Friday, 10th July 2020

This Month's Magazine
General Tax update

General Tax update

Advice from Graydon & Associates

Changes to taxes in Spain have brought about substantial benefits for the non resident investor. For non residents with property investments in Spain, Capital gains will be taxed at 18% (previously 35%).

Withholding taxes on the sale of property is reduced to 3% (previously 5%) but be aware that this is a payment on account for any potential capital gains tax liability.

Rental income will be taxed at 24% on the gross amount received (previously 25%).

Dividend income and interest will be taxed at 18% (previously 15%) unless the taxpayer is a resident in a country with a double tax treaty with Spain.

Personal allowances have been increased; for a joint declaration to €8,450 and for separate declarations, €5,050.
The new child allowances range from €1,800 for the first child, up to €4,100 for four or more. The lowest rate of Income tax is raised to 24%, and the highest is lowered to 43%. All Capital gains are charged at 18% irrespective of the period of ownership.


Dividends are taxed at 18% (the first €1,500 are exempt) Interest is taxed at 18% (except between related parties).

Corporation tax will be reduced from35% to 32.5% and to 30% from 2008. Small companies (turnover under €8,000,000) tax will be reduced from 30% to 25% up to €120,202 of profits; the excess will be taxed at 30% (previously 35%)
Companies with properties in Spain will be taxed at 18% (previously 35%).

The rate of withholding tax on the sale will be reduced to 3% (previously 5%).

Rental income will be taxed at 24% on the gross amount received (previously 25%).

Dividends and interest will be taxed at 18% (previously 15%). Unless the company qualifies for a DTTC or CEE directive exemption and can provide a certificate of tax residence in that country.

Offshore companies will, in principle, qualify for the 18% rate on the capital gain, made in Spain, on the sale of a property. However, it is probable that the Government will introduce changes to the application of this rate.

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