Hispania was a province of the Roman empire until its collapse in 476 AD. After this, Germanic tribes invaded, led by the Visigoths (Western Goths), who set up a kingdom which lasted until the early 8th century. Then, in 718, Spain was conquered by the Moors (Arabs and Berbers) and nearly all of the peninsula came under Islamic rule. This was a great time for the arts, culture and technology as the Arabs led the West in these fields at that time. Their capital, Cordova, was then one of the greatest cities in the world.

In the Middle Ages, Christian states in the north started the gradual reconquest of the peninsula. The Reconquista was completed in 1492, with the capitulation of the last Moorish state, Granada. This was also the year that Christopher Columbus, a Genovan under pay of the Spanish monarchy, landed in the Bahamas, thus discovering the New World.

In 1506, Spain became the leading nation in the Habsburg Empire by marriage. This meant that the Spanish monarch had rule over large areas of Europe together with rapidly expanding parts of the Americas. In 1520, Hernán Cortés completed the conquest of Mexico, and in 1533 Francisco Pizarro destroyed the Incan Empire. Both of these conquests were brutal, with the 1532 Battle of Cajamarca in Peru being little more than a massacre.

Vast amounts of silver and gold were discovered in the Americans, and these were used to consolidate the Habsburg position in Europe, fund further conquests and compete with their main rivals, Bourbon France. However, the influx of bullion also caused inflation, and rebellion in the Low Countries and war with England and France ate away at Spanish coffers. Spain's ambitions in Europe were expensive and unrealistic. The Inquisition was also a factor, encouraging dissension and corruption, while stifling any form of independent thought.

In 1640, Portugal seceded from Spain, and in 1643, the French comprehensively defeated the Spanish army at Rocroi. Five years later, the United Provinces of the Netherlands formally achieved independence. These events marked a downturn in Spanish fortunes, and by 1700, when the Habsburg line failed, Spain was a spent force, with France overtaking it as the great power in Europe.

The War of Spanish Succession (1701-14) saw Spanish territory further reduced. However, the 18th century was a period of recovery for Spain, especially in economic terms. In the early 19th century, Spain's American colonies gained their independence, and in 1898, Spain lost further overseas territory to the United States (which Spain had originally helped to create.)

In the 20th century, tensions between Nationalists and Republicans led to the Civil War (1936-39), which ended in rule by the Fascist dictator Francisco Franco, who suppressed the Basques, Catalans and other minorities. After Franco died in 1975, the Spanish monarchy weas restored and the economy slowly recovered. Spain joined the European Economic Community (EEC) in 1986.

Spain’s economy has suffered hugely during the recession. After becoming part of the EU, Spain enjoyed rapid growth; over the past 40 years its tourist industry grew to be the second largest in the world and accounted for around 50% of GDP in 2006. The property boom that followed contributed almost 16% of GDP and employed 12% of the workforce. The collapse of the property boom has led to high increases in personal debt with unemployment now at the 26% mark.

Personal income tax ranges from 24% to 45%. For 2012 and 2013 tax years, a supplementary tax of between 0.7% and 7% applies.