Tax & Accounting
Kreston Iberaudit combines experience and empathy through an excellent network of professional services.
With a highly experienced multidisciplinary team, a proactive and committed approach, Kreston Iberaudit is committed to advising expat clients in achieving their financial objectives.
Kreston Iberaudit assists expats moving to Madrid in:
- Accounting and auditing services
- Financial consulting
- Tax planning and cross-border taxation
Tax & Accounting for Expats in Madrid
With nice weather, delicious food, and rich culture, countless expats have made the beautiful city of Madrid their home. This metropolitan city offers many perks for expats, however, dealing with the complicated tax obligation while in Madrid isn’t one of them.
Key Tax & Accounting tips you should know as an expat in Madrid
- The tax year runs from January 1 to December 31. The tax returns are due between April 6 and June 30.
- Spain has a progressive tax system. The tax is calculated based on the state’s general tax rates plus the relevant regional tax rates.
- Once you become a resident, you are required to pay tax in Madrid on your worldwide income.
- As a non-resident, you will only pay tax on Spanish-sourced income and on any property you own – typically at a flat rate.
- You’re also required to pay wealth tax for the property that you own. The rates range from 0.2% to 2.5%. The tax is applied based on the value of all assets held on December 31 each year.
- Spain has signed a number of treaties with other countries to avoid double taxation. It’s best to consult a reputable tax specialist to avoid paying double taxes and take advantage of all the tax benefits offered by tax legislation.
Tax & Accounting for expats establishing a business in Madrid
- Your business in Madrid will be taxed at a 25% flat rate.
- As a newly formed company, a reduced 15% tax rate applies for the first two years of your business. A reduction of 10% tax may be granted to profits locked into a special reserve for five years.
- The tax returns of your company must be filed within six months and 25 days after the end of the accounting period. Payment is by instalments in April, October and December, each instalment usually being 18% of the tax liability.
- Make sure that your business takes advantage of available tax benefits and is properly complying to all corporate tax obligations.
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