Tax Calculator Spain

Tax Calculator Spain


Table of contents

The Value of Using Tax Calculator Spain: A Tool for International Contractors

If you are a contractor planning to work in Spain, determining your income tax can be difficult. Without accurate information, you may agree to a contract that doesn’t cover your expenses. It’s important to know the tax rates so you can budget for net income.

How can you find accurate rates on taxes in Spain, so that you can plan your budget based on net income?  

One new expat contractor from South Africa shared how they were considering a client offer from a Spanish client. They wanted to know how much their pay would be reduced by taxes.  

The client couldn’t advise them as an independent contractor on taxes and rates. So they really felt stuck in making a decision. 

They had always been an employee where the employer took care of calculating and withholding their taxes.  But this was a new challenge.

This is a frequent issue for expat contractors entering a new country, where they don’t have a tax advisor or any experience with the system.  It’s not just a matter of convenience for you. 

You will want to know when you are negotiating with your client how much of your pay rate will be retained as net income.

Knowing tax rates can help you negotiate with clients and cover expenses. Use our calculator to stay informed and plan your budget. Don’t let taxes hold you back – stay informed and plan accordingly.  

To avoid potential issues as such, we’ve updated our Tax Calculator Spain. 

Spain Tax Calculator for Expats

When you work in Spain as a contractor, you must also pay taxes on your income.  The challenge is adjusting to a new tax system that may be quite different from your home country. 

For example, Leon was a contractor from the UK who was negotiating his contract with a Spanish client.  He was trying to understand how to use the quoted rate of pay (gross income) and calculate his net income after taxes. 

This involved researching Spanish tax rates for the average salary in Spain, and estimating the amount of tax owed.  He wasn’t sure if it was accurate but didn’t want to hire an accountant just for the calculation.

We advised him that he could get an accurate estimate by using our Tax Calculator Spain.  He could then easily negotiate a rate that would take into account his tax liability and eventual net income. 

Here is our updated Tax Calculator Spain for you to discover your taxes and annual net income:

Taxation in Spain

Self-employed

Contracting in Spain means complying with all local laws and regulations including taxation.  

If you are there long term, you will pay progressive rates on your gross income, ranging from 19% to 47%. 

Non-resident contractors on a short term project would pay a flat 24% rate on gross income. 

There are also special rates for EU members from some countries.  Digital Nomad Visa

Spain has also just launched a digital nomad visa for freelancers that want to live in the country, while working remotely.  The majority of the work must be for non-Spanish clients. 

The 24% expat tax rate will be applied to your earnings under this visa Although you can renew it for up to five years if you wish. To qualify, only 20% of your income can come from Spanish sources.

Umbrella Company Options

If you are set up as a true self-employed (autonomo profesional), then you will have to withhold and manage your taxes. 

If you are an employee of your client, they will handle the withholding for you. An umbrella company will offer the same withholding if you choose to use their services.  

This is one of the advantages of umbrella companies: accurate tax withholding from client payments to ensure compliance. 

Tax rates are the same for both resident self-employed and employees. But contractors may have the ability to deduct more business expenses.

Double Taxation and Tax Treaties

If you work long term in Spain, you will become a tax resident, and subject to income tax on global earnings.  

This brings up the possibility of double taxation where you are paying tax in both Spain and your home country.  Fortunately, many countries have tax treaties with Spain, which allow a credit to be applied to avoid double taxation.

You will want to research the applicable tax treaty between your home country and Spain. This will determine how taxes will affect your contracting.  Even if a tax treaty applies, you may still need to file a tax return in both countries.  

If you stay in Spain long enough, you could possibly ‘lose’ your home country tax residency.  That will mean  that you won’t owe taxes at home.  This will not apply to US contractors who will always be liable for tax on worldwide income, subject to any tax treaties.

Filing and Payment in Spain of Income Taxes

Once you know what your estimated taxes in Spain will be, you will also want to know how to file and pay taxes.  Here are the basic steps, or you can always hire an accountant to do it for you.

Step 1: Collect a Foreigner’s Identity Card (NIE) number through the local foreigner’s office or police station within 30 days of arrival in Spain. This usually takes 2-3 weeks to arrive.

Note: a Spanish national would be issued with a DNI (Spanish National ID) instead of the NIE.

Step 2: Using this NIE number, you must register your obligation to pay Spanish tax with the Agencia Tributaria by filing Form 30. Check out the guides for filing this form.

Step 3: Log into the Agencia Tributaria using your NIE.

Step 4: You can submit your own income tax declaration form without a borrador and this can be done online by filing one of the following forms:

Step 5: Enter information relating to deductions.

Step 6: If you have tax due, you can pay in one go at your bank. Alternatively, you can choose to pay in 2 instalments by direct debit (end of June and November). Tax refunds will usually be paid into your account around 3 to 4 months after filing your tax return.

If you use an umbrella company for contracting in Spain, they can assist you with tax filing and payment systems.

How Contractor Taxation Can Assist your with Income Tax in Spain

If you are new to contracting in Spain, calculating taxes and any expat benefits can be overwhelming.  This is where contracting through an umbrella company can be of real value: from invoicing, receiving payment and paying taxes.  

Even if you use our Tax Calculator Spain to know your taxes pre-hire, you may want additional help once your contract begins.

Contractor Taxation has fully vetted umbrella companies in Spain that can assist you. They will help you understand the tax rates and your net salary.  This means that you can know your real income pre-hire, and you will have an ally while contracting  in Spain.

Other benefits of umbrella companies include:

  • Manages all client payments, tax withholding and any social contributions
  • Issues you a payslip each month, to a local or foreign account
  • Sponsors work permits
  • Helps set up the contract with the client
  • Moderates any disputes with your client
  • Advises on access to totalization and double taxation treaties 

If you have questions about how an umbrella company can help you as an international contractor in Spain, please contact us at Contractor Taxation.

FAQs

Do expats pay high taxes in Spain?

Expats pay the same progressive tax rates of 19-47%, similar to citizens and residents, if they are staying long term.  Non-resident expats pay a flat 24% rate.

What is the cost of living in Spain?

The cost of living in Spain is relatively low compared to some EU countries. This may be a factor in your decision to contract in the country.  One expat was considering two client offers, one in Belgium and the other in Spain.  

The Belgium offer was higher and at first more attractive. But after taking into account the high Belgium tax rates and cost of living, they chose the Spanish offer.

What is the highest tax rate in Spain?

The highest tax rate is 47% for all amounts earned over EUR 300,000.  Spain uses a progressive system,so the rates begin at 19% and each successive income level has a different, higher rate.  Our Tax Calculator Spain accounts for all of the different rates and income levels. This gives you an accurate estimate of taxes and net income.

If I work remotely for a Spanish client do I need to pay taxes in Spain?

If you are not working physically inside of Spain, then you will not have to pay taxes in Spain.  You will just file and pay taxes in the country where you reside.

What is the formula for calculating the income tax payable from a given amount?

There are mathematical formulas for doing this (if that is your talent). Or you could simply use our Tax Calculator Spain to do it automatically for you.