A little forethought and planning can ensure that your heirs don't have to suffer through complicated legal procedures should you die in Spain. Thinking ahead can also ensure that, should your spouse die, you are not left with disastrously high tax bills.
It is vital to fully understand the Spanish tax system to avoid misunderstandings and ensure that you do not make inappropriate decisions with regards to investments, business and private transactions. Not knowing the system is not an excuse and a bad decision made in ignorance can lead to higher taxes in the future or even fines and penalties.
Here is a simple guide to some of the key taxes which may affect you whilst living, doing business or even just being on Holiday in Spain.
As little as twenty years ago, tax evasion was a way of life in Spain and almost encouraged. Not any more! During the last decade, Spanish taxes have increased dramatically, particularly income tax. Although overall taxation remains reasonably low and is still less than the EU average, the gap is closing fast.
The Spanish Tax year runs from 1st January to 31st December and Spanish residents have to pay income tax (Impuestos sobre personas fisicas) on their worldwide earnings when they complete a declaration (Declaración de la Renta) during May or June the following year.
Your accountant, lawyer or "gestor" is your best bet when it comes to working out the best approach to your property taxes. As a source of general information, however, these are the taxes you can expect to pay on your Spanish property: