Question about the non lucrative Spain visa taxation
I’m looking at a non lucrative Spain visa. Can you tell me about taxation on world-wide assets? I’m not understanding it exactly. Is that a yearly tax? Seems like it would be very expensive.
Answers
These are the answers of some Facebook group members:
“The wealth tax in Spain has a generous exemption of €700K for residential property and €300K per person in a marriage. Each region sets the rate between zero and two percent. Madrid is currently zero, Catalonia is currently 2%. It is adjusted annually and may change.”
“Unless you are “yacht wealthy” the wealth tax likely will not affect you at all. Madrid is the only region that does not currently impose the wealth tax. The country-wide established exemption amount is €700,000 per person plus an additional €300,000 per person for a Spanish property. Each autonomous community (region) can choose to use the €700,000 exemption or establish their own. Last I studied it there were only three regions that established a value other than the €700,000 (four if you count Madrid at zero). Valencia uses a €600,000 exemption, Cataluña is €500,000 and €Aragón is €400,000. The tax is a sliding scale that starts on amounts above the regional exemption and is a different range per region.
Valencia’s scale ranges from .25% to 3.12%. It can get complicated, so if your world-wide assets are more than these amounts, a tax professional would be highly recommended for an exact calculation on what you might expect to pay. Here’s a very rough example. Say I had €2,000,000 in assets. Subtract the €600,000 (Valencia) and the two property exemptions. That leaves taxable assets of €800,000. The sliding scale is hard to calculate here so let’s just pretend the average is .75%. That means on my 2 million Euros I’d pay €6000 in taxes. Also remember that property tax here is low. We pay €700/year for a house that would be taxed at €12,000/year in Texas. Then there’s healthcare. According to the Kaiser Family Foundation, the average person pays $5460 out of pocket for medicare. Double that for couples. We pay €1908/year each for NHS coverage here. Even though we pay more in taxes, our NET cost to live here is absolutely less.”
“I have heard that people buy an apartment in Madrid, rent it out and use that as their mailing address and thus avoid the wealth tax in Spain.”
“The wealth tax in Spain has a generous exemption of €700K for residential property and €300K per person in a marriage. Each region sets the rate between zero and two percent. Madrid is currently zero, Catalonia is currently 2%. It is adjusted annually and may change.”
“You might check out the fb page called Tapas Forever. They talk about the non lucrative Spain visa”
“You should speak to a tax professional. Spain taxes on worldwide income just like the US does. Not sure what you mean about assets. Perhaps you are referring to the wealth tax in Spain?”
“Spanish income taxes are much higher than in the US! By US/Spain tax treaty, in general if you live here you pay taxes here, although your taxes here are an offset on US taxes. Spain taxes social security, private pensions, retirement account withdrawals and other US revenue. If you have worked long enough to earn a US government agency or military pension, that’s not taxed here in Spain but is included in calculating your incremental tax rate. Consider doing a Google search on a “Spanish Gestor” (tax preparer) in the area where you want to live (some regional tax rate differences), and reach out to one and request a Spanish Form 100 budgetary tax calculation using your anticipated revenue from the US. In general, taxes here will offset your US IRS taxes, but the rates here will also be much higher in the US for most. Download IRS Publication 54 Tax Guide for Americans Abroad from the IRS web site. Also the US/Spain Tax Treaty from the US State Dept web site. Find a US tax preparer with expertise filing taxes for Americans Abroad (most US tax preparers have no expertise in that regard). Property taxes here are much, much lower than in US. Healthcare insurance coverage here is comprehensive and much lower than in US. As to cost of living, it varies depending on where you will live and your personal lifestyle and also those same factors in the US. I think most would find it less expensive here! If you sell a house in the US, time your move here so that you have any capital gains in the taxable year before you move here, or time your move to be here less than 183 days in Spain in that year so you pay your initial taxes here the following year. Personally, I suggest you rent the first year. Spain is a great country but make sure the country, the area, the town, even the neighborhood all work well for you and your interests before you buy here. Good luck!”
“I would talk to experts to avoid costly mistakes. You can get a free tax consultation with albea tax here: https://spainguru.es/albea-tax-advisors-and-global-mobility/“
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