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TAXES

Spain to tax the rich to offset inflation relief measures

Spain's left-wing government has said that from 2023 it will slap a temporary tax on the wealthiest 1 percent of the population to help pay for inflation relief measures.

Published: 23 September 2022 09:30 CEST
SPAIN-TAX-RICH
Tax Minister María Jesús Montero believes it's unfair that regions such as Madrid and Andalusia are offering tax reductions to the wealthy whilst other regions are burdened with bigger tax collection commitments. (Photo by PIERRE-PHILIPPE MARCOU / AFP)

Tax Minister María Jesús Montero told La Sexta television channel it is important that “we can finance the aid” put in place to support “the middle class and workers”.

To this end, the government will impose an “exceptional” tax on Spain’s “big fortunes”, she said.

The tax will last for two years and affect “no more than one percent” of the population, Montero said.

“When we talk about rich people, we are talking about millionaires,” she added.

The minister did not provide details on what the tax rate would be or how much it would raise.

The announcement comes just days after Andalusia’s regional government decided to scrap its wealth tax for residents and non-resident homeowners with worldwide assets above €700,000, in a bid to attract higher earners to the southern region.

This has sparked a debate in Spain over whether it is fair for some regions (those governed by the right-wing Popular Party to be exact) to offer better tax conditions than others and then ask for an equal or bigger slice of the pie from the national state budget. 

Montero has accused regions such as Madrid, which has long been the region with the lowest taxes in Spain, of carrying out unfair fiscal competition, what’s referred to in Spain as ‘tax dumping’.

READ MORE: Why you should move to Madrid if you want to pay less tax

Spain’s leftist government in July introduced a draft bill to create a temporary tax on banks and power utilities to fund measures to ease cost-of-living pressures.

Spain is battling a surge in inflation as a result of the fallout from the war in Ukraine and the reopening of the economy after pandemic-related lockdowns.

The annual inflation rate hit 10.4 percent in August. It has remained in double digits since June, a level not seen since the mid-1980s.

The Spanish government has introduced a raft of measures to help people cope with soaring prices, such as free public transport, stipends for students to stay in school and subsidised petrol.

It says the measures amount to €30 billion  ($30 billion), or 2.3 percent of Spain’s gross domestic product.

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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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