The tax system in Spain, like other countries in the European Union, is based on various types of taxes, including income taxes, VAT, property taxes and local taxes. In connection with the rental of real estate, special regulations apply to the taxation of rental income in both Spain and Poland. A comparison of the tax systems of both countries shows both similarities and differences.
- Tax system in Spain
The Spanish tax system consists of several main types of taxes:
- Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas, IRPF): This is a progressive income tax that applies to all individuals tax resident in Spain. Tax rates in 2024 will range from 19% to 47%, depending on income levels.
- VAT (Impuesto sobre el Valor Añadido, IVA): The normal VAT rate in Spain is 21%, but there are also reduced rates – 10% and 4% – that apply to certain goods and services.
- Property Tax (Impuesto sobre Bienes Inmuebles, IBI): This is a local tax paid annually by property owners. The amount of the tax depends on the cadastral value of the property and the location (municipality).
Tax on property rental
Income from rental properties in Spain is treated as taxable income under the IRPF. For rental properties, net income is calculated as the difference between rental income and costs associated with maintaining the property, such as repair costs, insurance, mortgage interest and depreciation (3% of the property’s value). In Spain, property owners can benefit from a tax relief of 60% of the net rental income if the property is rented out for residential purposes.
For non-residents, income from rental property in Spain is subject to a fixed tax rate of 24% (19% for EU residents). In this case, no rental costs can be deducted.