These are some of my thoughts on the Catalan independence movement.

The first version of this article was written in October 2019, when we experienced some pretty outrageous scenes in Barcelona due to the violent protests following the sentence handed out to the politicians who were behind the separatist movement that held a unilateral referendum and declared Catalunya independent from Spain in 2017.

As always, I speak from the heart and without any filter. My thoughts and feelings come from a place of neutrality seeking common sense. I do have many Catalan friends and have absolutely no problem with the population in general. I’ve even learned Catalan myself out of my own interest and have nothing against the language itself. I always welcome learning more languages, albeit with the right priorities. I love life in Barcelona, but think it could be better if these independence shenanigans were put to rest once and for all.

The historical basis for independence

Most separatists seem to think that in the past Spain conquered Catalonia and has since then kept it reigned in by the use of force in a fascist way. This is simply false.

Spain is the result of the merger of 3 Kingdoms: Castile, Aragon and Navarra. Only Navarra was conquered by force. Aragon included Catalonia, Aragon, Valencia and the Balearic Islands. The merger between the crowns of Castile and Aragon in the 1480s was voluntary and served the interests of both monarchies.

The only time in which a full-fledged invasion and conquest succeeded was at the end of the War of Spanish Succession, ending on 11th September 1714 when Barcelona fell to the combined armies of Castile and France, not Spain as such. The Kingdom of Spain as a totally unified juridical entity, as opposed to a composite monarchy, started to exist at that date so, technically, Spain could not have invaded Catalonia.

Secessionists talk endlessly about the events of 1714, when the detested Phillip V’s troops blasted Barcelona into submission at the end of the War of the Spanish Succession. Rarely if ever mentioned are the events of 1701 & 1705, when the very same Phillip V was welcomed into Barcelona and crowned King of Aragon & Count of Barcelona by Catalonia’s assembled representatives. The official State Bulletin of the Kingdom of Aragon published an Act of the coronation, in the Catalan language (incidentally, Phillip was numbered ‘IV’ instead of ‘V’, as the first of the Phillips was only king of Castille, never of Aragon). Five years later, in 1705, the same Catalan politicians decided to ignore their earlier oaths of loyalty to their king and instead transferred their loyalties to Archduke Charles, a Habsburg pretender. At the time it looked like a winning bet, but the war was eventually won by Phillip de Bourbon and Catalonia thus found itself on the losing side of the conflict. If they’d have remained loyal to Phillip all along, subsequent history might be very different and 1714 would never have happened.

Another wonderful, albeit false, legend related to 1714 has Barcelona’s chief executive authority (Rafael Casanova) defending the city to his last dying gasp as the Bourbon troops of Phillip V proceeded to break through the walls and mercilessly crush Catalan resistance. To this day, homage is paid to this peculiar hero every year on the date the city fell, 11/Sep., an act of obligatory participation by all leading Catalan politicians. In actual fact, the real R.C. deserted his post when it was clear the battle would be lost, and escaped the city disguised as a monk. He lived a further 29 years, practicing law a nearby town with the full knowledge of Madrid’s authorities, who granted him a cozy amnesty a few years later. He died in 1734.

The economic case for independence

Leaving the tales of history aside, perhaps a slightly more valid cause for claiming independence would be the economical abuse of Catalonia from the rest of Spain, and particularly Madrid. This is what many separatists keep repeating. They paint Catalonia as a paradise with hard-working people, economical and cultural riches. They claim that Spain is usurping all the good things from Catalonia for the benefit of Madrid and other regions in Spain. Let’s see if this holds up.

The number of cases of corruption is among the top 3 regions, with some of the worst scandals in recent history. During decades, the corrupted political rulers of Catalonia, exemplified by the former President’s family, the Pujols, have sacked the hard-earned taxes of Catalans and Spaniards, extorting businesses and industries who wanted to apply for regional projects. This system, known as «el tres por ciento» (literally, «the three percent») is now being prosecuted in courts of Law, exposing the dark side of corruption in Catalonia. The entire Pujol family, and many Catalonian politicians are being investigated, some having been sent to prison, in an embezzlement case of over €1 billion in total.

Spain is not robbing Catalonia. Madrid actually transfers more of its GDP to other less-developed regions in Spain that Catalonia does. At least for other regions have a higher per capita income than that of Catalonia, so there goes the myth of Catalans somehow being superior and more hard-working than the rest of the Spanish people.

Catalonia also imposes the most and highest taxes amongst all Spanish regions. For example, wealth tax has been removed in Madrid, however it is still in force in Catalunya. Income taxes are also higher in Catalonia than in many other regions. They even introduced a tax on luxury items.

Catalonia, which has twice as many regional taxes when compared to the rest of the Spanish regions, ranks last in the Tax Foundation’s 2020 Spanish Regional Tax Competitiveness Index, a feat which they repeated in 2021. In 2020, a new tax on amenities with an environmental impact was ratified after the tax on the environmental hazard of radio-toxic elements was declared unconstitutional. Catalonia also reduced the inheritance tax credit and raised the marginal income tax rate by up to two points. Additionally, it has one of the worst-structured individual income and wealth taxes.

The mismanagement of the economic downturn by the Catalonian government, which focused more on the cause of independence than on the everyday-life problems of catalans, has had the effect of impoverishing Catalonia while other less affluent regions, like Madrid, Baleares, or the Basque region have grown strongly as Spain started recovering in 2015. In fact, Catalonia has been helped by the Central government to surmount its crisis. Now the Catalonian debt has a junk rating on it. All of this has been a serious blow on the self-esteem of Catalans in general, and to blame others has been the only way their regional Government has found to cope with it.

There is no real economic basis, therefore, and the Catalan separatist movement is not original at all, in fact, it is part of a global nationalistic and populist trend that we’ve been seeing in the past 10 years.

Is a Catalan state even possible?

The feasibility of an independent Catalan state is pretty much null, so the whole argument of whether Catalunya should be independent or not is a non-starter in my opinion. I understand that some Catalans think that they pay too much taxes to the Spanish state and don’t receive enough benefits, and that the region had its language and culture suppressed under the Franco regime, but that’s really as far as it goes. It’s not a reason to claim independence.

The situation we have now is purely the result of a few politicians manipulating a big mass of people into believing that most of their problems can be blamed on Madrid and Spain, and a Catalan independent state is the solution. For anyone who is economically literate and knows some basic history of Spain this is very obviously a false concept. Politicians in Catalunya over the past few decades have been as corrupt as they come, so I don’t understand why they blame the politicians in Madrid for any problems here in Catalunya.

The claim by the Catalan politicians that they have every right to make a referendum for self-determination is ridiculous. Self-determination referenda are not allowed by the Spanish Constitution, precisely because the subject of our sovereignty is the Spanish Nation as a whole. This is pretty logical.

I’ve lived through something similar when I lived in Malta. In the early 00s the nation was split right along the middle on the question of whether the country should join the European Union or not. For anyone with any sense the answer was obvious, however as usual the whole thing got politicised with the Labour party taking the No camp and the Nationalist party taking the Yes side.

The Labour party promised they would make Malta the new “Switzerland in the Mediterranean”, assuring that the tiny island did not need any help from Europe going forward, and that membership would only result in Sicilians invading Malta and the country losing much of its culture and charm. Luckily the referendum was won (with a very slight majority) by the Yes camp and so Malta eventually joined the European Union, adopted the Euro and is now doing very well as a country economically.

In Catalonia, the politicians promise that with independence, the region will become the new “Denmark of the South”. Funny how things repeat themselves. Both in Malta’s case and in Catalonia’s, these are absolutely false ideas that are simply non-starters and only serve to manipulate citizens.

Are Catalans Oppressed?

The Catalan separatists paint themselves as an oppressed nation. Anyone who has visited or lived in Catalunya knows that this can’t be further from the truth. I find it highly insulting to the people who are really living in oppressive situations around the world, starting from the Palestinians on the Gaza strip not too far away.

If anything, the non-separatist people living in Catalunya should be considered oppressed, since you have to be careful how you talk in public about this issue or you might get insulted or assaulted. I learned that the hard way when I first arrived to Barcelona when I went out with a Spanish national football team t-shirt (I was unaware of the conflict) and was shouted at and insulted until someone explained to me what the problem was. I still find the incident ridiculous and it’s just a perfect example of the non-pacific and non-tolerant nature of many separatists, who go to great lengths to paint themselves as pacific protestors and as the victims in this whole situation.

Moreover, in all public schools, the Catalan language is given much more importance than Spanish. I don’t understand why a region that is so internationally involved would want to favor a little-used language in favor of Spanish, not to mention English. In fact, due to a rule barring anyone who doesn’t speak Catalan from a teaching position in public schools, most English teachers are actually Catalans with a limited knowledge of English and definitely no British or American accent, so people end up graduating with very basic to non-existent English skills.

I’ve had some people accuse me of spreading lies, insisting that both Spanish and English are taught in schools and students end up being trilingual or bilingual at worst. I’ll just leave a few links about that, judge for yourself:

• https://elpais.com/espana/catalunya/2021-11-23/la-justicia-tumba-la-inmersion-linguistica-en-cataluna-pero-la-generalitat-pide-a-los-centros-que-no-hagan-ningun-cambio.html#?rel=mas
• https://elpais.com/espana/catalunya/2021-12-07/denunciados-por-amenazar-a-la-familia-que-pidio-el-25-de-lengua-castellana-en-la-escuela-para-su-hijo-de-cinco-anos.html#?rel=lom

If you’re in Catalunya, just chat up any random teenager or young adult in English and see how well they speak the language. Those who do invariably have studied the language in private at one of the many private language centers in the city.

If you’re an expat with a family, you should seriously consider whether a move to Catalunya is right for you, unless you have the means to send your kids to international private schools. I know several expats who lament the fact that they didn’t plan around this factor, and now have kids whose first and main language is Catalan, which is the 3rd or 4th language of their parents, and thus this ends up limiting their interaction with their kids.

Having grown up in a school that taught me four different languages, I understand and value knowing more than one language, but you need to be practical in these matters. In Malta, natives speak Maltese between themselves, but would never dream of teaching academic subjects in Maltese or preferring it over the other national language; English. The reason is that English is simply vastly more useful in a globalized world. If you speak to parents who send their children to public schools, you will also hear stories of children being indoctrinated in Catalan culture over that of Spain or Europe, so there is a much higher chance of them growing up with a separatist mentality.

During this period of protests and violence, we have also seen universities being shut down by separatist students, preventing the rest of the students and teachers from entering their classes and proceeding with their education. Again, who is being oppressed here?

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When visiting or living in Barcelona with babies and young kids, you want to make sure to keep your little ones safe as well as not fall foul of the law.

In fact it is obligatory for kids and babies to travel in car seats when traveling by car.

Upon arrival at the El Prat Airport you will not find any taxis that have car seats. If you use a service like Cabify they will outright refuse to carry you as they don’t want to break the law and risk getting their driving license suspended.

Your only other alternative is to use the normal taxis, but again they won’t have any car seats. This means that you will be putting your little one in danger unnecessarily. You never know when disaster might strike, and you don’t want to be the one responsible because you didn’t plan ahead for something this simple.

Thankfully, I’ve found the perfect solution for all our movements within Barcelona and to and from the airport. The answer is to use a service called Blacklane. It’s a kind of premium taxi service whereby you can use their mobile application to order a taxi in advance with set pick up and drop off points.

Pries are in accordance with the service offered and the premium cars they use. The best thing is that I can put my mind at rest that they will provide a quality car seat that is in line with regulations and is clean and ready for my son to travel in safely.

Two other services you can use:

• Taxibarcelona
• Taxi baby seat BCN
• Taxi adaptado

After having visited the USA many times I have no doubts about wanting to live in Europe, although I enjoy visiting the U.S. from time to time. I have avoided writing about the topic on this blog since I never really had to think hard about it and weight the pros and cons of each; it was just clear to me which I preferred.

Growing up I like many other millions of people worldwide thought the U.S. was the ultimate place to be, but after visiting I saw that it is far from the idolized place that we see in movies.

Since I call Spain home these days, a tweet from entrepreneur Martin Varsavsky on Twitter caught my attention and I thought I’d repost his thoughts here for anyone interested in comparing Spain to the United States.

Of course, there are many other nuances one should consider, and I wouldn’t stay that Spain is better than the U.S. outright, but it’s good to know about the ways in which they differ and then make an informed decision on where you want to live. To the below I would also add that America is not as much of a free market as everyone believes. I see much more competition in many European countries when compared to the U.S.

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Just landed in Madrid flying from San Francisco and traveling around the USA where I lived for 20 years and I frequently work. The San Francisco vs Madrid change makes me wonder.

• Why are homeless people so rare in Madrid and so common in San Francisco when here GDP per capita is half?
• Why is the murder rate 500% higher in California than in Spain?
• Why is health care free even for tourists in Spain paid for by Spanish taxpayers as a human right and so incredibly expensive and cumbersome in California? Our son fell in the bathtub and we had a $12k bill for a few stitches at Stanford University emergency room.
• Why are universities in Spain free and there is no student debt while in the USA there is more student debt than the GDP of Spain?
• Why are there in the USA more people in jail/parole than there are inhabitants in Madrid the third largest city in Europe?
• Why is litigation so common in the USA and so rare in Spain?
• Why is inequality in the USA twice as high as that of Spain?
• Why does Spain who borders Africa and has a much bigger illegal immigration problem than the USA provides amnesties for those who work for three years and USA separates parents from kids and conducts violent raids? Has 11 million hard working people who it refuses to legalize.
• Why do people live 4 more years in Spain than US while Spain spends 70% less per person in health care?

Spain is not perfect, housing costs are high, good jobs are tougher to find, half of Catalonians want out, political corruption is unacceptable, universities produce no Nobel prizes.

But here cancer does not mean bankruptcy, pregnancies come with maternity leave, long vacations available to all, gun deaths, opium deaths are almost unheard of and in 09 when unemployment shot up crime surprisingly went down.

Spain has the fastest growing large economy of Europe. It is a welcoming democracy loved by the millions of foreigners who live here. Looking for an alternative country to live in? Consider Spain.

USA is amazing at solving intricate science and technology problems that no other country has solved but struggles at solving every day life challenges that all other developed nations have solved.

Raising Kids

North American living is many times a case of living in suburbia, and this contrasts quite sharply with European living in general. Here’s an interesting video contrasting North America and European cities when it comes to raising kids and letting them outside the house.

Other Considerations

There is no doubt that over the 60 years after the second world war, the USA could be considered as not only a superpower but the world’s most advanced nation in many respects, with many innovations arising there, as well as a sense of freedom and entrepreneurship that was unmatched anywhere else.

However the glory days are behind, and in my opinion, this country has been in decline in many ways for the past twenty years.

General John Grubb described seven stages that most empires go through:

1. The age of outburst (or pioneers).
2. The age of conquests.
3. The age of commerce.
4. The age of affluence.
5. The age of intellect.
6. The age of decadence.
7. The age of decline and collapse.

I’m not sure exactly where I would place the USA, but my gut feeling is that it has crossed into the 7th stage of decline and collapse with all that’s happened there in the past 5 years. Europe might not be in an exciting phase, but it remains a place that is much richer in culture and diversity and in my opinion a way better place to live in. You also have the rise of Asia as a continent which has grown immensely in affluence, innovation and political clout.

If anything, I think that the USA is no longer the undisputed world leader, and now has to share the stage with the rest of the world. Its domination of world commerce through the dollar as the default currency is also at risk after the immense money printing that has occurred, and time will tell whether a basket of other currencies will take its place, or even something altogether new like Bitcoin.

When you are buying a new car it is essential to negotiate to get the best price possible. I used to hate this part as I don’t like negotiating. I prefer to know the real price of something and then decide for myself whether I can afford it or not.

Being in a foreign country and having to negotiate against experienced salesmen in a foreign language looked like a recipe for disaster to me.

Luckily I used the power of the internet to figure things out and I got a great deal.

Here’s how you can also get the best price on a new car in Spain.

First of all, be sure of which car you want and exactly which configuration. This is essential.

Second, find an online forum for that make and model. For example, in my case, I wanted to buy a Mazda so I found the Mazda forum in Spain and signed up.

Then, use Carnovo to get price quotations from several dealers in your area. Even though they’re supposed to be the best offers, they’re not, you can negotiate even more than that.

Your next step is to check the forum, typically other buyers will post their offers and the final price they managed to get from their dealers. Use those experiences to figure out the best price you can get for your car. You should now go to the dealer with a range of prices you are ready to accept, it’s wise to leave a leeway of €500.

So, if the original offer on Carnovo was say €29.000 and you know others on the forum have gotten it at €28.000, you can now go and tell the dealer straight up that you are interested in the car and ready to make a deposit right away, but you also know that the price should be €28.000 because your friends have gotten it at this price. Whatever he says, just keep insisting and be prepared to walk out if he doesn’t accept. Just make sure he has your contact details, even if he lets you walk out, he will call you in a few days to accept your offer.

That’s a brief guide to getting the best deal on a new car in Spain. Hope it helps!

One of the most common mistakes expats make is that of not researching the tax situation of their new country before they move there. This can lead to some very bad news further down the road.

Let’s have a look at Spain, which has a lot of taxes that people coming from other countries might not be familiar with. For example, having previously lived in Malta, many of the Spanish taxes were simply new to me and have no equivalent in Malta. There is no property tax, exit tax, or wealth tax there, just to mention a few examples.

Spain certainly seems to reward those who feed on the government funds / tax-payers rather than encouraging people to set up businesses, invest, or save.

It’s important to understand this unfortunate fact before you move to Spain. I am definitely not a fan of the Spanish tax system, work culture and politics, but there are also lifestyle benefits of living in Spain that you will have to weigh up.

Spain – Europe’s Tax Hell

Unfortunately, while Spain remains an amazing country with friendly people and all the ingredients to sustain an incredible lifestyle, it has been plagued by bad politics for several years now, and that has paved the way for the decline of this country.

It’s also quite sad that this downwards spiral in Spanish politics and taxes has been pretty evident for many years. For example, this analyst had correctly predicted pretty much everything that would occur in the coming years, back in 2015:

Spain has a complex tax system where taxes are levied by the central, regional, and local governments. Stamp duties, transfer, wealth, and inheritance taxes are administrated and regulated by 19 regional governments. Regional governments can also approve additional taxes and set the regional income tax brackets and rates, representing 50 percent of the overall income tax, while the other 50 percent is set by the central government.

Madrid is by far the best region tax-wise, while Catalonia sits on the opposite side of the spectrum. Madrid is indeed the only region that does not levy wealth tax on its citizens. The central government of Spain is trying to “harmonize wealth taxes among regions”, which in effect means preventing Madrid from applying a 100% discount on wealth taxes due, as it currently does.

The truth is that wealth taxes never worked. When a region sets a higher wealth tax, taxpayers move out of that region. It’s as simple as that. Others will set up structures to avoid the wealth tax. At the end of the day, even if wealth taxes worked, they would collect little revenue. At the same time, they disincentivize entrepreneurship, harming innovation and impacting long-term growth. With so many countries having abandoned the wealth tax, regions in Spain should repeal the tax instead of asking for Madrid to harmonize its wealth tax with the rest of the regions.

The same is true for inheritance and gift taxes. They only raise 0.58 percent of Spain’s total revenue while they harm entrepreneurial activity, savings, and employment. Additionally, in some cases, they have proven to be confiscatory taxes. Regional statutory tax rates can reach levels as high as 81.6 percent, depending not only on the level of the amount inherited but also on the level of pre-inheritance wealth of the inheritor and familial closeness to the inheritor. A recent study revealed that inheritances can in fact reduce wealth inequality as transfers are proportionately larger (relative to their pre-inheritance wealth) for households lower in the wealth distribution.

With that background in place, it’s time to get practical and look at the various questions and doubts foreigners have when dealing with the Spanish taxation system.

A Guide to Spanish Taxation

Let’s start with the basics, shall we? One of the first things to note is that taxation in Spain affects not only residents but also non-residents. The most classic example of taxation of non-residents is that on income from rental properties that one owns in Spain. Another point of confusion is how to determine whether you’re actually a resident or not for tax purposes.

Click here to get in touch with my tax advisors

Am I a tax resident in Spain?

In general terms, tax liability in Spain is determined by the concept of permanent residence, whereas citizenship is irrelevant. An individual is considered a permanent resident in Spain in any of the following circumstances:

• You have spent more than 183 days in Spain within a single calendar year regardless of whether you are formally registered.
• Your primary professional activities are conducted in Spain – essentially if you are self or otherwise employed in Spain.
• Your main interests (eg your spouse or children who are still dependent on you) live in Spain.

Note that if the spouse and underage children reside permanently in Spain, your residence is presumed unless sufficient proof is provided to the contrary.

These criteria of residency apply for personal income tax, wealth tax, inheritance tax and gift tax although for inheritance and gift tax some exceptions may apply.

What is the tax year-end?

31 December. Unless the taxpayer dies on a day other than 31 December.

What do you need in order to submit the return?

You will need to obtain a digital certificate by filling in the form found here and going to the nearest office to verify your identity. Once you’re verified you will receive the digital certificate via email and you will then need to install it in your browser so that you can access the Hacienda website and fill in your tax forms.

If you are enlisting help from a tax consultant or accountant (as I recommend you do if it’s your first time doing these statements), he will be able to submit all forms on your behalf. You will only need to provide him with information about your income and assets as well as a copy of your NIE. He might also ask you some further questions to ascertain whether you can make use of certain tax deductions.

When are tax returns due? That is, what is the tax return due date?

The due date for filing the tax return and making a payment for tax residents and individuals taxed under the special expatriate regime is normally from 6 April to 30 June of each year for the income obtained in the previous year.

Specific filing deadlines apply to non-residents and, as a general rule, non-residents must report income and pay taxes on a quarterly basis (First 20 days of April, July, October and January for that income the accrual date of which is the previous quarter). Non-Resident returns related to deemed-income from the holding of real estate must be submitted until 31 December of the following year.

There is no possibility of claiming for filing extensions, hence, if the tax return is not filed on time, penalties will be imposed. These penalties will vary depending on whether the tax return is filed after the deadline on a voluntary basis or whether it is as a result of a tax inspection.

Let’s now have a look at some forms and Spanish taxation schemes which can trip up  expats.

Modelo 100

This is known as the declaracion de la renta, and is the most common tax form. Most people need to fill in this form on a yearly basis. You will automatically get a draft version from Hacienda, called borrador, which you then need to check and add details to if necessary. Once you’re sure everything is correct you can send it off. You will have to pay the tax from your bank account, or provide your bank account details so they can pay you back in case you had paid extra tax during the year, most likely due to any retenciones that local companies processed on your behalf.

If you are married and make a joint declaration, you have an allowance of €3,400. You will only pay tax for any earnings above €5,500 during the fiscal year. As a general rule, the option for joint filing is a good one for those couples where one of the spouses doesn’t receive any remuneration (or receives a very low one that doesn’t go above the €3,500 joint declaration allowance).

You can use Taxdown.eu to prepare your tax declaration, or if you need assistance in English I can connect you with my tax advisor who speaks English.

Modelo 720

Tax resident individuals are obliged to report (720 Form) the following assets and rights located outside of Spain to the Tax Authorities:

• Accounts in which the individual is the titleholder, or in which he is representative, authorized person or beneficiary, or in which he has disposal powers.
• Securities, rights, insurance and life or temporary annuities.
• Real estate or rights on real estate.

There will be no reporting obligation for those assets or rights which value (considered in aggregate for each group of assets listed above) is lower than €50,000. The deadline for filing the 720 Form is from 1 January to 31 March of the year following that for which the information must be reported.

For more information about this read my post about the modelo 720 form in Spain.

ETE Form

This is a form that residents need to use to inform the Bank of Spain of the economic transactions and of the balances of financial instruments held abroad, which at the end of the year exceed the value of 1 million euros.

The ETE form needs to be submitted by any natural or legal person (public or private) resident in Spain, other than the payment service providers (credit institutions and payment institutions), registered in the official records of the Bank of Spain, whose amount of the financial balances (initials) and final) and the total amount of transactions made (collections and payments) in the period exceeds one million euros.

Modelo D6

Another bank of Spain form. Its purpose is to report marketable securities deposited abroad even if the issuers are Spanish, for both fixed income and variable income securities, provided that they are regarded as marketable securities, and holdings in collective investment undertakings (investment funds, SICAVs etc.). The deadline is January 31^st for the positions of the preceding year. There is no minimum exempt threshold.

The D-6 must be filed when an operation (investment or settlement) takes place in which any of the following circumstances are applicable:

1. The resident’s interest in share capital before or after the operation reaches 10%.
2. The resident investor belongs to its governing body.
3. The amount of the transaction exceeds €1,502,530.26.

Wealth Tax

Spain has a wealth tax (impuesto sobre patrimonio) that non-residents should consider when buying real estate in Spain. Wealth tax is imposed on non-residents’ assets located in Spain. The tax rate ranges from 0.2%, when the value of the assets held is less than €167,129, to 2.5%, when the value of the assets exceeds €10,695,966. However, there is a tax-free allowance of €700,000.

The autonomous regions can modify for their own territories the applicable tax rates and the tax-free allowance, and can introduce tax reliefs, which means that the effective tax rates vary substantially between autonomous regions. Autonomous region’s legislation can be applicable if the taxpayer is resident in the EU or EEA.

Most notably, Madrid does not apply wealth tax to its residents. Therefore, for high-net-worth individuals it is used to be more attractive from a tax point of view to reside in Madrid than in other autonomous regions such as Catalunya.

However, in 2023, a new wealth tax was introduced by Spanish politicians. They say it’s a temporary tax, but we all know what a lie that is, considering the previous wealth tax system was also supposed to be temporary when introduced in 2008, and it exists to this day.

This is just another pig-headed populist move to appease the ignorant masses who believe that robbing Peter to pay Paul is a sustainable and good way to achieve prosperity.

What will happen is that more and more entrepreneurs and high net worth people will move to other countries, perhaps neighboring Portugal which treats them much better. Others will just implement structures that eliminate their wealth tax liability. Wealth taxes have been abolished the world over, precisely because they are unjust and don’t even achieve their purported aims of helping grow the government coffers during tough times.

Net wealth will be taxed from 3.7 million, throughout all Spanish regions (including Madrid and Andalusia which had previously discounted all wealth tax for their residents), the rates are tiered and go up to 3.5%. The valuation rules are the same as those of the current Wealth Tax, with the possibility to apply the family business exemption and the Income Tax/Wealth Tax limits of 20/60. Both rules are a relief for many. For those under Beckham regime, the tax calculation remains similarly unchanged (based on Spanish assets only). Otherwise the wealth tax is based on worldwide assets unless the double taxation treaty in place between the two countries implies any exceptions.

For tax residents in Catalunya, it will only impact those with assets above 10 million euro, as that will trigger the 3.5% rate versus the 2.75% applied in Catalunya. This is due to the current wealth tax implemented by autonomous regions being fully deductible in the new state wealth tax.

A change in government whereby the socialists are no longer in charge is the only real possibility of removing the wealth tax once and for all and put an end to this stupidity.

Property Taxes

Property taxes are also an important issue for expats in Spain. Spanish VAT (IVA), document fees and sales transfer taxes (similar to UK and Maltese stamp duty) are payable. Rates vary according to what type of property is purchased, the value, and the region the property is located in.

Transfer tax of 6% is payable when there is a property purchase, while a yearly local tax is levied on real estate (up to 1.3%), which applies on the cadastral value and varies depending on the municipality levying the tax, the category of real estate, and other circumstances.

Capital Gains Tax

Capital Gains Tax (CGT) is payable on the sale or transfer of qualifying assets. Rates are in line with savings income tax rules. Liability depends on which asset sales qualify and which don’t. Exemptions are available according to each individual’s personal circumstances. Rates are on a scale between 19% and 23%, irrespective of the region where you live.

Inheritance Tax

Unlike many other countries, Spain levies an inheritance tax even on related parties to the deceased. I would suggest you check out this link for more information.

Gift Tax

In Spain, you need to pay tax on any donations you receive while being a resident of this country. Certain regions have much lower taxation, for example, Andalucia.

Exit Tax

On 1 January 2015, Spain introduced an exit tax. Individuals that have been permanent residents for at least ten years during the previous 15 years and cease to be residents are taxed on any unrealised capital gain derived from shares or interests in any type of entity.

Taxation is only imposed when either:

• The total value held in those assets exceeds €4 million. The individual holds a stake of at least 25% in an entity and its value exceeds €1 million. In this case, only the gains considered to derive from this stake are taxed.

The unrealised gains will be taxed at the standard rates of 19%, 21% and 23%.

If the change of residence is temporary and some requirements are met, the tax due can be deferred for five years if the proper guarantee is submitted (preferably a bank guarantee or a pledge over the securities). If the deferral of the tax due is not requested, when acquiring Spanish residence again, the individual is entitled to claim the refund of the tax due.

If the taxpayer moves to another EU/EEA country the gain will only need to be declared and taxed if the shares are sold within the next 10 years or they move outside the EU/EEA.

To benefit from the EU or EEA deferral regime, an individual must communicate his new address (and subsequent changes of domicile) to the Spanish Tax Administration using the appropriate form.

So Brexit could be an issue for those affected, in which case seek advice on how to hold your investments so that exit tax will not apply.

Leaving Spain – Modelo 030

When you take up fiscal residence in another country, having previously been resident in Spain, you need to inform the Spanish tax authority about the change. It is always best to obtain a tax residency from your new country of residence just to be on the safe side if Hacienda questions you.

The form to fill in is Modelo 030. Here are some more tips on things you need to do before you leave.

Do You Need to Register as Self-Employed When You Move to Spain?

If you decide to move to Spain, one of the first things you will need to do is to regularise your position as a worker or retired person.

If you’ll be employed by a Spanish company, you have no problems. They will do everything for you.

If you want to start offering your own services, such as teaching yoga or teaching English, or even buying and selling goods and services online, you will most likely need to become a self-employed person (autonomo in Spanish).

Another option is to open a company, however this is more complicated and only makes sense if you earn more than €60,000 per year. If that is the case, then you should look into this option as you will also end up paying less tax that way.

There are two other cases that I’d like to mention.

If you are a professional stock trader or operate in the markets in any way as your main activity, you don’t need to register as a self-employed person. You will simply declare your profits and losses in your annual tax return and pay the corresponding tax (currently ranging between 19 and 23%). Many people have doubts about whether they need to register as self-employed persons if they are doing such activity, but the reality is that you don’t have to, unless you are also managing other people’s money and not just your own.

Another common case is that of entrepreneurs and investors moving to Spain in search of living a better life. Typically they would own one or more companies and have been working for several years building these companies back in their home countries. They then decide that they would like to slow down and put in a management team to run the business while they move with their families to Spain to enjoy the Spanish quality of life.

You will find many Scandinavians, Russians, Germans and British entrepreneurs and investors in this situation living along the Spanish coasts from Barcelona all the way down to Marbella.

This is an interesting situation vis-a-vis the Spanish tax system and many have doubts about it.

The simple answer is the following:

If you’re a company owner and you decided to retire and not work at all while in Spain, then you don’t need to register as a self-employed person. You will simply declare any dividends or income from sales of your assets every year and that’s it.

On the other hand, if you still provide some consultancy services to your management team from time to time, or receive remuneration from other parties (typically hour-based consultancy or speaking at conferences), then you would need to register as a self-employed person and issue invoices to your company and third parties that way. Every year, you will now declare the dividends you receive from your company plus the income you generated through being self-employed.

Note that these two categories of income are taxed in different ways. General income is taxed on a scale that goes up to 52% in some autonomous regions like Catalunya, while the savings tax rate under which dividends would fall under is capped at 23%. You can read more about the Spanish tax system here.

Social Security – Public Healthcare and Pensions

Spain has quite a decent public health system, and to be able to make use of that you will need to be paying social security contributions. The same applies if you want to receive a state pension in your sixties (if that will still exist). So in practice what most entrepreneurs and investors do if they want to get access to these two state services is to register as self-employed and charge their own companies abroad a consultancy fee every month.

Disclaimer: I’m not a legal expert or tax advisor and the above should not be taken as legal advice. Contact me if you want me to help you find a tax lawyer or accountant to help you with any of the setups I described above and I’ll be glad to put you in touch with the people I trust.

Note that this is just a summary of my research on the topic and my discussions with various tax consultants. It should not be taken as tax advice. When in doubt, you should always consult a trusted tax consultant to help you fill out this submission. 

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