While the Non-Lucrative Visa provides an opportunity to enjoy the Spanish lifestyle, it also comes with important tax obligations that applicants must consider and prepare for.
Tax Residency in Spain
One of the key implications of obtaining a Non-Lucrative Visa is the likelihood of becoming a Spanish tax resident. Spanish tax laws state that if you spend more than 183 days in the country within a calendar year, you are deemed a tax resident. This rule applies to most NLV holders since the visa requires them to reside in Spain for at least six months per year.
However, the 183-day rule applies to the calendar year, not the visa year. This means that if an NLV holder arrives mid-year, they may not meet the 183-day threshold in their first year of residence. In such cases, they might not be considered a tax resident for that particular year but would likely become one in the following year when they reside in Spain for a full calendar year.
Once classified as a tax resident, you are subject to Spanish taxation on your worldwide income. This means that not only your Spanish earnings but also any income derived from foreign sources, including pensions, investments, rental properties, or dividends, must be declared and taxed in Spain.
Tax Rates and Categories
As a Spanish tax resident, your income is taxed progressively at the following rates:
- Up to €12,450: 19%
- €12,451 to €20,200: 24%
- €20,201 to €35,200: 30%
- €35,201 to €60,000: 37%
- Over €60,000: 45%
- Over €300,000: 47%
Investment income, such as dividends and capital gains, is taxed at lower rates, ranging from 19% to 26% depending on the amount.
Wealth Tax Considerations
Spain also imposes a wealth tax (Impuesto sobre el Patrimonio) on residents whose global assets exceed a certain threshold. The exemption limit varies by region, with an additional exemption for a primary residence. Rates range between 0.2% and 3.5%, depending on the total value of assets.
Double Taxation Treaties
For NLV holders with income from other countries, double taxation treaties between Spain and their home country play a crucial role in avoiding being taxed twice on the same income. Spain has agreements with many countries, including the UK, the US, and Canada, which typically allow residents to offset taxes paid abroad against their Spanish tax liability.
Modelo 720 – Foreign Asset Declaration
Spanish tax residents with overseas assets exceeding €50,000 in value (across bank accounts, investments, or property) must submit a Modelo 720 declaration. Failure to do so may result in heavy fines and penalties.
Non-Tax Residents in Spain
If an NLV holder does not stay in Spain for more than 183 days in a calendar year, they remain a tax resident in their home country and are only taxed in Spain on income derived from Spanish sources, such as rental income from Spanish property.
While Spain’s Non-Lucrative Visa offers an attractive residency pathway, applicants must carefully assess the tax consequences. The timing of arrival can impact tax residency status, as the 183-day rule applies to the calendar year rather than the visa validity period. Becoming a tax resident means declaring global income, potential wealth tax obligations, and compliance with foreign asset reporting.
Seeking advice from a tax professional experienced in Spanish taxation and international tax treaties is strongly recommended to ensure compliance and optimize tax efficiency while enjoying life in Spain.
#NLVSpain
Add comment
Comments