Spanish Tax for British Expats After Brexit: A Complete Guide

Spain is home to several hundred thousand British nationals, making it one of the most popular destinations for British expats worldwide. Post-Brexit, the automatic EU free movement rights that previously facilitated British residency in Spain have been replaced by formal visa and residency application processes. The tax rules, however, apply to British nationals in the same way as any other non-EU third-country national.

This guide covers the principal Spanish taxes affecting British residents, the Beckham Law for new arrivals, the Modelo 720 overseas assets declaration, and the interaction with UK tax obligations.

Spanish tax residency: the 183-day rule

The primary test for Spanish tax residency is whether you spend 183 days or more in Spain in a calendar year (not a UK tax year). However, there are secondary tests:

• If your main economic interests are in Spain (your business is based there, your primary income is generated there), you may be treated as tax-resident even without 183 days
• If your spouse or dependent children are habitually resident in Spain, there is a presumption of Spanish tax residence

A Spanish tax resident pays IRPF (Impuesto sobre la Renta de las Personas Físicas — the Spanish personal income tax) on their worldwide income. This is the critical implication: once you are Spanish tax-resident, your UK rental income, UK pension income, UK dividends and overseas savings interest all enter the Spanish tax net.

IRPF — Spanish income tax rates

IRPF is a combined state and regional tax. Rates vary slightly between autonomous communities — the Basque Country and Navarra have separate arrangements, while Madrid has historically had lower rates than other regions. The general state scale (as of 2025/26) for general income is:

Income band	State rate (approximate)	Combined effective rate (approx.)
Up to €12,450	9.5%	~19%
€12,450–€20,200	12%	~24%
€20,200–€35,200	15%	~30%
€35,200–€60,000	18.5%	~37%
€60,000–€300,000	22.5%	~45%
Above €300,000	24.5%	~47%+

Regional rates are added on top of state rates. Madrid has applied tax reductions; Catalonia has historically applied the highest combined rates.

Savings income (dividends, interest, capital gains) is taxed at a separate "savings income scale," ranging from 19% (up to €6,000) to 28% (above €300,000).

The Beckham Law — now the Ley de Startups Special Regime

The so-called Beckham Law — formally the special tax regime for workers assigned to Spain — was significantly reformed by the Ley de Startups in 2023 (effective from 2024 for new applicants).

The regime allows qualifying individuals who become Spanish tax residents to elect to be taxed only on Spanish-source income at a flat rate of 24% on employment or self-employment income up to €600,000, and 47% above that. Foreign-source income is generally excluded from IRPF during the regime period.

Qualifying conditions for the new regime:

• The individual must not have been Spanish tax-resident in the five preceding years (the original Beckham Law required ten years of prior non-residency; the 2023 Startup Law reform reduced this to five years)
• The move to Spain must be motivated by:
  • Starting employment with a Spanish employer or branch
  • Starting self-employment or freelance work in an economic activity classified as "qualified activity" (including entrepreneurs, highly skilled workers, digital nomads, and investors under the digital nomad visa)
  • Becoming a director of a Spanish company (with restrictions)

The regime can be applied for in the year of first Spanish tax residence and applies for that year and the five following years (six years total). Family members can apply to be covered under the same regime.

What the regime covers and does not cover:

• Employment income from Spanish employers: taxed at 24% flat
• Worldwide income is generally excluded while the regime applies, except for Spanish-source income
• Income from Spanish property remains taxable in Spain regardless

Limitations: The regime does not apply to all income types in the same way, and Spanish-source capital gains remain taxable. The interaction with the UK's SRT and UK tax filing obligations must also be considered.

Modelo 720 — overseas assets declaration

The Modelo 720 is Spain's annual declaration of overseas assets. Spanish tax residents must file it if the total value of any category of overseas assets exceeds €50,000. The three asset categories are:

1. Bank accounts and financial products outside Spain
2. Investments (shares, bonds, funds) held outside Spain
3. Real estate located outside Spain

Important: Filing obligation arises when the aggregate value in any category exceeds €50,000. For a British expat with a UK property, a UK pension and a UK investment account, all three categories may trigger the obligation.

Following a 2022 European Court of Justice ruling, the draconian penalty regime that previously applied to the Modelo 720 (confiscatory fines, and gains treated as income regardless of actual gain) was substantially reformed. Penalties for late or inaccurate filing now align more closely with those for other tax declarations — though non-filing remains serious.

The obligation applies to the previous year's assets — so the 2025 declaration covers assets held as at 31 December 2024, and must be filed by 31 March 2025.

Capital gains tax in Spain

Capital gains in Spain are taxed as savings income at rates of 19–28%. The 28% rate applies to gains above €300,000. There is no equivalent of the UK principal private residence relief in Spain — a gain on the sale of a Spanish main residence is generally taxable, though there are exemptions for over-65s and for reinvestment in another primary residence.

For UK property sold while Spanish-resident, the UK-Spain DTT determines whether the UK or Spain has primary taxing rights on the gain. Typically, UK property gains are taxable primarily in the UK (under the UK's non-resident CGT rules), with Spain providing relief via a foreign tax credit.

Spanish wealth tax — ITSGF

Spain's wealth tax has a complex history. The state wealth tax was initially "temporarily" suspended in 2008 but restored in 2011. In 2022, the national government introduced a new Solidarity Tax on Large Fortunes (ITSGF) as a backstop, specifically targeting individuals in regions (notably Madrid) that had effectively set the regional wealth tax rate to zero.

The ITSGF applies to individuals with worldwide net worth exceeding €3 million:

• 1.7% on the tranche from €3 million to €5 million
• 2.1% on the tranche from €5 million to €10 million
• 3.5% above €10 million

The ITSGF is levied in addition to (or as an offset against) the regional wealth tax, depending on the autonomous community. Spanish tax planning at the high net worth level increasingly focuses on the interaction between IRPF, the regional wealth tax and the ITSGF.

Succession and Gift Tax (ISD) — regional variations

Spain's Inheritance and Gift Tax (ISD) is administered regionally, with very different outcomes depending on the autonomous community:

• Madrid: Has historically provided a 99% reduction for direct family members (spouse, children, parents) — effectively abolishing succession tax for mainstream family inheritance
• Andalusia, Valencia: Have reduced rates and exemptions
• Catalonia: Has generally higher effective rates with fewer reductions

For British nationals inheriting Spanish property or assets from a Spanish-resident testator, the regional rules apply. The interaction between Spanish ISD and UK IHT — where both estates may have cross-border elements — requires coordinated advice.

The UK-Spain Double Taxation Treaty

The UK-Spain DTT (1975, as amended) covers:

• Employment income (taxed where work is performed)
• Pensions (UK state and private pensions generally taxable in Spain for Spanish residents, with exceptions for UK government pensions)
• Dividends (15% maximum withholding at source, with treaty relief)
• Interest (10% maximum withholding at source)
• UK property gains (primarily taxable in the UK)
• Elimination of double taxation via credit method

UK nationals in Spain should file both a Spanish IRPF return and (in many cases) a UK self-assessment return, claiming the appropriate treaty relief on each.

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How Global Investments can help

Our advisers work with British expats in Spain on the full range of financial planning — pension management, tax structuring, property investment and estate planning. We coordinate with Spanish tax specialists to ensure holistic advice.

Contact us to arrange a review of your Spanish tax position.

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This article reflects Spanish and UK tax rules as understood in June 2026. Tax law is subject to change, and the rules are applied differently in different autonomous communities. Always obtain qualified Spanish and UK tax advice for individual circumstances.