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Income tax in Spain (IRPF)

The IRPF (personal income tax) is the tax you pay on what you earn during the year. It is one of the State's main sources of revenue.

How it works: it is progressive

"Progressive" means that the more you earn, the higher the percentage you pay, but only on the part above each bracket, not on your whole salary.

An illustrative example, with made-up brackets: the first €10,000 at 10%, the next €10,000 at 20%. If you earn €15,000, you pay 10% on €10,000 (€1,000) and 20% on the remaining €5,000 (€1,000). Total: €2,000, an average of 13.3%. Real brackets and percentages are different and change with the law.

Withholding on your payslip

During the year, your employer deducts part of your IRPF from each payslip and pays it to the tax authority for you. It is called withholding. It is an advance on the tax, not the final tax.

The annual tax return

Each year, usually between spring and summer, the previous year's return is filed. The withholding you already paid is compared with the tax you actually owe:

• You get a refund: if too much was withheld.
• You have to pay: if too little was withheld.

Whether you must file depends on how much you earn and how many payers you have, and those limits change. Check them every year.

Allowances and deductions

Part of your income is not taxed because of your personal circumstances (the personal and family minimum), and there are deductions and reductions that lower the tax, for example for children or for contributions to certain plans.

An important exception

In the Basque Country and Navarre, income tax is regulated and managed by the regional (foral) tax authorities, with their own rules, brackets and deadlines. So the rules can differ from the rest of Spain.

This guide is a general explanation, not tax advice. For your own case, check with the tax authority that applies to you or an adviser.

Informational and educational content. Not financial advice.

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