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What taxes are there?

Tax Classes

There are various classifications that can be made of taxes, but the most well-known and used is the one that distinguishes between direct taxes and indirect taxes. Direct are that are applied to a direct or immediate manifestation of economic capacity: the possession of assets or the obtaining of income. Indirect taxes, on the other hand, those that are applied to an or mediate manifestation of economic capacity: the circulation of wealth, either through acts of consumption or through acts of transmission. In short, direct taxes tax wealth itself, while indirect taxes tax the use of that wealth.

Following this classification, the main taxes currently existing in Spain are the following:

  • Direct taxes

    • Personal Income Tax ( Law 35/2006 of November 28 and Royal Decree 439/2007 of March 30 , which approves the Regulation). This tax is studied in a specific section.

    • Non-Resident Income Tax ( Royal Legislative Decree 5/2004, of March 5 and Royal Decree 1776/2004, of July 30 , approving the Regulation). This tax is levied on income earned in Spain by people who do not live in Spain.

    • Corporate Income Tax ( Law 27/2014, of November 27 and Royal Decree 634/2015, of July 10 , which approves the Regulation). This tax is levied on the profits that companies (corporations) obtain from their activities. Specifically, it is applied to net profit, meaning that the expenses necessary to obtain it are subtracted from the income obtained by each company.

    • Inheritance and Gift Tax ( Law 29/1987, of December 18 , and Royal Decree 1629/1991, of November 8 , approving the Regulation). Inheritance and Gift Tax is paid by individuals when they receive money or other assets free of charge, that is, without it being considered as compensation for work or services they have performed or for money or something they have given in exchange. This includes both cases in which what is received is an inheritance or legacy from a deceased person ("mortis causa" acquisitions) and cases in which what is received is a donation made by a living person ("inter vivos" acquisitions). This tax is transferred to the Autonomous Communities.

    • Wealth Tax ( Law 19/1991, of June 6 ). This tax is levied on the net assets of a natural person, that is, the assets and economic rights they hold, less any charges and encumbrances that diminish their value, as well as any personal debts and obligations they are liable for. However, there are assets that are exempt from Wealth Tax, such as a person's primary residence and household goods. The tax is transferred to the Autonomous Communities.

  • Indirect taxes

    • Value Added Tax ( Law 37/1992, of December 28 , and Royal Decree 1624/1992, of December 29 ). This tax is studied in a specific section.

    • Tax on Property Transfers and Documented Legal Acts ( Royal Legislative Decree 1/1993, of September 24 and Royal Decree 828/1995, of May 29 ). This tax has a very broad scope and is subdivided into several types. Very briefly, it can be said that it applies to the transfers (sales) of all types of assets and rights, to certain operations carried out by companies and to acts that must be officially documented (house deeds and other notarial documents). The person who has to pay the tax is the purchaser (buyer), not the person who transfers the asset or right (seller). It is a tax transferred to the Autonomous Communities.

    • Foreign trade operations and Customs ( Regulation (EU) No 952/2013 of the European Parliament and of the Council of 9 October 2013 , establishing the Union Customs Code). It is studied in the teaching guide dedicated to Customs.

    • Special Taxes and Environmental ( Law 38/1992, of December 28 and Royal Decree 1165/1995, of July 7 ). These taxes are only paid by people who purchase or consume certain goods, such as alcohol and alcoholic beverages, hydrocarbons, tobacco, or fluorinated greenhouse gases, who register a means of transportation, or who produce certain goods, such as spent nuclear fuel and radioactive waste.

      Its raison d'être, apart from its great revenue-raising capacity, lies in the consideration that the consumption of these goods generates social or environmental costs. Consider the health costs of alcohol and tobacco abuse, and air pollution from cars, fuel use in general, and gases.

In addition to the above, we must take into account the existence of local taxes , which are required by the City Councils or Provincial Councils. The most important are the Property Tax, the Economic Activities Tax, and the Motor Vehicle Tax. The Autonomous Communities also have the power to establish taxes and other levies.