Understanding Taxes in Spain: Income, VAT, and More
Understanding Taxes in Spain
Income Tax of Individuals (IRPF) is the best-known tax in Spain. From a technical standpoint, this is a personal and direct tax levied according to the principles of equality, universality, and progressiveness, on the income of individuals according to their personal and family circumstances. That is, this tax is imposed on every person (or household) and the earnings or income they receive. The purpose of income tax is to tax the income of each taxpayer, which includes their income, profits, and losses.
Income Tax for Companies (Impuesto sobre Sociedades)
This is a tax belonging to the Spanish tax system, regular, proportional, direct, and personal. It taxes the income of corporations and other legal entities and is regulated by Royal Decree 4/2004 of March 5, approving the revised text of the Income Tax Act.
Income Tax for Non-Residents (Impuesto sobre la Renta de no Residentes – IRNR)
This tax is regulated by Royal Decree Law 5/2004 of March 5, approving the revised Law on Income Tax of Non-Residents (IRNR). It gathers together and streamlines the taxation of individuals and entities not resident in Spain for income obtained in Spain.
Wealth Tax (Impuesto sobre el Patrimonio)
This is a tax that is applied individually, not on income or transactions, but on the wealth of natural persons, and is calculated based on the value of all assets of the taxpayer. It applies at the national level in some countries. Its supporters argue that it aids in the redistribution of wealth, while opponents say that it does not achieve this goal and often impoverishes countries due to the expatriation of capital.
Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones)
This is a tax belonging to the Spanish tax system. Its object is the taxation of an increase in wealth produced by the acceptance of an inheritance or a donation. The acts serve as the event giving rise to the tax. The figure is governed by Law 29/1987 of December 18 on Inheritance Tax and Donations. Despite dealing basically with two different events, successions on one side and grants on the other, it is considered a single tax figure that includes the transfers free of charge, mortis causa in the case of succession, and inter vivos in the case of donation.
Transfer Tax and Stamp Duty (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados)
This is a complex tax in force in Spain. This is a complex tax levied because of different taxable events, so that sometimes the doctrine divides it into three different taxes: capital transfers, documented legal acts, and corporate operations. Each of these taxes imposes a taxable event entirely. Property Transfer Tax is levied on all those transfers of property that are not taxed by the value-added tax. However, the tax stamp is a tax on the formalization of certain deeds, commercial and administrative, in Spanish territory or abroad that have effects in Spain.
Value Added Tax (VAT) (Impuesto sobre el Valor Añadido – IVA)
This tax base is the Spanish system of indirect taxation. It is a general consumption tax levied on the market. In 1992, the tax was being reformed at the community level to accommodate the so-called internal market within the European Union, which saw the abolition of border controls.
Special Taxes (Impuestos Especiales)
These are also known as excise duties, which affect the consumption of certain goods in addition to what the VAT and general tax do.
Customs Duties (Renta de Aduanas)
Customs Duties are a tariff levied on import and export transactions of goods and merchandise in accordance with EU directives.
Disability
A person who suffers from any physical, mental, or intellectual impairment that makes it difficult to participate in society equally with the rest.
Incapacitation
These are people with lingering illnesses, physical or psychic, that prevent them from governing themselves. The handicap must be declared by judicial decree. According to the severity of the anatomy, a tutor will be assigned to the plaintiff.
Principles
- Equal treatment: Intended to treat all people equally in the situation they are in.
- Equal Opportunities (EO): Intended to give persons with disabilities the same opportunities as other people.
- Non-discrimination: Prohibiting disability discrimination by public authorities that are forced to intervene.
- Reasonable accommodation: Intended for employers to hire disabled people if they are a load during training for employment.
- Affirmative action: Measures to establish equality among the rest of the disabled people.