Key takeaways
- Spanish tax residency is established by spending over 183 days in Spain within a calendar year, making worldwide assets and income subject to Spanish tax for Australians
- New residents with foreign assets exceeding €50,000 must file Modelo 720 by 31st March, reporting bank accounts, investments, and real estate held outside Spain.
- Australian superannuation is generally taxed in Spain as income, with the Australia-Spain Double Taxation Agreement preventing double taxation but not necessarily recognising Australian tax-free components.
- Beyond income tax, Australians in Spain may also be subject to Wealth Tax on worldwide assets, with regional variations in thresholds and rates.
Australian expats in Spain
As an Australian expat in Spain, you must navigate the complex overlap of two distinct tax systems.
Managing an Australian superannuation fund, a UK pension, or global investment accounts requires a clear understanding of your obligations.
Securing expert advice on Spanish tax for Australians is essential to ensure tax efficiency and avoid heavy penalties as a resident.
Understanding your Spanish tax residency status
The first step in your journey is determining exactly when you become a tax resident in Spain.
Under Spanish law, you are generally considered a tax resident if you spend more than 183 days in the country during a calendar year.
These days do not need to be consecutive; any temporary absences are usually included unless you can prove tax residency in another country.
Unlike Australia, where the tax year runs from July to June, the Spanish tax year follows the calendar year (January to December).
This misalignment can often lead to “double-counting” of income in the transition year, making professional advice essential.
When would Spanish tax for Australians begin?
If you arrived in Spain in September 2025, you were likely a non-resident for that year.
However, 2026 marks your first full year of residency, meaning you are liable for Spanish tax for Australians on all worldwide income and assets.
It is crucial to understand that your tax residency is distinct from your immigration status.
You may still need to apply for a digital nomad visa in Spain or manage other residency permits while your tax status changes.
Being a legal resident does not always mean you are a tax resident, but the two often go hand-in-hand for long-term stays.
Spanish tax for Australians: Reporting foreign assets with Modelo 720
One of the most important obligations for new residents is the filing of Modelo 720.
This is an informative declaration of assets held outside of Spain.
If you own assets abroad exceeding €50,000 in any of three specific categories, bank accounts, investments, or real estate, you must report them to the Agencia Tributaria (Spanish Tax Agency).
The deadline for this filing is the 31st of March each year.
For Australians with significant assets in their home country or the UK, this is a non-negotiable requirement.
Failing to file or providing incorrect information can lead to substantial fines, although recent European court rulings have moderated the severity of these penalties.
If you are worried about past omissions, you should seek advice on overstaying a visa in Spain or other compliance issues that might affect your standing.
Tax treatment of Australian superannuation
For Australians, the treatment of “Super” is often the biggest point of confusion.
The Spanish tax authorities do not recognise the tax-free status that superannuation often enjoys in Australia after the age of 60.
Instead, the Agencia Tributaria typically views superannuation as a private pension or a life insurance product, depending on the fund’s structure.
When you draw down funds from your super, the income is generally taxed at the progressive savings tax rates in Spain, which currently range from 19% to 28%.
However, the Australia-Spain Double Taxation Agreement provides some protection.
This treaty ensures that you are not taxed twice on the same income, allowing you to claim a credit in Spain for any tax paid to the Australian Taxation Office (ATO).
It is important to note that the “tax-free” component of an Australian superannuation payment is often not recognised by the Spanish Tax Agency.
They may view the entire withdrawal as taxable income unless a specific structure allows for a different interpretation.
This is a common pitfall for Australians who expect their retirement savings to remain untouched by the taxman.
Early planning of the Spanish tax for Australians before your first withdrawal can save you thousands of euros in unnecessary tax payments.
Additionally, the way you report these funds can vary depending on whether you receive a lump sum or a regular pension stream.
Managing UK pensions and investments
Many Australians in Spain also hold assets in the UK, such as a UK pension fund.
The tax treatment of these assets is governed by the UK-Spain Double Taxation Agreement.
If you are considering moving funds, you might look into a QROPS transfer to Spain or other methods to consolidate your retirement savings.
| Key Topic | Explanation | Helpful Resource |
|---|---|---|
| Spanish tax for Australians | Australians living in Spain may face a multi-country tax situation involving the UK, Australia, and Spain. Understanding how pensions, super funds, and foreign income are taxed helps ensure compliance across jurisdictions. | Declare UK income in Spain |
| Documentation Requirements | Proper documentation from HMRC and Spanish authorities is required to demonstrate that tax obligations have been correctly handled in each territory. | Official tax certificates and filings |
| Retirement Transfers (QROPS) | QROPS structures may provide flexibility and potential tax efficiency for individuals planning long-term residence in Europe, depending on personal circumstances. | Professional cross-border tax advice recommended |
Tax-efficient drawdown and fund transfers
Financing your living expenses in Spain requires a strategic approach to drawing down international funds.
Simply transferring large sums of money can trigger questions from banks and tax authorities.
It is often more efficient to plan your withdrawals to stay within lower tax brackets or to utilise specific Spanish tax exemptions.
For those who have not yet secured a long-term residency, exploring the Spain digital nomad visa W2 can provide a structured path to residency with potential tax benefits.
Alternatively, some expats opt for the Spanish non-lucrative visa if they do not intend to work in Spain but have sufficient passive income from their Australian or UK assets.
Investment accounts and overseas assets
Your Australian investment accounts, including shares and managed funds, are subject to Spanish capital gains tax.
Spain taxes worldwide capital gains at rates ranging from 19% to 28%.
It is important to keep meticulous records of the original purchase prices in Australian Dollars (AUD) and convert them to Euros (EUR) using the exchange rate on the date of the transaction.
This “historical cost” calculation can be complicated if you have held assets for many years.
Furthermore, Spain has a Wealth Tax (Impuesto sobre el Patrimonio) and a Solidarity Tax on Large Fortunes.
These taxes apply to your worldwide net wealth, not just your income.
For Australians with significant property holdings or large investment portfolios back home, these taxes can become a high annual cost.
Each region in Spain, such as Valencia, has its own thresholds and rates for wealth tax, so local expertise is vital.
You should also ensure that any international contracts in Spain related to your investments are legally sound and tax-compliant.
If you own property abroad, you must also be aware of Spain’s regional property taxes and how they might interact with your global wealth.
For those looking to invest in Spanish real estate, understanding the legal fees for buying Spanish property and conducting a Spanish mortgage review are essential steps.
Legal support for international residents
Navigating cross-border legal and tax issues requires professional expertise.
Whether you are dealing with UK-Spain cross-border legal disputes or simply trying to reduce your tax burden in Spain, having English-speaking advisors is invaluable.
Delguía y Luzón has extensive experience in advising Australians and other international clients on:
- Completing and filing Modelo 720 accurately.
- Analysing the tax impact of Australian superannuation and UK pensions.
- Structuring international contracts and franchise agreements in Spain.
- Providing legal support for UK businesses operating in the Spanish market.
Trusted advice for international residents
Moving from Australia to Spain is an exciting life change, but it requires careful financial planning.
By understanding your tax residency, meeting your reporting obligations like Modelo 720, and seeking expert advice on your international assets, you can enjoy your new life in Valencia with peace of mind.
If you are concerned about your status or the extraordinary regularisation of foreigners in Spain, contact us today for a consultation in English.
Professional legal support for Australians navigating Spanish tax
Contact Delaguía y Luzón today to ensure your Spanish tax obligations are met, your foreign assets are correctly reported, and you achieve optimal tax efficiency as an Australian expat in Spain.
- Email: felix.delaguia@delaguialuzon.com
- Phone: +34 963 74 16 57
FAQs: Spanish tax for Australians
When do Australians become tax residents in Spain?
Australians are generally considered Spanish tax residents if they spend more than 183 days in Spain during a calendar year. Once residency begins, worldwide income and assets usually fall under Spanish tax for Australians, regardless of where the income is generated.
Do Australians need to declare overseas assets in Spain?
Yes. Residents must file Modelo 720 if they hold foreign bank accounts, investments, or real estate exceeding €50,000 in any reporting category. Failure to report can result in penalties, so compliance is essential.
How is Australian superannuation taxed in Spain?
Spain typically treats Australian superannuation withdrawals as pension or savings income, which may be taxed at progressive savings rates. The Australia–Spain Double Taxation Agreement helps avoid double taxation by allowing tax credits already paid in Australia.
Are Australian investments taxed in Spain?
Yes. Capital gains from Australian shares, funds, or other assets are generally subject to Spanish capital gains tax once you are a resident. Accurate records of purchase prices and currency conversions are necessary for correct reporting.
Why is professional advice important for Spanish tax for Australians?
Cross-border situations involving pensions, investments, and multiple tax jurisdictions can be complex. Professional advice helps ensure compliance, reduce unnecessary tax exposure, and avoid costly reporting errors.
