Spain in general has a relatively mild tax regime, for digital nomads and regular employees. However, Andalucia offers some additional advantages when it comes to minimising your tax obligations.
No wealth tax
Wealth tax is broadly defined as a charge on accumulated savings, often derided as a punishment for prudent savers. For this and other reasons, Andalucia has decided to abolish it completely since 2022 for assets upto 4 million euros. An obligation to file a declaration does exist for fortunes above 2 million euros, but there is no tax on it until the 4 million threshold. Even this latter threshold is imposed by the Spanish government, not the Andalucia region, so in effect Andalucia does not have a wealth tax at all.
High inheritance tax limit
In Spain, like several other European countries, inheritance beneficiaries are grouped according to their kinship with the donor, with no possibility of completely removing children or spouses, and without blanket tax exceptions. However, individual regions can apply their own beneficial tax rates, as Andalucia has done. Andalucía provides high personal reductions. For inheritances, descendants, ascendants and spouses receive up to €1 million tax free (as opposed to the Spanish government’s €15,957).
In addition, the main home is reduced by 99% for inheritances received by close family, with no maximum cap, under the condition that they cannot sell it for 3 years. This solves a centuries old problem whereby heirs were forced to sell a property simply to collect the cash with which to pay that property's inheritance tax.
Finally, the top succession tax rate in Andalucía is 26% (for amounts over €800,000) compared to Spanish government’s top rate of 34%.
Reduced income tax rates
Andalucía has reduced its local income tax rate over recent years, making the local scale rates of income tax competitive compared to other Spanish regions - even the Balearic islands which have traditionally been lower taxation areas. Upto 60,000 euros the rates are quite similar across Spain, however for higher incomes the top rate in 2023 was 22.5% in Andalucia.
Digital Nomad visa and other Spain-wide incentives
The following 3 aspects of financial benefits are not exclusive to Andalucia, they are simply presented here as additional incentives that make Andalucia attractive fianncially:
- Digital Nomad Visa allows fixed low income tax rate for approved digital workers. Use this special article as a starting point to learn more about it.
- "Digital Kit" Grant for digitalisation of small companies or freelancers, where the financial assistance can help with modernising your processes. More information in this dedicated article.
- Employment law has also been recently reformed towards financial efficiency. For example, for independent contractors, it will no longer be necessary to prove the investment to set up the business or demonstrate that the company will be able to generate employment in Spain. Read more in our immigration law article.
Andalucia as a financially attractive destination
The last several years have shown that politicians and civil servants have aligned their actions towards making Andalucia a tax-efficient destination within the European Union. The ongoing reforms may help you optimise your tax position by residing in Andalucia.
Contact us
If you are an individual or a company and are interested in a procedure, contact us. We work with expert lawyers in Spanish immigration and expatriate legal and tax issues:
