46%, depending on how much you earn. You may also be eligible for a flat-rate tax of 25%, with several additional allowances available based on your particular situation.

2. Wealth tax: High-value real estate assets attract a wealth tax of between 0.2 – 2.5% for both residents and non-residents. There are a number of allowances that may reduce our wealth tax burden, depending on where the property is situated and whether you are using it as your primary residence.

3. Capital gains tax: Any profits generated from the sale of an asset in Spain are subject to capital gains tax. Such profits are taxed at between 19% and 23% for residents, while a flat rate of 24% applies for non-residents. Again, there are some exceptions to this.
   

4. Inheritance tax: Any donations or inherited assets you receive in Spain, both as a resident and non-resident, will be subject to inheritance taxes. 

5. VAT: VAT is also applicable in Spain. There are three VAT rates, set at 4%, 10% and 21%, depending on the type of product of service being sold.

A key requirement of maintaining your Spanish Non Lucrative Residence is the need to spend a minimum of 183 per year in Spain. At that point you will become tax resident in Spain, and you will be expected to pay taxes on your worldwide income.

You will also have to pay taxes in Spain if you have economic interests in the country, e.g. if you are self-employed or running a business in Spain. In addition, you may also be considered tax resident if your spouse and or children live in Spain.

Bear in mind that Spain has non-double taxation treaties in place with a host of countries, to prevent you from being taxed twice on the same income. You can view the list of countries here.

Should you invest in Spanish company shares, you’ll be eligible to pay capital gains tax to the Spanish revenue service. In addition, if you were to buy a property in Spain, this transaction may be subject to certain taxes as well.

It is always advisable to seek specialist tax advice about your unique financial situation before making any decisions about immigrating to Spain.

IPREM is a Spanish index used in the calculation of economic aid, unemployment benefits, grants, scholarships and allowances based on and individual person’s specific income and situation. Known in Spanish as El Indicador Público de Renta de Efectos Múltiples, the IPREM indicator is often referred to as the Multiplier for the Public Income Index in English.

As an income benchmark, the IPREM also informs the calculation of the amount of funds you’ll be required to have access to in order to qualify for the Non Lucrative Residency Visa.

As of December 2020, the minimum financial means requirement for obtaining Non Lucrative Residency is 400% of PREM for the primary applicant. You can find out more about the financial requirements for the Spain Non Lucrative Visa program here.

Formally known as the Numero de identidad de extranjero, the Spanish NIE is a tax identification number. Foreigners seeking to settle in Spain will require a NIE to work, study, or purchase real estate or vehicles.

The NIE number appears on your Spanish residency card, known as the “tarjeta de residencia” in Spanish, and is linked to both your residency status and access to social security services while in Spain.

The NIE format comprises a mix of alpha numeric characters – an initial letter, followed by 7 digits, and ending with a verification letter.