# Provincial taxes in Spain and Non-resident tax rate



## ayar (Feb 17, 2012)

Hi all. I just got a job in Madrid and I am getting different information from different people about the tax rate. My boss says that my tax rate is going to be around 22% for a gross salary of around 50,000 euro and that is all the tax I have to pay. I read in other places that there is an extra "provincial tax" which is quite substantial and it is in addition to the national tax. 

Here for example (table copied below since I can't yet post links): 


Income	Spain’s national tax rate	Provincial tax rate	Total tax rate
€0 - €17,707	15.66%	8.34%	24%
€17,707 - €33,007	18.27%	9.73%	28%
€33,007 - €53,407	24.14%	12.86%	37%
€53,407 and above	27.13%	15.87%	43%

So if I choose to be taxed as a resident, do I have to pay the provincial tax? 

I am aware that I can choose to be taxed at the 25% as non-resident. In that case, do I still have to pay the provincial tax? 

Very confused. Any help will be very much appreciated.

Thanks, 
Amy


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## xabiaxica (Jun 23, 2009)

ayar said:


> Hi all. I just got a job in Madrid and I am getting different information from different people about the tax rate. My boss says that my tax rate is going to be around 22% for a gross salary of around 50,000 euro and that is all the tax I have to pay. I read in other places that there is an extra "provincial tax" which is quite substantial and it is in addition to the national tax.
> 
> Here for example (table copied below since I can't yet post links):
> 
> ...


will you be living in Madrid & working there??

I'm pretty certain that if that _is_ the case you can't choose to be taxed as a non-resident


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## snikpoh (Nov 19, 2007)

ayar said:


> Hi all. I just got a job in Madrid and I am getting different information from different people about the tax rate. My boss says that my tax rate is going to be around 22% for a gross salary of around 50,000 euro and that is all the tax I have to pay. I read in other places that there is an extra "provincial tax" which is quite substantial and it is in addition to the national tax.
> 
> Here for example (table copied below since I can't yet post links):
> 
> ...


I'm sorry to say but you don't have a choice in the matter - once you are employed (full time) here, then you MUST pay Spanish tax and hence are (tax) resident.

Try this link for details - interestingly Madrid has a slightly lower than average tax rate. Tax rates etc.


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## ayar (Feb 17, 2012)

Thank you for the quick replies. This is what I have been told about the expat tax. Again, I can't post a link to this website because i am a newbie.

"As of 10 June 2005, the Spanish government approved a new tax regime for expatriates working in Spain. This was Royal Decree 687/2005.

This tax rate for expats could be advantageous to avoid paying the upper levels of the rate table outlined above. In order to qualify, the expatriate must meet following:

Expats must not have been a resident in Spain at any previous time during the 10 years before their current work or position in Spain.
Their position must be under a legal employment contract with a Spanish company or through secondment employment, or with a non-resident company holiding a permanent establishment (i.e. a branch) in Spain.
The work must be performed in Spain, although some flexibility is allowed. Work may be partially performed outside Spain if the salary for work abroad does not exceed 15% of the total salary for the year. If the working contract provides that the individual performs functions in another group company, this limit goes up to 30%.
The expat’s income must be subject to Spanish NRIT (Non-Resident Income Tax).
If you qualify, this means you’ll be subject to a special flat tax rate for expatriates at 25% for all Spanish income sources, and you will be taxed as a non-resident regarding all income, capital gains and wealth taxes.

Note: You’ll have to make the decision within six months from the start date of your social security registration. The period of time you can claim this expat tax rate starts from the first year when the expat has spent more than 183 days in Spain and continues for a total of five years or more.

Further note: Due to the special nature of this tax, you’ll very likely need a tax advisor to ensure proper adherence to the decree."


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## anles (Feb 11, 2009)

ayar said:


> Hi all. I just got a job in Madrid and I am getting different information from different people about the tax rate. My boss says that my tax rate is going to be around 22% for a gross salary of around 50,000 euro and that is all the tax I have to pay. I read in other places that there is an extra "provincial tax" which is quite substantial and it is in addition to the national tax.
> 
> Here for example (table copied below since I can't yet post links):
> 
> ...


The total rate in the final column is what you pay in tax. It is the sum of the provincial and national columns. This just means that in the first bracket, 15,66% is due to the central government and the remaining 8.34% is due to the autonomous government. Although I hadn't previously heard of the non resident tax from what you have posted, a flat rate means that regardless of your income bracket you can pay a fixed percent which would be beneficial if you are above the first bracket.


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## xabiaxica (Jun 23, 2009)

ayar said:


> Thank you for the quick replies. This is what I have been told about the expat tax. Again, I can't post a link to this website because i am a newbie.
> 
> "As of 10 June 2005, the Spanish government approved a new tax regime for expatriates working in Spain. This was Royal Decree 687/2005.
> 
> ...


I think that might be the most important line in the entire text!!

what's the name of the website you got it from? - I'll have a look to see if it's OK to post & if so I'll link to it


I've just googled the law - it's the so-called 'Beckham Law' http://en.wikipedia.org/wiki/Beckham_law


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## ayar (Feb 17, 2012)

Also, what is a good amount of money to live comfortably in Madrid for a single person with no kids ideally renting a one bedroom apartment in a quiet area but easily accessible by train.


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## jp1 (Jun 11, 2011)

With my very cynical hat on I expect that decree was introduced to gain Hacienda more tax revenue, not less. Why would Hacienda not try and collect as much tax as possible?

The catch I believe is in the fact that capital gains are taxed at the non-resident rate of 35% (as it was at that time), as opposed to 15% for residents.

The idea was probably muted a year or two earlier when in the early mid stages of the housing boom and calculations showed that such individuals like Beckham would purchase a villa for several million Euros, and 4 or 5 years later under the housing boom it would be double or triple in price.

So hacienda lose out on maybe 5~10% of salary tax, but gain on an extra 20% on tens of millions on the sale of the villa.

2007 saw the EU outlaw the capital gains tax rate discrimination between residents and non-residents.

Interestingly that wiki article states that in 2009 the decree was under review and is now no longer valid.

WHAT A COINCIDENCE!!


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## GlobalDirector (Feb 19, 2013)

just google "Beckham law spain" or "ley beckham espana" and you'll get correct answers. The system is still valid, but max annual salary for whihc you can claim that tax regime of 24% is 600.000 eur / year. if you fit all conditions, you can get that special flat rate for year of entry in Spain + 5 following years. Not that if you exceed the 600K annually, the flat regime is no longer valid then. 

you need to calculate for your own personal situation in Spain, after deduction of any deductible amounts allowed, how much your net revenue would be to be taxed at an overall 24%, then if you make more than that amount, you can ask for it. but you need to do this under certain conditions. Contact a good lawyer, I've given you the main topics already, rest is up to you


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## Overandout (Nov 10, 2012)

ayar said:


> Also, what is a good amount of money to live comfortably in Madrid for a single person with no kids ideally renting a one bedroom apartment in a quiet area but easily accessible by train.


Obviously it depends on your definition of "good" but 50k€ is plenty.

That should see you for 2.5k€ net per month which is over double what many people earn.

Your flat should be no more than 500€ per month unless you like the exclusive town centre areas, leaving you 2k€ for everything else.


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