Spain attracts thousands of German emigrants with its Mediterranean climate, affordable property and schemes such as the Golden Visa or the Digital Nomad Visa. Yet the tax reality often proves a stumbling block: a wealth tax of up to 3.5 per cent on worldwide assets, income tax rates of up to 54 per cent and pronounced regional differences can make the country more expensive than Germany for affluent people. High-net-worth entrepreneurs with more than one million euros in assets pay tens of thousands of euros in tax each year in some regions, while Germany’s exit tax (§ 6 AStG) is merely deferred within the EU. This comprehensive guide sets out the current rates for 2026, real-world examples, optimisation strategies and interactions with German tax, based on the latest BMF guidance, regional reforms and double-tax treaty rules.
Spain taxes tax residents (defined as people who spend 183 days or more per year in the country or whose centre of life is there) on their worldwide income and assets. In Germany, by contrast, after leaving you are generally only subject to limited tax liability. Income tax (IRPF, Impuesto sobre la Renta de las Personas Físicas) is steeply progressive: a national framework from 19 per cent on income up to €12,450 to 47 per cent from €300,000. Autonomous regions may also levy additional surcharges. Madrid softens the burden to 21 to 45.5 per cent, while Catalonia tightens it to 25 to 50 per cent.
The wealth tax (Impuesto sobre el Patrimonio) applies from a minimum national allowance of €700,000, with rates from 0.2 to 3.5 per cent. The regions take different approaches: Madrid and Andalusia effectively exempt it via 100 per cent rebates or high allowances; Valencia increases the allowance to €1 million in 2026; Catalonia remains at an allowance from €500,000 with rates up to 3.48 per cent. A solidarity surcharge is added from €3 million and can be as high as 3 per cent. The Germany–Spain double taxation agreement (DTA) addresses potential conflicts: pensions are taxed in Spain at 19 to 47 per cent (Germany proportionately), rental income is subject to 19 per cent withholding tax (creditable in Germany), and capital gains at 19 to 28 per cent.
Inheritance and gift tax varies dramatically: Madrid exempts non-EU heirs entirely from tax liability, while Andalusia offers an allowance of up to €1 million for children (0 to 7.65 per cent). Catalonia charges up to 32 per cent plus regional rates. Spanish corporation tax is 25 per cent (a new 15 per cent for start-ups for two years). And the Beckham Law for new residents provides: a flat 24 per cent on Spanish employment income up to €600,000 (six years, condition: no EU residence in the previous 5 years).
Tax type | Income tax | Wealth tax | Inheritance (children) | Capital gains |
Germany (top rate) | 45% + 5.5% solidarity surcharge | 0% | 7-50 % | 25% flat withholding tax |
Spain national (2026) | 19-47 % | 0.2-3.5 % from €700k | 7-34 % + region | 19-28 % |
Example: Madrid | 21-45.5 % | 100% exempt | 0% non-EU | 19-26 % |
Example: Catalonia | 25-50 % | 0.21-3.48 % from €500k | 7-32 % + region | 19-28 % |
Tax type | Income tax | Wealth tax | Inheritance (children) | Capital gains |
Wealth tax charges the net worldwide assets of tax residents above a €700,000 allowance (national, Art. 28 Ley IP) at progressive rates from 0.2 per cent (up to €167,129) to 3.5 per cent (over €10.7m). Regional autonomy creates both havens and traps: Madrid suspends the tax entirely (100 per cent rebate, unlimited), Andalusia has effectively levied none since 2022 (rebate), and the Canary Islands grant a €700,000 allowance with an exemption for tourist letting. Valencia increases the regional allowance to €1 million in 2026 (from €500,000); the Balearics (Mallorca) offer a €3 million allowance; and Catalonia only €500,000 with rates up to 2.75 per cent.
Property valuation in Spain uses the cadastral value multiplied by factors (1.1 to 2.0), which often results in a value above market value. A home with a cadastral value of €500,000 can come out at €800,000. Owner-occupied main homes (vivienda habitual) are deductible up to €300,000. Germans with €2 million in assets (€1m property, €1m securities) pay around €25,000 per year in Catalonia, zero in Valencia (2026) (after the allowance) and zero in Madrid. At €5 million, the solidarity surcharge of 1.7 to 3 per cent is added.
Pitfalls in connection with the exit tax arise because Germany merely defers the tax on hidden reserves, while Spain taxes the full asset value immediately. Without careful planning, this can lead to a double burden.
Detailed calculation for €3m assets (2026, single, excluding €300k main home allowance):
Madrid: €0 (100% rebate)
Valencia: €1m allowance → €0 (new in 2026)
Canary Islands: €700k allowance → €18,000 (1.2%)
Andalusia: €700k allowance → €15,000 (effectively reduced)
Catalonia: €500k allowance → €32,000 (1.6%)
Balearics: €3m allowance → €0
Spain’s IRPF income tax covers worldwide employment income, investment income, rental income and pensions for tax residents. The national scale is progressive: 19 per cent up to €12,450; 24 per cent from €12,450 to €20,200; 30 per cent from €20,200 to €35,200; 37 per cent from €35,200 to €60,000; 45 per cent from €60,000 to €300,000; and 47 per cent from €300,000. Regional surcharges are added: Madrid ranges from 21 to 45.5 per cent, Andalusia up to 49 per cent, Catalonia from 25 to 50 per cent and Valencia up to 54 per cent including the solidarity surcharge.
Rental income is taxed at a net rate of 19 to 47 per cent after deducting costs, with the DTA providing for Spanish withholding tax of 19 per cent, creditable in Germany. German pensioners are taxed in Spain on their pensions at 19 to 47 per cent, as under DTA Article 18 Spain has the primary right to tax. Tax on capital gains is 19 to 28 per cent and can be 19 to 26 per cent on property sales.
The Beckham Law, officially Régimen Especial Impatriados, allows newcomers who have not been EU-resident in the last five years to be taxed at a flat 24 per cent on Spanish employment income up to €600,000, and 47 per cent above that, while foreign income remains exempt for six years. The Digital Nomad Visa, by contrast, offers 15 per cent on income up to €600,000 for four years, while wealth tax applies in full.
Example: €200,000 annual income (pension €50k, rent €100k, capital €50k):
Madrid: ~€75,000 (38%)
Catalonia: ~€95,000 (47.5%)
With Beckham: €48,000 (24% on the employment portion)
As an EU member, Spain benefits from interest-free deferral of the German exit tax until the shares are sold, or instalment payments over up to seven years with security (ATAD reform 2022). If you return within 7 years, the tax is cancelled retroactively.
A key drawback is that Spanish wealth tax can apply in parallel with the German exit tax: with €2 million of hidden reserves, Germany defers the tax under § 6 AStG, while Spain levies €20,000 to €60,000 per year immediately on the full asset value. Optimisation may include, for example, transferring assets into a holding company before departure, using the Beckham Law for income, and choosing Madrid residency with a 100 per cent wealth tax exemption.
Madrid leads: 100% wealth tax rebate (unlimited since 2022), income tax 21–45.5%, inheritance tax zero for non-EU (e.g. German heirs). Population growth + business hub.
Canary Islands (Tenerife/Gran Canaria): 100% wealth exempt (Zona Especial Canaria), income tax 47%, inheritance allowance €47k for children plus 4% corporation tax rebate.
Valencia (new in 2026): €1m wealth allowance (from €500k), income tax up to 54%, Denia/Moraira attractive.
Balearics (Mallorca): €3m wealth allowance, income tax 49%, inheritance allowance €3m Group I - luxury, but pricey.
Best avoided: Andalusia (despite €700k allowance, high inheritance tax), Catalonia (costly wealth tax of 3.48%).
Region | Wealth tax (allowance 2026) | Top income tax rate | Inheritance allowance (children) | Cost of living | Expat score |
Madrid | Unlimited (100% rebate) | 45.5 % | Unlimited non-EU | High | ⭐⭐⭐⭐⭐ |
Canary Islands | €700k (100% exempt for tourism) | 47 % | €47k | Medium | ⭐⭐⭐⭐ |
Valencia | €1m (new) | 54 % | €100k | Medium | ⭐⭐⭐ |
Balearics | €3m | 49 % | €3m (Group I) | High | ⭐⭐⭐ |
Andalusia | €700k (rebate) | 49 % | €1m | Low | ⭐⭐ |
Catalonia | €500k | 50 % | €100k | High | ⭐ |
Spain’s Golden Visa: attractive, but tax-risky:
The Golden Visa requires an investment of €500,000 in property or €1 million in Spanish funds and provides an NIE number, a residence permit and travel within the EU straight away.
Warning: after 183 days of stay you become tax-resident and your worldwide assets then fall within wealth tax (e.g. €35,000 per year with €2m of assets outside Madrid). As a non-resident you pay only a flat 24 per cent on Spanish-source income.
Digital Nomad Visa (since 2023): remote work cheaper, wealth more costly:
This visa offers 15 per cent tax only on income up to €600,000 (four-year term) for remote work for foreign employers.
Important: worldwide assets and other income (rent, capital) are taxed in full and it can be combined with the Beckham Law.
Main pitfall: buying property for a Golden Visa increases the cadastral value and therefore wealth tax significantly, plus 7–12 per cent property transfer tax on purchase.
Fix the region (months 1–3): Madrid/Canary Islands, if buying property (Golden Visa).
Manage the exit tax (months 4–6): apply for deferral, move assets into a holding company (DE).
NIE + padrón (month 7): tax ID (2 weeks), municipal registration.
Apply for Beckham (within 6 months): 24% on employment income.
Protect wealth (before becoming resident): foundation/holding, minimise cadastral valuation.
Use DTA/double-tax relief: credit pensions/rents, plan inheritance (Madrid residency).
Annually: IRPF by June/July, wealth tax by 30 June, involve an adviser.
Lead time 12–18 months: save costs of €50k+ per year.
Spain promises Mediterranean idyll with sunshine, beaches and affordable property, but it confronts emigrants with substantial tax challenges: wealth tax of up to 3.5 per cent wipes out the financial advantage in regions such as Catalonia and Andalusia, while Madrid and the Canary Islands become a lifeline thanks to full exemptions. Germany’s exit tax can be deferred interest-free within the EU, but only the smart combination of regional planning, the Beckham Law and pre-structured wealth solutions creates a genuine net advantage over Germany.
Moving to Spain requires strategic planning with a 12–18 month lead time to minimise wealth-tax traps and exit-tax risks. Our specialists in international tax law analyse your individual asset situation, develop a region-optimised strategy including the Beckham Law and holding structures, and support the coordination with German and Spanish tax authorities.
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People moving to Spain can benefit from the Beckham Law, which offers newcomers a flat 24 per cent on Spanish employment income up to €600,000. Foreign income remains tax-free for six years. Regions such as Madrid and the Canary Islands fully exempt wealth tax via 100 per cent rebates. The Digital Nomad Visa reduces income tax to 15 per cent for remote work up to €600,000. Capital gains are taxed at 19 to 28 per cent, which is lower than Germany’s flat tax on investment income. Allowances such as €300,000 for a main residence further soften wealth tax.
To save tax, Dubai or the UAE are suitable, with 0 per cent income tax and no wealth tax. Portugal’s NHR regime offers 10 per cent on pensions and 20 per cent on employment income for 10 years. Singapore taxes on a territorial basis, only taxing remitted income at 0 to 22 per cent. Switzerland (Canton of Zug) attracts people with 11.85 per cent income tax and lump-sum taxation for the wealthy. Cyprus and Malta, as EU countries, have non-dom regimes with 0 per cent on foreign income and 12.5 per cent corporation tax. Madrid in Spain exempts wealth tax and is therefore an ideal EU option with exit-tax deferral.
For affluent people, taxes in Spain are often higher than in Germany, mainly due to the wealth tax of 0.2 to 3.5 per cent. Top income tax rates reach 47 to 54 per cent regionally versus Germany’s 45 per cent plus solidarity surcharge. Investment income is cheaper in Spain at 19 to 28 per cent compared with 26.375 per cent German withholding tax. Middle earners (up to €100,000) pay similarly; above €300,000, you generally pay more in Spain (except under Beckham). Madrid and the Canary Islands create conditions comparable to Germany, whereas Catalonia is costlier. Living costs are 20 to 30 per cent lower and partially offset this.
