Spanish Tax for British Expats: Income Tax, Wealth Tax and Property Rules

Spain is consistently among the top three destinations for British expats — and for good reason. The climate, lifestyle, cost of living, and proximity to the UK are all compelling. The Spanish tax system, however, is more complex and demanding than many new arrivals expect. Understanding your obligations before you move — or shortly after arriving — can save very significant amounts of tax and avoid costly penalties.

This guide covers the key elements of the Spanish tax system for British expats: tax residency, the Beckham Law regime, income tax rates, the Modelo 720 overseas assets declaration, property taxes, wealth tax, and capital gains tax on Spanish property disposals.

Spanish Tax Residency

Spain uses two main tests to determine tax residency, and meeting either one triggers full Spanish tax residency.

The 183-day rule: You are Spanish tax-resident if you spend more than 183 days in Spain during the calendar year (1 January to 31 December). Days of presence are counted strictly. Unlike the UK Statutory Residence Test, there are no transit-day exceptions or complex tie rules — presence in Spain counts.

Centre of economic interests: You are also Spanish tax-resident if your centre of economic or vital interests is in Spain, regardless of days. If your main business is in Spain, or if Spain is where most of your assets are, Spain may claim residency even if you spend fewer than 183 days there.

Family presumption: If your spouse (from whom you are not legally separated) and dependent minor children are habitually resident in Spain, there is a presumption that you are also Spanish tax-resident, unless you can demonstrate otherwise.

Spain uses the calendar year as its tax year. There is no split-year treatment equivalent to the UK's — you are either resident or non-resident for the full calendar year, based on where you meet the above tests.

The Beckham Law: Special Expatriate Regime

Spain's special expatriate tax regime — universally known as the Beckham Law after the footballer David Beckham used it on moving to Real Madrid — is one of the most significant tax advantages available to new arrivals who qualify.

How it works: Those who qualify can opt to be taxed as Spanish non-residents for the year of arrival and the following five tax years. This means they are taxed at a flat rate on Spanish-source income rather than the progressive Spanish resident rates.

Tax rates under Beckham Law:

• Spanish-source income up to €600,000: 24% flat rate
• Spanish-source income above €600,000: 47%
• Capital gains and other savings income on Spanish assets: 19% to 28% on the savings-income scale
• Foreign income: generally not subject to Spanish tax under this regime

Who qualifies: As of 2023, the Beckham Law applies to:

• Employees who move to Spain under a work contract with a Spanish employer
• Directors of Spanish companies (with certain conditions)
• Remote workers under Spain's digital nomad visa who are employed by or provide services to non-Spanish companies
• Self-employed individuals meeting certain conditions under the digital nomad rules

The applicant must not have been Spanish tax-resident in the 10 years preceding the year of arrival, and must apply via form 149 within six months of beginning Spanish employment or registering as a resident.

The practical value: For high earners, the difference between 24% flat tax and the top Spanish progressive rate (which reaches 45-54% depending on the autonomous community) is very substantial. The regime is particularly valuable for those with significant Spanish-source employment income.

The limitation: The Beckham Law does not generally shelter UK or foreign investment income from Spanish tax — but since foreign income is typically not taxed in Spain under the regime, this is usually not a practical problem for most users. The limitation matters mainly if you have foreign rental income that would otherwise be taxable in Spain as a resident.

Standard Spanish Income Tax Rates

For those not on the Beckham regime, or from year 7 of residency, Spanish income tax is progressive and calculated in two parts: a state rate and an autonomous community rate. The combined rates (state + regional) vary by region but are broadly as follows for 2025/26:

• Up to approximately €12,450: 19%
• €12,450 to €20,200: 24%
• €20,200 to €35,200: 30%
• €35,200 to €60,000: 37%
• €60,000 to €300,000: 45-47%
• Above €300,000: 47-54% (depending on autonomous community)

Andalusia is notable for having relatively low regional rates, making the effective combined rate lower than in Catalonia or the Basque Country. This is a factor that can inform where in Spain you choose to live.

Spanish residents are taxed on their worldwide income. Foreign income (UK dividends, UK rental income, foreign pension) is included in the tax base and subjected to the progressive rates, subject to double tax treaty relief. Tax credits apply for taxes paid abroad on the same income.

The Modelo 720: Overseas Asset Declaration

The Modelo 720 is not a tax — it is an informational declaration of overseas assets. It must be filed annually if the value of assets in any of three categories exceeds €50,000:

• Category A: Bank accounts held abroad
• Category B: Securities, rights, life insurance, and income held abroad
• Category C: Real estate located abroad

You declare each category separately. If only Category C exceeds €50,000 (for example, you still own a UK property), you must file Category C only.

The filing deadline is 31 March. In subsequent years, you only need to refile a category if the value has changed by more than €20,000 since the last declaration.

Spain's Constitutional Court struck down the disproportionate penalty regime in 2022 (which had previously imposed penalties of 150% of the tax value of undeclared assets). The penalties are now more proportionate, but the filing obligation remains and non-filing can still result in significant fines.

Property Taxes in Spain

IBI (Impuesto sobre Bienes Inmuebles): The Spanish equivalent of UK council tax. It is an annual municipal tax based on the "valor catastral" (cadastral value) of the property — typically well below market value. Rates vary by municipality but are generally modest, typically 0.4-1.1% of the cadastral value per year.

Plusvalia municipal: When property is sold, the municipality levies a tax on the increase in the cadastral value of the land over the holding period. Following a Constitutional Court ruling in 2021, the tax calculation was reformed to allow taxpayers to choose between the old coefficient method and a real-gain method — and to avoid the tax entirely if there is no gain on the land element.

Non-resident income tax on Spanish property: Non-residents who own property in Spain must file an annual Spanish tax return and pay a notional income tax charge on the property even if it is not let out. The charge is based on a percentage (generally 1.1% or 2% depending on the cadastral value update) of the cadastral value, taxed at 19% (EU residents) or 24% (non-EU residents). Post-Brexit, British nationals are treated as non-EU/non-EEA for this purpose.

Wealth Tax

Spain's wealth tax applies to individuals resident in Spain (on worldwide net wealth) and to non-residents (on Spanish-situs assets). The thresholds and rates vary by autonomous community:

• Andalusia: Wealth tax was abolished in 2022. The national solidarity wealth tax (ISGRV) applies as a backstop from €3m upwards at 1.7-3.5%.
• Madrid: Wealth tax was also practically eliminated through a 100% rebate. National solidarity tax applies.
• Catalonia: Wealth tax applies on net assets above approximately €500,000 (with a personal allowance of up to €700,000), at rates from 0.21% to 2.75%.

The solidarity wealth tax (Impuesto de Solidaridad de las Grandes Fortunas) was introduced nationally from 2023 as a minimum floor for very high-net-worth individuals in regions with zero effective wealth tax. It applies at 1.7% on net wealth between €3m and €5m, 2.1% between €5m and €10m, and 3.5% above €10m.

Capital Gains Tax on Spanish Property

Residents: Capital gains on the sale of a principal residence may be partially or fully exempt from Spanish CGT (under the reinvestment exemption, for those aged 65+, or for those buying another principal residence within two years). Other Spanish property gains are taxed on the savings-income scale, which for 2025/26 runs from 19% (first €6,000) up to 30% (gains above €300,000).

Non-residents: Non-residents pay Spanish CGT on Spanish real estate gains at 19%. The buyer is obliged to withhold 3% of the sale price at completion as a payment on account of the seller's CGT liability, remitting it to the Spanish tax authority (AEAT) on behalf of the seller. If the actual CGT is less than 3% of the sale price, the seller can reclaim the difference.

How Global Investments Can Help

Spain is an attractive destination but one where the tax obligations — Modelo 720, wealth tax depending on region, non-resident income tax on property, and the complexities of the Beckham Law — require careful management from the moment you arrive. Global Investments advises British expats on moving to Spain, including pre-arrival tax planning, structuring investments and pensions to work efficiently under Spanish tax law, and coordinating with qualified Spanish tax advisers for local compliance. If you are planning a move to Spain or have recently arrived, please speak with one of our advisers.