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TAXES

Do I have to pay tax in Spain on the non-lucrative visa?

As the name suggests, Spain's non-lucrative visa or NLV doesn't allow you to work, but that doesn't necessarily mean you're not liable to pay taxes here.

Published: 14 March 2024 13:39 CET
Updated: 17 March 2024 08:23 CET
Do I have to pay tax in Spain on the non-lucrative visa?
You can't work with Spain's non-lucrative visa, so do you have to pay tax in the country? Photo: Photo by SHVETS production: https://www.pexels.com/photo/elderly-man-with-eyeglasses-working-on-his-laptop-7545264/

The non-lucrative visa or NLV is a one-year residency visa that allows non-EU citizens to come and live in Spain and is extendable for a further two years.

The main rule of the NLV is that you’re not allowed to work while in Spain, this means no working for companies within Spain, no remote work for companies outside of Spain and no self-employed work either.

Because of this, it’s a popular choice for those who want to retire in Spain.

READ ALSO – Non-lucrative vs digital nomad visa: Which one should you choose to move to Spain?

So, if you’re not earning any money in Spain, does this mean you have to pay tax here or not?

In short, yes, you will have to pay tax in Spain if you’re here on the NLV. 

In order to be eligible for the NLV you have to have a substantial amount of savings or receive a certain amount of passive income to be able to support yourself here.

This passive income could be from receiving a pension, rental payments for a property you own abroad, returns on investments or capital gains from the sale of assets.

So even though you’re not physically working while living in Spain, you are still earning money in some form, even if this is only a small amount of interest on your savings. All of it is taxable. 

READ ALSO: What are the pros and cons of Spain’s non-lucrative visa?

In order to be eligible for the NLV, you need to prove you have 400 times the amount of the IPREM which for 2024 is €2,400 per month in passive income or savings of €28,800 for the year.

Spanish law states that if you’re resident in Spain you must pay income tax on your worldwide income and capital gains.

If you’re here on a one-year visa and stay in Spain over the 183-day threshold then you will be subject to paying tax here. If you don’t spend a minimum of 183 days, you won’t be able to renew your NLV.

READ ALSO: Do I have to pay taxes in Spain if I don’t work?

This means that even though you are prohibited from working while on this visa, your passive income is still taxable and you will pay tax on your global income.

Interest on savings or capital gains are taxed at the following rates:

  • 19 percent for the first €6,000 of taxable income
  • 21 percent for the following €6,000 to €50,000
  • 23 percent for the next €50,000 to €200,000 
  • 27 percent €200,000 to €300,000
  • 28 percent for any amounts over €300,000.

You will also be taxed on pensions and other passive income such as rent from abroad. This will be taxed at a different rate.

Income tax is charged at the same rate for general income and pensions and is subject to progressive tax rates ranging from 19 up to 47 percent.

  • Up to €12,450: 19 percent
  • €12,451 – €20,200: 24 percent
  • €20,201 – €35,200: 30 percent
  • €35,201 – €60,000: 37 percent
  • €60,001 – €300,000: 45 percent
  • Over €300,000: 47 percent

If you’re eligible for the NLV and are earning €20,200 to €35,200 for example, you will be taxed at a rate of 30 percent. The exact amount you will pay, however, will depend on your individual circumstances.

You will be liable to file the annual Declaración de Renta for the previous year. It’s typically due at the end of June and on it, you will declare all your passive income and capital gains.

You may also be subject to pay wealth tax, as well as inheritance and gift tax, so it’s important that you contact a gestor or tax expert to find out exactly how much you’ll pay.

If you’re also subject to paying tax in your home country, Spain has double taxation agreements in place with many countries to ensure you don’t pay tax on the same money twice.

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For members

TAXES

Can you pay taxes in Spain with a foreign bank account?

Many foreigners have tax obligations in Spain but might not have a Spanish bank account to pay them from. Changes by Spain's tax authorities might just make it easier, depending on your circumstances.

Published: 3 May 2024 09:01 CEST
Can you pay taxes in Spain with a foreign bank account?

Navigating the ins and outs of the Spanish tax system can be a little daunting at times. That’s why many people choose to pay for a gestor to handle it all for them.

But for many foreigners in Spain, especially those with property in the country but who aren’t resident, figuring out when and how to pay your taxes can be extra complicated, especially if you don’t speak Spanish.

READ ALSO: What does a ‘gestor’ do in Spain and why you’ll need one

This was compounded by the fact that, for many years, you couldn’t pay Spanish taxes from a foreign bank account. As such, many people were forced to open a Spanish bank account for the sole purpose of paying tax.

Can you pay taxes in Spain with a foreign bank account?

Fortunately, it’s no longer like that. From February 1st 2024, the tax authorities in Spain started allowing tax payments via direct debit from any bank account within the SEPA area, removing the need for a Spanish bank account.

So, in short, yes, you can pay your Spanish taxes with a foreign bank account — depending on the country in which the account is based.

What is SEPA?

SEPA stands for Single Euro Payments Area is a basically an integrated bank transfer system. SEPA includes all the EU members states, plus those in the EFTA (Iceland, Norway, Liechtenstein and Switzerland). The UK is also still member of the SEPA area, despite Brexit.

Before the change, you could only pay your taxes in Spanish via banks approved by the tax authorities.

READ ALSO: Spanish tax returns: A handy guide for foreigners

VAT and tax experts Marosavat explain that under the previous rules, “direct debit [was] only available when the taxpayer’s bank account belongs to a bank entity cooperating with the Spanish tax authorities. This requirement impose[d] an important restriction when using direct debit as a payment method, especially for foreign taxpayers.”

But slowly, the Spanish tax authorities have eased the rules and made it easier for foreign businesses and tax payers to pay their tax from abroad. First, in March 2021, the rules were relaxed for foreign businesses with tax obligations in Spain. 

Then from July 2023 foreign accounts were approved for deferment and split applications of tax debt, and from February 2024 for regular tax payments.

Following the changes, Marosavat says, “the payments will still be processed through a cooperating bank entity, which communicates with the taxpayer’s bank entity. In consequence, all commissions and bank expenses related to the procedure will be passed on by the tax administration to the taxpayer.”

According to Spain’s Agencia Tributaria website, which you can find an English language version of here:

  • Payments are allowed for those who do not have an open account in any collaborating entity in state collection management.　

  • It is especially intended for use by those who pay their debts from abroad.　

  • It can be done by both natural persons and legal entities.　

  • The payment will have releasing effects on the date of receipt and entry of the transfer. 　

Non-resident property owners

This is particularly welcome news for second home owners in Spain, many of whom are non-resident and manage their properties from abroad for most of the year. 

According to IberianTax, by extending tax payments to the wider SEPA area, “property owners can now continue to use their home country’s bank accounts or accounts from other SEPA countries to make tax payments towards their taxes. This change simplifies the process and alleviates the burden of setting up a separate Spanish bank unnecessarily.”

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