Last Updated on 26th November 2025
Expats planning to live, invest, buy a home or run a business in Spain need to understand their tax residency position, how this is determined, and what it means to their immediate and ongoing tax liabilities and reporting obligations.
Importantly, tax residency and your visa or residency permit are two separate things. Regardless of whether you hold permanent residency rights or even citizenship of either the UK or Spain, this doesn’t impact your classification as a tax resident or non-resident.
It’s equally vital to clarify that, while some tax residency assessments are fairly straightforward, they aren’t always conclusive. Spending 183+ days a year in one place or another won’t necessarily mean you’re automatically a tax resident, especially if there are other aspects that will be taken into account by the tax authorities.
What Is Spanish Tax Residency and Why Does it Matter to Foreign National Residents?
The basics of tax residency are that every foreign national, overseas domicile or non-citizen who lives in Spain needs to evaluate how their assets and incomes will be subject to tax, because:
- Tax residents are liable for Spanish taxation against their worldwide income and assets, which means that, for example, those obligated to pay wealth tax will have their tax bill calculated against all relevant assets and holdings internationally.
- Non-tax residents still pay tax in Spain, but only on incomes or earnings generated in Spain, excluding those originating from overseas.
Expats also need to consider how double tax treaties come into play, because some forms of income may be subject to tax at source. Treaties provide relief from paying duplicate taxes in both countries, but must be applied carefully to ensure taxpayers remain compliant.
While Spain is generally regarded as a lower-taxation destination than Britain, it is important that foreign nationals accurately assess their tax residency and avoid non-declarations or non-tax payments, which can carry serious repercussions.
How Do the Spanish Tax Authorities Deem Whether or Not an Expat in Spain Is a Tax Resident?
The simplest test examines where each individual spends the most time, and if you reside in Spain for 183 days or more per year, you’ll normally be categorised as a tax resident. However, that isn’t definite, because there are other criteria and circumstances that could apply, as we’ve stated.
For example, if you are living in Spain but have your main economic interests, such as investments, a business and property, elsewhere, maintain a primary home in another country, or have immediate family members overseas, it is possible that you will be deemed a non-tax resident.
These criteria are fairly consistent across other European countries. If there is ambiguity about where you are a tax resident, tie-breaker checks will be made to arrive at a conclusion. However, this also means that, if you plan to obtain Spanish residency and have budgeted only for localised taxes, you will need to verify your tax residency status with care.
Another relevant aspect is that the Spanish tax year doesn’t work like the tax calendar British citizens will be familiar with. While the UK tax period runs from 6th April each year, in Spain this aligns with the calendar year from 1st January to 31st December.
Spain’s tax regime doesn’t have a split-year tax treatment, so if you relocate partway through the year, you could be treated as a tax resident since the previous 1st January, which can cause complications if you are also liable for UK tax for the same months.
Does My Status as a Tax Resident in Spain Have a Material Impact on My Tax Obligations?
We often discuss the significance of tax residency, and it can have a substantial impact on your tax liabilities and overall tax burden.
Tax residents pay tax in Spain on all their assets and incomes in any location, whereas non-residents are liable only for earnings within Spain. The flip side is that, if you’re a non-resident, any assets or income arising elsewhere will be taxable in your place of tax residency, regardless of whether the tax rates are higher and the allowances lower.
Third-country nationals who have, for instance, income in the UK will need to pay the prevailing British income tax rates if they’re a tax resident there. However, expats living part of the year in Spain as non-residents and buying property abroad can also rest assured that this won’t be included in wealth tax calculations.
Contrasting Spanish Taxation for Expat Tax Residents and Non-Residents
To clarify the differences, we’ve created a quick reference table, while noting that this is generalised information and your specific tax position and liabilities will depend on your exact circumstances.
This is particularly relevant within Spain, given that provincial and municipal tax rates vary, as do the allowances applied against certain taxes, including wealth tax.
| Expat Non-Tax Residents in Spain | Foreign National Spanish Tax Residents | |
| Income Tax | Applicable only to incomes arising in Spain, with most non-tax residents subject to a flat rate of 24%. | Paid at rates from 19% to 47% on all taxable incomes, originating from any location. |
| Wealth Tax | Payable only on assets within Spain that meet the wealth tax threshold – although those assets could also be taxable in your place of tax residency. | Applied against worldwide assets above a €700,000 threshold, plus a primary home allowance of €300,000, with rates from 0.2% to 3.75% |
| Mandatory Reporting | Regular tax returns are obligatory for all incomes and assets within Spain, coupled with overseas tax reporting. | Annual tax declarations plus the Modelo 720 form for tax-residents who must declare assets held overseas worth €50,000 or more. |
| Capital Gains Tax | Levied against Spanish-based taxable gains with a 24% rate for non-EU nationals. | Payable against real estate and assets with rates of between 19% and 30%. |
Independent Assistance Evaluating Your Tax Exposure as an Expat in Spain
This guide has shown you some of the many reasons tax residency matters, as well as the variances in tax exposures and allowances you might expect.
For more information on managing tax efficiency as a Spanish foreign national resident, or to correctly assess your tax residency status, you are welcome to contact our Chase Buchanan Private Wealth Management Spanish teams in Marbella or Valencia, or our Administration Centre in the UK, to arrange a consultation.
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*Information correct as at November 2025
