Income tax has to do with any money owed to you be means of work, pension and investment, or all where applied. Income tax in Spain will also include any and all assets under your name, such as properties, including your home. All these elements have a taxable percentage, if they exceed the given threshold. The given threshold will depend in the nature of the asset or income in question and each individual will be assessed according to their situation.
If you reside in Spain on a permanent basis and choose to spend over 183 days, then you are expected to become a resident in Spain. If you are a resident in Spain, then you will also be expected to pay your taxes here in Spain, and declare your assets, as well as being able to enjoy all the other benefits that being a resident can to offer.
Usually people tend to only be a resident in one country, while this does not change your nationality, or your rights, it simply states where you live for prolonged periods of time. This said it is normal for people to pay their taxes in the country where they live. In the case of UK citizens if you reside in Spain as residents you are to pay income tax and complete your tax declaration, including all incomes and assets whether in Spain or aboard. This can get a little confusing as you may not expect to pay taxes in Spain because you have paid them in the UK. However, because you live in Spain and must do your tax returns, what should happen is that the UK should stop retaining tax there so you can pay it in Spain if needed to. While there is currently a double taxation agreement, that is meant to help stop people paying tax twice, if both country’s´ consider you a tax resident, then you will need to organise your finances and residency for just one country.
It is always a good idea to consult a professional lawyer and accountant as to the best way to go about residency and tax matters between countries and Spain. ABAD solicitors are completely prepared to assesses your situation and advice as to the best way forward as well as being fully qualified to present and calculate your taxes on your behalf.