Do you have a property in Spanish territory? Have you come on vacation and hired services of a professional in Spain or bought goods?

Along the following lines we will indicate the main tax categories in the Spanish Tax System.

The Spanish constitution of 1978 comes to indicate as obligations of all citizens the contribution to the maintenance of public spending in accordance with their economic capacity through a fair tax system inspired by the principles of equality and progressivity that, in no case will be confiscatory. Public spending will make an equitable allocation of public resources whose programming and execution will correspond to the criteria of efficiency and economy. Only personal or property benefits may be established in accordance with the law. Art.31 of the Spanish Constitution.

Tax Categories in the Spanish Tax System

In this regard, we find as essential principles non-confiscatoriness, the reservation of law as well as equality in the contribution of the maintenance of public expenditure through the establishment of the tax system. Thus, Law 58/2003, of December 17, General Tax, states in its article 3 the principles related to the tax system by providing in its section 1 that:

“1. The management of the tax system is based on the economic capacity of the persons obliged to pay taxes and on the principles of justice, generality, equality, progressivity, equitable distribution of the tax burden and non-confiscatoriness”.

“2. The application of the tax system will be based on the principles of proportionality, effectiveness and limitation of indirect costs arising from the fulfilment of formal obligations and will ensure respect for the rights and guarantees of the taxpayers”.

 

These principles, both those of the system of the tax system set forth in section 1 and those of application thereof, of section 2, come to frame the limits of the application of public powers related to the imposition of taxes, providing legal security, delivery of goods and the provision of services regarding the tax system thereby contributing to the maintenance of public spending.

 

What are the Tax Categories in the Spanish Tax System?

These limitations apply to all three tax categories in Spain, i.e. taxes, fees and special contributions.

 

Thus Article 2 defines these categories when establishing as a tax

– Taxes: are the taxes required without consideration whose taxable event is constituted by businesses, acts or events that show the taxpayer’s economic capacity.

 

For their part, they are fees

– Fees are taxes whose taxable event consists of the private use or special use of the public domain, the provision of services or the performance of activities under public law regime that refer, affect or benefit in a particular way to the taxpayer, when the services or activities are not of voluntary request or reception for taxpayers or are not provided or performed by the private sector.

 

Finally, define the standard as special contributions;

– Special contributions are taxes whose taxable event consists in obtaining by the taxpayer a benefit or an increase in the value of their assets as a result of the performance of public works or the establishment or expansion of public services.

 

Differences between tax categories in Spain:

While taxes can be considered direct and indirect, which record a certain act or fact (non-resident income tax) or indirect taxes that are derived to the consumer of final goods or services (value added tax).  We will address these categories in greater depth in other entries on this website.

The fees involve a certain price for a public service (payment for the issuance of a certificate or payment for the reservation for a municipal installation, for example) and the special contribution involve payment for a public administration activity or application-installation of public services whose beneficiaries are determined (payment for the installation of public lighting in urbanization).

 

At Welex we count on a team of economists who are experts in all aspects related to the Spanish Tax System: taxes, rates, special contributions and much more. Do not hesitate to contact us if you have any queries regarding accountant or legal matters in Spain.

 

 

Related Articles

How to know whether you are tax resident in Spain or not

There are people that reside in different countries, or spend certain periods of time during the year in one or another country, and might not know that, when having to file the tax return, there is a specific income tax to be paid in accordance to whether you are resident or not.

Read more

Definitive guide for Inheritance Tax in Andalusia

Introduction: Who pays inheritance tax in Andalusia, Spain?

Read more

Reduction of Taxes in Andalusia, Spain

Coming into vigour as of 28th April 2021 and with exclusive duration until 31st December 2021, specifically in the modality of Onerous Property Transfers. This reduction of taxes in Andalusia, Spain, is applicable to the transfer of real estate and to the constitution and transfer of rights over the same, except those of guarantee.

Read more

What expenses do I have when buying a second home in Spain?

The purchase and sale of a second transmission property in Spain, that is to say, where the seller is a private individual or the property has already been inhabited, is subject to the Property Transfer Tax in Spain. This tax varies depending on the autonomous community where the property is located.

Read more