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The new tax laws in Spain’s Andalusia in 2022: What you need to know

The Andalusian regional government has announced several major changes to its tax laws which come into force in January 2022, affecting everything from personal income tax to inheritance tax. Here’s what you need to know.

Taxes in Andalusia in 2022.
Taxes changes in Andalusia. Photo: Frank Nürnberger / Pixabay

Andalusia’s tax reforms were passed in October 2020 and set out significant reductions in regional taxes from January 1st 2022, the date in which they came into force for taxpayers.

The changes will affect four of the main taxes which Andalusia has jurisdiction over.

These include Personal Income Tax (IRPF), Wealth Tax (Patrimonio), Inheritance and Donations Tax (ISD), and Property Transfer and Documented Legal Acts tax (ITPAJD).

The new laws also include an increase of the income limit threshold to benefit from tax deductions.

It will go from €19,000 per year to €25,000 for individual taxes while in the case of joint tax declarations, the bar will be raised from €24,000 to €30,000 in 2022.

READ ALSO: Andalusia unveils plans to become Spain’s least bureaucratic region

IRPF

One of the key changes in Andalusia’s tax laws will be in the category of personal income tax or IRPF.

In 2022, this will be reduced to the lowest rate of 9.5 percent, the minimum required by Spanish law.

This update brings Andalusia in line with other regions such as the Community of Madrid, which is famed for its low tax rates and gave the green light for the same change in December 2021.

READ MORE: Why you should move to this region in Spain if you want to pay less tax

The new regulation also raises the regional deduction for investment in first homes to five percent both for young people and for owners of officially protected homes.

In addition, the law will also improve deductions on rent for various groups, including people with disabilities, those over 65 as well as victims of domestic violence or terrorism. The limit will be €25,000 for individual taxation and €30,000 for joint taxation.

The tax benefits related to births and adoptions will also increase. Deductions of up to €200 can be made, which is four times more than previously allowed. In the case of families living in depopulated areas, the threshold will be increased to €400. Greater reductions will also be available for large families, those needing domestic assistance and those with disabilities.  

Two new exceptions have also been created –  one to offset educational expenses with a limit of €150 per student and another for donations that have an environmental purpose. 

READ ALSO: Why you should move to this region in Spain if you want to pay less tax

Wealth Tax

Another of the changes affects the souther region’s Wealth Tax, which has been lowered for people with disabilities.

The Andalusian government has raised the limit to €1.25 million, which is almost double compared to the €700,000 which was exempt for people with a degree of disability between 33 and 65 percent up until now.

Taxpayers who exceed the 65 percent disability threshold will be exempt from this tax as long as they do not have assets above €1.5 million. 

Inheritance Tax 

The changes also include the reduction of Inheritance and Donation Tax in Andalusia. Rates have been reduced to between 7 and 26 percent in 2022.  

According to the Andalusian government’s calculations, the combination of the rate and the coefficients will mean that the marginal tax rate will not exceed 45 percent.

Up until now, it could reach up to 70 percent. This measure will especially affect family groups including brothers and sisters, cousins, nieces and nephews, and aunts and uncles.

There will also be a reduction in the tax base for first homes or habitual residences, after a death, or by donating to descendants with a disability.

The base rates that apply to companies and businesses will also be reduced.

Property Transfer Tax

The Andalusian Government has also agreed to maintain the reductions that were already being applied to the Property Transfer or Transmission Tax. The general rate will remain at 7 percent, while notarial documents will be taxed at 1.2 percent. This has been in operation since the end of April 2021.

Offspring under 35 years of age, large families or people with disabilities will also benefit from a reduced rate of 3.5 percent. But in 2022 there will be an increase in the maximum value of the home on which it is transmitted, so there is a little more margin, depending on the group to which they belong.

A reduced tax rate of 6 percent on the acquisition of homes with a value of €150,000 or below will also be introduced in 2022. This will be open to anyone living in Andalusia, without any other additional requirement.  

A one percent reduction in tax will also be applied to the purchase of non-polluting vehicles. 

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How is crypto taxed in Spain?

Cryptocurrencies are becoming more and more popular in Spain and recently the government as been cracking down, enforcing tax controls and the declaration of crypto assets, but exactly how are they taxed?

How is crypto taxed in Spain?

If you live in Spain or a non-resident and have cryptocurrencies in Spain, it’s important to find out the government legislation on these virtual coins, so that you’re properly prepared, know to declare them and find out how much you’ll be taxed on them. 

Last week we wrote an article about Modelo 721, Spain’s new form for declaring crypto assets, which is due before March 31st 2024. This is an informative declaration only. You will not have to pay any tax because of it, but that doesn’t mean that cryptocurrencies aren’t taxed in Spain.

Are cryptocurrencies taxed in Spain?

Yes, all crypto coins are subject to tax in Spain, no matter what type they are, whether that’s Bitcoin, Ethereum, Polkadot, Litecoin or any one of the thousands of other ones.

You will be expected to pay tax on cryptocurrencies only when you trade them or make gains or losses.

Law 10/2010 on virtual currency, also called cryptocurrency, is considered for tax purposes as “an intangible asset, computable by units or fractions of units, which is not legal tender, but is used as means of payment as it can be exchanged for other goods, including other virtual currencies, rights or services if accepted by the person or entity that transmits the good or right or provides the service”.

If you are trading crypto coins for a personal investment, you will be subject to personal income tax, in the same way that you’re taxed on other profits from savings and investing.

READ ALSO: Do I really need to declare foreign assets to Spain’s taxman by March 31st 2024?

How much are crypto coins taxed in Spain?

Capital gains from trading cryptocurrencies are subject to taxes between 19 and 28 percent, depending on how much you earn. These are the rates.

  • From €0 to €6,000: 19 percent
  • From €6,000 to €50,000: 21 percent
  • More than €50,000: 23 percent
  • More than €200,000: 27 percent
  • From €300,000 upwards: 28 percent

Remember you will only be taxed on the gains you make. This is worked out by taking the amount you sold your crypto coins for minus the amount you bought them for in the first place.

Let’s say, for example, you made a gain of €60,000. In this case, you will pay 19 percent on the first €6,000, 21 percent for the next €44,000, and 23 percent on the remaining part of the €60,000.

This means you will pay a total of €12,940 tax on €60,000 profit, leaving you with €47,060.

You will also be taxed on gains you make from trading one cryptocurrency against one another. When you sell that coin you traded for a further profit, you will be taxed again on the second gain. 

Crypto as a business

The above amounts equal how much you’ll pay if you’re an individual, but if you’re making profits as a business or you are indeed mining crypto currencies you will be charged from 19 to 47 percent tax.

It’s not yet clear how much you will be taxed if you receive crypto by airdrop, but legal experts expect this also to be taxed between 19 and 47 percent.

How do you declare crypto earnings?

Any profit you make from cryptocurrencies must be declared during the annual declaración de la renta or income tax form, which is filed usually before the end of June each year for the previous year. 

You will report all your crypto transactions for buying and selling during that year. You can usually download a record of these from the crypto exchange you bought and sold them from.

If you made any losses you can also choose to report these. In certain cases, this may be used to offset any gains you make over the next four years.

Wealth tax

It’s important to be aware that cryptocurrencies are included in the wealth tax declaration on large fortunes. This means that the value of your crypto coins will be added to the value of your other worldwide assets including property, savings, money in your bank accounts etc.

It’s an annual tax, payable on the total net value of your assets held on December 31st of the previous year and is only applicable to those with a net wealth of over €3 million.

Rates and rules vary slightly depending on where you live in Spain, so it’s important to contact a tax professional to find out the laws in your region.

How do the Spanish tax authorities know if I have cryptocurrencies?

If you purchased your cryptocurrencies on a Spanish exchange, they will have been obliged to provide information to the Treasury about their users, so most likely they will already know. 

If you purchased crypto through a foreign exchange, such as the well-known Binance, it is likely that they will have also given your details to the Spanish tax authorities as they are inscribed with the Bank of Spain. 

Currently, there are around 70 exchanges inscribed with the Bank of Spain including Binance, Bit2Me, BitPanda, Criptan, Bitbase and Bitonovo. You can find a full list of them here if you scroll to the bottom. 

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