After moving to Spain your first tax declarations are due the year after you become tax resident in Spain. The tax year in Spain runs with the calendar year, 1st January to 31st December and the basic rule is that you become tax resident when you’ve spent 183 days in the year in Spain.
Your tax obligations arise for the fiscal year in which you become resident in Spain, not from the date you got your residency.
Here we provide a useful summary and information of the first tax declarations for anyone who doing their Tax in Spain for the first time.
Moving to Spain – Your First Tax Declarations
There are two declarations that people who have moved to Spain need to do after completing their first tax year. These are the Modelo 720 Overseas Assets Declaration and the Modelo 100 Personal Income Tax Declaration. (declaracion de la renta).
Depending on your overall wealth and the region that you live in, you may also have to make a Wealth Tax declaration.
The Overseas Assets Declaration has to be done by the 31st of March, the Personal Income Tax Declaration by the 30th June.
Gift and inheritance taxes are administered regionally and must be settled within 1 month or 6 months of the event respectively.
Overseas Assests Declaration
Modelo 720 is the form which has to be completed by Spanish residents to declare overseas assets. The requirement applies to anyone who lives in Spain, who owns, or is beneficiary to overseas assets worth €50,000 or more.
This reporting requirement, was introduced to clamp down on tax fraud being committed by Spanish residents who had acquired, or intended to acquire assets, to hide wealth outside of Spain in order to evade paying tax. Anyone moving to Spain who still owns relevant assests in their home country gets caught in this requirement.
What is reported in the Overseas Assets Declaration?
There are three main reporting categories which are reported in the Modelo 720 declaration. Cash in bank accounts, investments, and real estate. In 2023 crypto currency was introduced as an asset that must be declared via Modelo 721.
The reporting requirement only applies to assets in a particular category, if the group total value of the assets in that category amounts to €50,000 or more.
Modelo 720
The obligation to complete the Modelo 720 to report assets, applies to the owner of the assets, authorised signatories, a settlor who can benefit from a trust they settled, and those with authority to dispose of the asset. This includes assets held by a company, a trust or fiduciary.
With jointly owned assets, you need to report even if your personal share of assets is less than €50,000. Each owner declares the full value and indicates their percentage share of the asset.
In most cases, assets are valued using the wealth tax rules as of 31st December each year. For assets held within financial institutions (e.g. bank accounts), you also need to declare the average balance over the last three months of the year.
The value of the assets is declared in Euros, so any savings or investments held in other currencies such as GBP or USD, has to be converted. The rate to be used is that at 31st December of the relevant year.
Modelo 721
This new declaration of crypto currencies held on overseas exchanges arrived in 2023. The declaration requirement started in 2024 in reference to the year 2023.
You can read more about these declarations in our article – Overseas Assets Declaration.
Information and documents required to complete the return
To compete the declaration you will need your residency certificate or TIE and the following relating to your overseas assets, as applicable.
Property
Address/es, (including country), acquisition date, purchase price, ownership, e.g. 100% or joint 50/50
To compete the declaration for you, Limit will need a copy of your residency certificate or TIE, (we hold a copy and can share this with Limit), and the follow relating to your overseas assets, as applicable.
Investments, Personal Pensions (e.g. SIPP’s) & Life Insurance
Country, provider name, provider full address, fund identification number if available (ISIN ) Value/s as at 31st December 2024, confirmed by providing valuations, statements or policy schedules.
Cash, savings, bonds etc
Country, bank name, bank’ s full address, IBAN or other account identification number / reference, balance of current and savings accounts as of 31st December 2024, confirmed by providing statements.
If you need to make a declaration and would like help doing it. Please click here to start the process by registering your request with our accounting partners.
Personal Income Tax Declaration
As a resident in Spain you are liable to pay tax on general income, and other income e.g. from savings and investments and profits or gains from the sale of assets.
General income includes things like pensions and salary etc, other income might be savings interest, dividends, rent, capital gains from selling property or shares sold with a profit / loss.
What has to be included in your Spanish Tax Return?
As the Spanish tax year runs from January to December, if you receive income from the UK where the tax year runs from April to April, there is an overlap in the tax yeara. In this case, if your regular income has changed from one UK tax year to the next, the income reported for the Spanish tax year, will be the last 3 months of the previous UK tax year, and then 9 months of the current UK tax year. (E.g. 2024 Spanish tax year = January to March UK tax year 2023/24 and April to December UK tax year 2024/25).
Income to be declared is either calculated on a pro-rata basis from the figures on the last 2 P60’s, or using payslips or pension payment advice letters.
When preparing the information for your declaration, it is useful if you summarise your income totals by type for each period for example:
Main / regular income – salary pensions etc (Jan to March plus April to December)
Income source / type and amount
e.g. state pension – £9,560
work pension – £10,530
rental income – £13,240
Secondary / other income – rent, interest, dividends, capital gains etc (Totals recieved Jan to December)
savings interest – £4500
share dividends -£2500
If you have rental income to declare, expenses relating to the letting of the property can be taken into account, however must be evidenced by receipts or invoices issued by registered companies or registered tradespeople. If you do not have receipts, it may be better not to deduct the expense as an audit by the tax office would result in a penalty for claiming an undocumented expense. It’s worth noting that rental income from letting to a tenant as their main home, enjoys a 60% allowance, i.e. only 40% of the net rental profit is taxable in Spain. Any tax due and paid in the UK is applied as a credit on your tax return in Spain.
You are not obliged to make a declaration if your earned income is from one source and one payer e.g. salary or work pension and is €22,000 per year. Earned income from more than one payer does not have to be declared if it is less than €14,000 per year, e.g. state pension plus small work pension.
Wealth Tax
Wealth tax is levied regionally and naitionally. Andalucia, Madrid, Murcia and the Balearics have a general exemption on Wealth Tax of between €3,800,000 and €4,000,000 per individual. This includes a €300,000 main home allowance. For wealth above this amount national wealth tax is payable.
In other regions the allowance is between €800,000 and€1,000,000 depending on the region.
The taxable base for calculating wealth tax is the sum of all your assets, cash in bank accounts, investments, and real estate etc.
Need Help Making Your First Tax Declarations?
If you would like help making your first tax declaration/s or are not sure if you need to do them, please feel free to complete our assessment questionnaire to register your request. We’ll assess the details that you provide, confirm the returns that you need to do, the info and documents that you’ll need to provide, and the cost to get the returns you need to do done.
Get Help With or Request First Tax Declaration Assessment
Read more about Becoming Tax Residency in Spain