Taxes in Cataluña

If you are resident in Spain you are liable to Spanish taxes on your worldwide income, gains and wealth, and also subject to the succession tax rules on inheritances and gifts. Rates and allowances vary from region to region, so if you live in Barcelona, Girona, or Lleida provinces you need to be familiar with the local rules for the Cataluña region.

What income tax do I have to pay in Spain?

Savings income – interest income, dividends, capital gains, income from life assurance contracts and income from purchased annuities is taxed progressively at 19%, 21% and 23% for 2016.

General income – All other income (including employment, pension and rental income) is taxed at scale rates of income tax. Each Autonomous Community can vary the regional portion and in Cataluña the rates currently range from 21.5% to 48%.

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How are capital gains taxed in Spain?

Capital gains made on both property and investments are taxed as savings income at progressive rates of 19%, 21% and 23%.

You do not need to pay capital gains tax when selling your main home provided you either reinvest the money onto another main home or you are over 65 years old (and meet certain conditions).

Do I have to pay wealth tax?

If you are resident in Spain you may have to pay this annual tax, depending on the value of your worldwide assets as at 31st December. In Cataluña the annual general allowance is €500,000 in 2016 plus €300,000 against the value of the main home. Regional tax rates range from 0.21% to 2.75%.

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How much Spanish succession tax will my heirs pay?

If you leave heirs assets that are located in Spain, they will each have to pay succession and gift tax on the amount they receive. Spouses are generally not exempt. Also, if you are resident in Spain and receive an inheritance you will be liable for succession tax on it.

In Cataluña the tax rates can range up to 34% and in some cases multipliers can take it much higher. Allowances here are quite generous, for example there is a 99% relief for spouses and additionally spouses and children get €100,000 tax free. There is a 95% relief against the main home, with certain conditions.

What is Modelo 720?

If you are resident in Spain you have to declare your overseas assets worth over €50,000 on Modelo 720. Significant penalties may be imposed for failure to report. Although it is not a tax return as such it can have tax implications, so you do need to take professional advice.

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We have in-depth knowledge of Spanish and UK taxation and the interaction between them. We specialise in reducing tax on invested capital, pensions, wealth and inheritance, and have saved our clients a substantial amount of tax over the years.