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Employment Taxation for Expats in Spain

Submitted: April 2014

Foreigner’s Identification Number

All expats working in Spain for more than three months must obtain for a certificate of residence; this will include a foreigner’s identification number or Numero de Identificacion de Extranjero (NIE). The certificates are issued by the foreigner’s department (Departmento de Extranjeros) at your local national police station. You should be able to pick up the necessary form (EX-15) without an appointment. You may need an appointment to return with the form. You will need to take your passport, two passport photos and the fee. You will also need some paperwork showing your address in Spain and your reason for being there. Do not sign the form until it can be witnessed by an official. It may take a month to receive you certificate with your NIE number, and you may have to collect it in person. If you have any general questions you can phone (+34) 952 923 058.

Working for an employer

Income tax

The tax year runs from 1 January to 31 December. Your employer will deduct tax from your wages or salary each time they pay you. As a resident you are taxable on your worldwide earnings; however if a double taxation treaty exists between Spain and the country of origin of income, this can be minimised.

Each person has an allowance of a certain amount per year on which they pay no income tax. For a single person in 2014 this amount is EUR5,151; which is EUR429 per month or approx EUR100 per week. This amount can vary depending on your circumstances. You will pay tax on your income after allowances at the following rates:

Income EURRate
Up to 17,70724%
From 17,707 to 33,00728%
From 33,007 to 53,40737%
53,407 and above43%

The figures above are based on the Madrid region and include regional taxes. These taxes vary from region to region. For 2014, a supplementary rate is also payable which varies with rising taxable income from 0.75% to 7%.

If you earn over EUR22,000 you will have to submit a tax return at the end of the year.

Working as self-employed

It you are self-employed in Spain you will pay tax quarterly. There are two categories of self-employed in Spain, sole traders (empresarios individuales) and independent professionals (profesionales autonomos). The main difference from a tax point of view is that as an independent professional each time you issue an invoice to a business, they will retain 21% from the amount due, which will be sent to the tax department. This amount is reduced in the first three years of work to 9% under certain circumstances. This retention is then credited to you on the quarterly returns that you have to make.

You are taxed on your profit at the progressive individual income tax rates. You will still get the same allowances as an employee. If you earn over EUR22,000 you will have to submit a tax return at the end of the year.

Social Security

Your employer will register you for social security, and will also pay most of it. You will probably only see a deduction of around 6% from your pay. There are two components which you will see on your payslip, Contingencias communes which is for health and pension insurance and Desempleo which is unemployment insurance.

If you are self-employed you will have to register with the social security office. The monthly minimum payment of social security for the self-employed is approx EUR254 per month.



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