Germany
Tax residents in Spain with income from Germany
(The content of this document is merely informative and has been prepared for informative purposes. For more information, you can consult directly the Personal Income Tax Law and the Spanish-German Convention to avoid double taxation).
I.- Tax residence
A natural person is resident in Spanish territory when any of the following circumstances occur:
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They have stayed longer than 183 days in Spanish territory over the calendar year.
To determine this period of permanence, sporadic absences will be counted unless the taxpayer proves his tax residence in another country (through a certificate of tax residence issued by the tax authorities of that other country). In the case of countries or territories labelled as tax havens, the Tax Administration can demand proof of stay in that tax haven over a period of 183 days within the calendar year.
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They situate the main base or centre of their activities or economic activities, directly or indirectly, in Spain.
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They have dependent not legally separated spouse and/or underage children who are usually resident in Spain. This latter situation accepts evidence to the contrary.
II.- Personal Income Tax
If a natural person, as described, turns out to be tax resident in Spain , they will be taxpayers for the Personal Income Tax (IRPF) and you must pay taxes in Spain for your worldwide income , that is, you must declare in Spain the income you obtain anywhere in the world, without prejudice to the provisions of the Convention to avoid international double taxation signed between Spain and the country of origin of the income.
The agreements list some types of income and establish, with respect to each of them, the tax powers that correspond to each signatory State:
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In some cases, exclusive power for the country of residence of the taxpayer,
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in others, exclusive power for the country of origin of the income and,
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Finally, in some cases, power shared between both countries, both being able to tax the same income, but with the obligation for the taxpayer's country of residence to arbitrate measures to avoid double taxation.
The personal income tax tax period is the calendar year. A person will be a resident or non-resident throughout the calendar year since the change of residence does not imply the interruption of the tax period.
The income tax return of natural persons who are tax residents in Spain is submitted in the months of April, May and June of the year following the year of accrual. The Personal Income Tax regulations regulate limits and conditions that determine the obligation to submit the tax return, which must be consulted every year. Exempt income is not taken into account to determine the obligation to declare.
Example: Taxpayer, tax resident in Spain, whose only income in 2019 is a pension from Germany, caused by having worked in a company in said country (Spain has the power to tax it as it is a pension derived from previous employment in the private sector. Treatment in the Convention is explained below). If the pension exceeds the amount of 14,000 euros per year, taking into account the limits and conditions of the obligation to declare related to the 2019 financial year, you would be obliged to submit a personal income tax declaration corresponding to 2019, since the payer of the German pension is not obliged to make withholdings on account of Spanish personal income tax.
Spanish-German Agreement of February 3, 2011 ( BOE of July 30, 2012)
(The text of the Agreement can be consulted at https://sede.agenciatributaria.gob.es in the following route: Home > Regulations and interpretative criteria > International taxation)
In a simplified manner, taking into account the provisions of the new Agreement between Spain and Germany ( CDI ), applicable with effects from the year 2013 , the taxation for tax residents in Spain of income from German source most commonly obtained would be:
Pensions :
Understood as remuneration that has its cause in a previously held job, they have different treatment depending on whether they are granted for services provided in the public or private sector.
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Pension received due to dependent work provided to the State, federated states, political subdivision or local entity, or legal entity under public law (article 18.2 CDI) . Its treatment is:
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In general, these pensions would only be taxed in Germany.
In Spain they would be exempt, although the exemption will be applied progressively. This means that, if the taxpayer is required to file a personal income tax return for obtaining other income, the amount of the exempt pension is taken into account in Spain to calculate the tax applicable to the remaining income.
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However, if the beneficiary of the pension residing in Spain had Spanish nationality, the aforementioned pensions would only be taxed in Spain.
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Pension received by reason of previous employment in the private sector (article 17 CDI) . Its treatment is:
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In general, they would only be taxed in Spain.
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However, payments made in accordance with German social insurance legislation may also be taxed in Germany where the event giving rise to the right to receive the income occurs on or after December 31, 2014, with a tax limit of following percentage of the gross amount:
- 5%, when the event that generates the right to receive the income occurs between January 1, 2015 and December 31, 2029.
- 10%, if the event determining the perception occurred after January 1, 2030.
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Likewise, the regime of the previous section will be applied to other payments received as of December 31, 2014 when they are generated by reason of contributions to tax-incentivized pensions (article 17.3 CDI and provisions VI, VII and VIII of the annexed protocol) that have been carried out over a period of more than twelve years.
In the cases of sections 2 and 3, in relation to the tax paid in Germany up to the tax limit, the taxpayer may apply the deduction for international double taxation in Spain to personal income tax.
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Income derived from real estate (article 6 CDI) :
Income from real estate property located in Germany can be taxed in both Spain and Germany. The resident taxpayer would have the right to apply the deduction for international double taxation in Spain in personal income tax.
Dividends (article 10 CDI) :
German-source dividends may be taxed in Spain in accordance with its domestic legislation. These dividends may also be subject to taxation in Germany, if that is the country where the company paying the dividends resides and according to the legislation of that State, but if the beneficial owner of the dividends is a resident of Spain, the tax will be required will have a maximum limit of 15 percent of the gross amount of the dividends. The resident taxpayer would have the right to apply the deduction for international double taxation in Spain in personal income tax up to that limit.
Interest (article 11 CDI) :
In general, since 2013, interest originating from Germany and whose beneficial owner is a tax resident in Spain can only be taxed in Spain.
Remuneration of members of the boards of directors of companies resident in Germany (article 15 CDI) :
They can be taxed in both Germany and Spain. The taxpayer would have the right in Spain to apply the deduction for international double taxation.
Capital gains:
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Derived from real estate (article 13.1 CDI) : Gains obtained from the sale of real estate located in Germany may be subject to taxation in both Spain and Germany. The taxpayer has the right to apply the deduction for international double taxation in Spain in personal income tax.
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Derived from shares or participations in companies whose assets consist of at least 50 percent, directly or indirectly, of assets real estate ##3##, or that grant, directly or indirectly, the right to enjoyment of real estate , if the real estate is located in Germany (article 13.2 and 13.3 CDI): Gains derived from the sale of these shares or participations may be subject to taxation in both Spain and Germany. The taxpayer has the right to apply the deduction for international double taxation in Spain in personal income tax.
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Derived from movable property that forms part of the assets of a establishment permanent (article 13.4 CDI) : Gains derived from the disposal of movable property that forms part of the assets of a permanent establishment that a businessman or professional resident in Spain has in Germany, including gains derived from the disposal of said permanent establishment (alone or with the entire company ), can be taxed in both Spain and Germany. The taxpayer has the right to apply the deduction for international double taxation in Spain in personal income tax.
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Derived from other types of goods (article 13.6 CDI) : In general, gains derived from the alienation of any other type of property can only be taxed in Spain as long as this is the State in which the transferor resides. An example of this type would be the gain derived from the sale of shares in a German company. However, in certain cases of change of residence (article 13.7 CDI) from Germany to Spain, there may be shared taxing power for both countries. In the event that double taxation occurs, the taxpayer has the right to apply in Spain, in personal income tax, the deduction for international double taxation.
In addition to those mentioned above, the Agreement lists other types of income (business profits, income from work, artists and athletes, public functions, other income...), the treatment of which can be consulted in its text.
III.- Obligation to provide information on assets abroad
People residing in Spain must inform the Spanish tax administration about three different categories of assets and rights located abroad:
- accounts in financial institutions located abroad
- securities, rights, insurance and income deposited, managed or obtained abroad
- real estate and rights over real estate located abroad
This obligation must be fulfilled, using form 720, between January 1 and March 31 of the year following the year to which the information to be provided refers.
There will be no obligation to report on each of the categories of goods when the value of the set of goods corresponding to each category does not exceed 50,000 euros. Once the informative declaration has been submitted for one or more of the categories of assets and rights, the presentation of the declaration in subsequent years will be mandatory when the value has experienced an increase of more than 20,000 euros compared to that which determined the presentation of the last declaration. .
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