How much tax to set aside in your first year

Terms used

• Beckham — The Beckham law is Spain's special tax regime for some newcomers who move to Spain for work.
• Retención — The retención is the income tax your employer withholds from each payslip and pays to the tax office as an advance.
• Modelo 210 — The Modelo 210 is the tax return non-residents file for income earned in Spain.
• Beckham regime — The Beckham regime is a special tax scheme for certain new arrivals, taxing employment income at flat rates if you qualify and request it.
• Modelo 151 — The Modelo 151 is the return filed instead of the usual one by people under the Beckham regime.
• AEAT — The AEAT is Spain's tax agency.
• Modelo 130 — The Modelo 130 is the quarterly advance payment of income tax for self-employed people.
• Modelo 303 — The Modelo 303 is the quarterly VAT return for self-employed people.

Key rules

• Withholding: Tax withheld from your pay is an advance, so your final bill can be higher or lower.
• 183 days: More than 183 days in Spain in a calendar year makes you resident for the whole year.
• Deadline: The annual return runs from early April to 30 June, and any balance due is payable by 30 June.
• Filing threshold: You must file if one payer paid you over 22,000 euros, or over 15,876 euros with several payers.
• Self-employed: Quarterly IRPF and VAT payments are advances, and the VAT you charge is not your money.

The short answer

What your employer withholds is a guess at your yearly tax, not the final bill. Your real tax is worked out once a year in the annual return. If too much was withheld, you get money back. If too little, you pay the difference. So keep a cushion, especially in your first year.

How withholding differs from your final tax

The retención is taken from each payslip. Your employer bases it on an estimate from your salary, family situation and contract. The final figure comes from the return, which covers all your income and applies scales, deductions and allowances.

The gap is usually bigger when you:

• have more than one employer
• change family situation during the year
• have extra income, such as savings interest or rental income
• claim deductions your employer did not take into account

If you have a single employer and no other income, the gap is often small. If you have several income sources, set aside more.

Do your days in Spain make you a resident?

You are a tax resident if you spend more than 183 days in Spain in the calendar year. You are also resident if Spain is the main base of your activities or economic interests. A spouse and minor children living in Spain can lead to a presumption that you are resident.

The tax year does not split. If you arrive in July and pass the 183 days, you are taxed as a resident for the whole year, on your worldwide income. You do not pay only for the months you lived here. Short trips abroad still count as days in Spain unless you prove residence in another country with a tax residency certificate.

If you are not resident, you file the Modelo 210 on Spanish income only. If you qualify for the Beckham regime and request it, employment income is taxed at a flat 24% up to 600,000 euros and 47% above, and withholding follows that. Check your eligibility before relying on it.

When you file and pay

The return runs from early April to 30 June, and any balance due is payable by 30 June. Online filing opens first, phone appointments follow in May, and in-person appointments start in June. If you want direct debit, ask for it earlier, usually by around 25 June. You can pay the balance in two parts: 60% when you file and 40% by 5 November. Refunds are paid after filing, and the AEAT has six months to pay or it owes you interest. The exact dates are announced each year.

Do you have to file?

As a resident, you must file if your employment income is above:

• 22,000 euros a year from one payer
• 15,876 euros if you have several payers and the second and later ones together paid more than 1,500 euros

You must also file if your payer was not obliged to withhold. Investment income and capital gains subject to withholding require filing above 1,600 euros a year. Rental-property imputation and lottery-type gains also oblige you to file. Below these limits you may be exempt, but filing voluntarily is the way to claim a refund or deductions. If you receive minimum income support (IMV), you must file. If you are under the Beckham regime, you file the Modelo 151 instead.

How much to set aside

• Employee, one payer: keep a modest cushion, since withholding is usually close to the final tax. Refunds are common.
• Several payers or other income: set aside extra, because withholding on each payer may be too low.
• Self-employed: the quarterly payments are advances too. You pay the IRPF advance (Modelo 130, 20% of net profit unless 70% of your income is withheld) and the VAT return (Modelo 303) each quarter, with deadlines on 20 April, 20 July, 20 October and 30 January. Keep aside the VAT you charge, since it is not your money.
• Arrived mid-year: assume Spanish tax on your full-year worldwide income if you pass 183 days. A tax residency certificate from another country can change that.

The timeline, documents and questions below cover the filing steps in detail.

Timeline and deadlines

• Count your days in Spain: more than 183 in the calendar year makes you a resident for the whole year: during the calendar year, checked at 31 December

• File your return online: from early April of the following year

• File by phone appointment if you prefer: in May

• File at an in-person appointment: from June

• Pay any balance in full, or pay the first 60% when you file: by the end of the campaign Deadline: 30 June.

• Pay the remaining 40% if you split your payment: by 5 November

• Expect your refund if withholding was too high: within six months of filing, or interest applies

Documents you need

• Tax residency certificate from another country: it proves you live there for tax purposes, so days you spend away from Spain are not counted as days in Spain. You only need it if you want to show residence abroad.

Frequently asked questions

Do I have to file a tax return if I earn less than 22,000 euros?

Yes, you may still have to file if you have more than one payer: the limit drops to 15,876 euros when the second and later payers together pay you more than 1,500 euros. You must also file if your payer is not obliged to withhold tax. You can file voluntarily to claim a refund or deductions.

Can I pay my tax bill in instalments?

Yes, you can split a balance you owe into two payments: 60% when you file and 40% by 5 November. Set aside the full amount early so the second payment does not surprise you.

How long does a tax refund take to arrive?

The AEAT has six months after you file to pay your refund, and it owes you interest if it pays later. A refund only appears if your payslip withholding was higher than your final tax.