Navigating Spanish taxation

By Jon Pemberton, Partner, Blevins Franks

Living in Spain is a dream for many, but the tax landscape is complex, with regional as well as state rules and rates. Whether you are a long-term resident, recent arrival or preparing to move to Spain; whether you are working or enjoying retirement, the Spanish tax regime can bring both challenges and significant opportunities for those who take advice and plan ahead.

Tax residency in Spain

The foundation of your tax liability starts with residency. The Spanish Tax Agency remains vigilant in applying its residency rules. If you spend more than 183 days a year in Spain, you are typically deemed a tax resident, making your worldwide income and assets subject to Spanish taxation.

You can also be deemed a resident if your “centre of vital interests” (spouse or dependent children), or “centre of economic interests” (primary source of income or business) is in Spain.

Spanish income tax

General income

Spain’s Personal Income Tax applies to general income, which covers employment, pension and rental income, royalties, and gains not made on the sale/transfer of assets. It is a progressive system split between state and regional rates.

For 2026, income tax rates range from 18.3% to 53.85% in Comunidad Valenciana, and from 19% to 47% in Murcia.

Savings income

The 2026 tax rates on savings income are (with no regional variation):

19% on the first €6,000

21% between €6,000 and €50,000

23% between €50,000 and €200,000

27% between €200,000 and €300,000

30% for any amount exceeding €300,000

Interest income, dividends, capital gains on sale/transfer of assets, income derived from life assurance contracts and purchased annuity income all fall into this category, as do gains on crypto assets.

Spanish succession tax

Spain’s succession and gift tax varies between regions, with positive reforms over recent years. Valenciana and Murcia now offer 99% relief for spouses, descendants and ascendants on inheritances and gifts. Valenciana also introduced a 25% allowance for siblings, aunts/uncles and nephews/nieces this year, increasing to 50% from June 2027.

Compare this to the UK, where the nil-rate bands are frozen, reliefs are being restricted, and pensions will form part of your estate from April 2027. Retiring in Spain now provides much more opportunity to protect family wealth, if you limit UK assets.

If you wish to leave assets to other beneficiaries – including unmarried partners and stepchildren – they may face significantly higher tax charges, making early professional planning crucial.

Wealth taxes

Spain levies annual wealth taxes, though the impact is limited. If it is a concern for you, professional, strategic tax planning advice could reduce its impact.

The main wealth tax is managed by the regions. Murcia (along with AndalucíaandMadrid) offers a 100% credit (effectively zero tax), while other regions apply rates from 0.2% to 3.5% on worldwide assets. The tax-free allowance is now €2,000,000 in Valenciana (compared to €700,000 under state rules), plus €300,000 for your primary residence. Solidarity Tax on Large Fortunes currently applies at state level, but effectively only targets individual net wealth above €4 million.

Beckham Law

This regime has become more accessible to certain directors of Spanish entities with significant shareholdings, remote workers and highly skilled professionals. Core benefits include a flat 24% tax rate on employment income up to €600,000 (47% after that); no tax on foreign-sourced income, and wealth tax exemption on foreign assets.

However, the rules are intricate and meeting every requirement is crucial. Misunderstandings are common and many well‑intentioned plans have been undone by incomplete advice.

Spanish tax planning

Since Spain’s tax system is heavily regionalised and subject to frequent updates, it is important to regularly review your financial planning. Your tax position can vary dramatically depending on how your assets are structured, the source of income, and where you live. While headline rates may seem high, strategic planning and specialist cross-border advice can often substantially reduce your overall tax position.

Blevins Franks has offices and long-established advisers across Spain, including Benijófar and Javea, and five decades of experience advising British expatriates on tax planning and protecting their wealth. Get in touch to review your assets and ensure you are taking advantage of all the tax planning opportunities Spain has to offer.

The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.

Blevins Franks Wealth Management Limited (BFWML) is authorised and regulated by the Malta Financial Services Authority, registered number C 92917. Authorised to conduct investment services under the Investment Services Act and authorised to carry out insurance intermediary activities under the Insurance Distribution Act. Where advice is provided outside of Malta via the Insurance Distribution Directive or the Markets in Financial Instruments Directive II, the applicable regulatory system differs in some respects from that of Malta. BFWML also provides taxation advice; its tax advisers are fully qualified tax specialists. Blevins Franks Trustees Limited is authorised and regulated by the Malta Financial Services Authority for the administration of trusts, retirement schemes and companies. This promotion has been approved and issued by BFWML.