Spanish Tax Bills For Expats Depend On Residency

As the end of the year creeps closer, so does the risk of a no-deal Brexit should a UK/EU free trade deal not be forthcoming.

This self-imposed, supposedly immovable December 31 deadline is still threatening to result in a disorderly no-deal British/EU divorce, with its effects not just hitting hard on the UK and its resident citizens but also on British expats living and working all over Europe. Expected are harsher visa requirements, exclusion from free healthcare and even negative changes to the current income tax laws at present applicable to expatriates.

For example, British expats living in Spain and working as self-employed will need to comply with the Spanish tax year’s different dates of January to December. At the present time, a double-taxation treaty with the UK prevents British expats from being taxed twice on their earnings, with eligibility for Spanish tax at 183 days’ residence in any one single calendar year. Those whose businesses aren’t registered in Spain but whose primary professional business activities take place within its borders may also be liable to pay the Spanish taxman. If expats have dependent spouses and children resident in Spain, the same tax rules apply.

At a basic level, expats who’re tax resident in Spain must pay tax on their income after all personal allowances have been taken into account. At present, the personal allowance is set at €5,550 for those under 65 years of age, after which it rises to €6,700 and to €8,100 at the age of 75 or older. Only expatriate registered citizens are allowed to claim the personal allowance, with those yet to register paying a flat rate tax of 24 per cent on basic income. Obviously, applying for residency is the sensible option both for saving money on your tax bill and claiming whatever rights you’re still entitled to once Brexit is finally a done deal.