The Spanish budget for 2018 was meant to have been approved in September 2017, but due to political instability in Spain and the lack of sufficient support to pass the budget, it had to be postponed. With no 2018 budget confirmed at the start of the year, the 2017 budget was automatically extended until the new one could be approved.
The Spanish Congress finally approved the 2018 budget on 23rd May 2018 after weeks of hard negotiations. It has now been approved by the Senate and was published in the Spanish Official Gazette (Boletín Oficial del Estado – BOE) on 4th July 2018.
The 2018 budget did not include any major tax changes and will have minimal impact on UK nationals in Spain. Wealthier residents may be affected by the extension of wealth tax for at least one more year, though this was expected.
Here is a summary of the measures which may affect residents of Spain, depending on your circumstances.
- The Spanish income tax return threshold has been increased from €12,000 to €14,000 gross per annum. So, if your annual 2018 income is less than €14,000, you do not need to submit an income tax return. The rest of the tax rates and income bands remain the same as 2017.
- Wealth tax (‘temporarily’ re-introduced in 2011) has been extended for yet another year and is applicable for tax year 2018.
- The minimum widower and state pensions has been increased by between 1% and 3%, depending on the case.
- New deductions for large families (three children or over) and for taxpayers with disabled dependants have been introduced.
- There is a new 30% deduction for taxpayers who invest in new companies, up to €60,000 per annum.
- The tax-free threshold for Spanish lottery winnings increases from €2,500 to €10,000 in 2018, €20,000 in 2019 and then €40,000 in 2020.
- The official interest rate is 3%, and for late payments it is 3.75%.
- The VAT rate for cinema tickets drops from 21% to 10%.
- Paternity leave increases from four to five weeks.
The rules came into force on 6th July, though some of them have special application dates.
If you are affected by wealth tax – for Spanish residents it applies to worldwide wealth worth over €700,000, with an additional €300,000 main home allowance (allowances are per individual, so potentially up to €2 million for resident couples holding assets in joint names) – For more information about these subjects you may contact Blevins Franks for advice on how you may be able to potentially reduce your liability.
This information has been supplied by Blevins Franks. This firm provides integrated advice on tax planning, investments, pensions and estate planning. They have 40 years’ experience advising UK nationals in Spain and can recommend tax-efficient ways of holding your investment assets, designed to suit your personal circumstances, requirements and risk profile.
The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual is advised to seek personalised advice.