Ever wondered who has the highest tax burden in Spain? We find out if you ultimately pay more as a salaried employee, a self-employed worker, an investor or a landlord.
Tax is a complicated issue, but in Spain it seems even more so, particularly when it comes to working out how much you will pay in the end.
Whether you’re a salaried employee, a self-employed worker, an investor or a landlord, you will be taxed slightly differently and different amounts.
So who actually ends up paying more tax?
The most important factor to be aware of is that not all income is taxed the same way. Salaries and income from economic activities are included in the general income tax base, while other income streams of income are taxed under savings income at different rates.
Another factor to keep in mind are social security contributions. While these are not technically taxes, they are part of the financial burden, particularly for the self-employed and employees, and can greatly affect how much you will actually pay.
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It’s difficult to definitively state who pays more tax as it depends on a multitude of different circumstances from where you live in Spain and if you have children to whether you rent or own your own home, the operational costs associated with your business and the deductions you may be eligible for, as well as many other factors.
It is possible to get a general idea, however, taking the example of a single person with no children who earns a certain amount per year.
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The salaried worker
Employees in Spain pay IRPF or personal income tax on their salaries. This is a progressive tax, meaning the more you earn, the more you pay.
Each month, your company withholds a portion of your salary and gives it to the tax authorities on your behalf, as an advance payment of your income tax.
In addition to this tax, you also have to pay social security contributions, which includes fees for common contingencies, unemployment, vocational training and more. A silver lining is that as an employee you only pay part of your share, while your employer pays the rest, The total sum of all these items is around 6.48 percent of your total contribution base.
Salaried workers also have access to reductions for employment income – a minimum of €2,000 per year.
Taking an example of someone who earns €25,000 per year, with deductions for employment income (€2,000), IRPF in two brackets (€2,365.50 at 19 percent and €2,215.20 at 24 percent) and a personal allowance of (€5,550), they would end up paying a total of €3,526.20 in taxes.
This amount, plus social security (€1,320) would amount to a total burden of €4,846.20.
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The self-employed
Self-employed workers or autónomos also pay IRPF at the same rate as employed workers.
They initially pay a 15 percent withholding tax on the net profit, unless they have just started, in which case they only pay 7 percent.
There are two major differences, however. These are that self-employed works can have tax-deductible expenses and the amount of social security that they pay.
The amount of tax they ultimately pay can depend on how many expenses they can deduct and this depends on the type of business they run and what the Agencia Tributaria feels is a justifiable expense.
Autónomos also pay all of their social security fee, so it’s a lot higher amount than an employed worker. It can range from €200 for those who earn up to €670 per month to €590 per month for those earning over €6,000.
Taking the same example of a self-employed worker earning €25,000, after deducting VAT and other expenses including social security (€4,680), IRPF in two brackets (€2,365.50 at 19 percent and €2,215.20 at 24 percent) and personal allowance, they would pay a total of €2,858.42.
As you can see, this is a much lower amount that the salaried employee whose initial tax bill was €3,526.20.
When you add social security payments of €4,680 on top of this though, it takes the total amount they have to pay out to €7,538.42, which is way higher than the amount the salaried worker has to pay.
Ultimately, self-employed workers pay less income tax than salaried workers because they pay so much more in social security contributions. As this is a deductible expense, it reduces their taxable income, but they still end up paying more when it comes to real amounts.
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The investor
Financial income, such as dividends, interest, or capital gains, is taxed differently to income in Spain. In 2026, the combined state and regional tax rates range from 19 to 30 percent, depending on the amount you earn.
According to financial experts El blog Salmón, means that as an investor you can actually end up paying less tax than those with a similar income who are working or who are self-employed
For example, if an investor earned the same amount – €25,000 in capital gains, they would pay approximately €5,310. There are, however, several deductions that can be applied that will bring the burden down such as real estate commissions, notary fees, transfer tax etc.
As an investor you also won’t be paying social security or get contributory pension rights, so it may not always work out as more beneficial.
The landlord (or person who gets passive income)
If you are a resident landlord, you will generally be charged 19 percent on rental income after deductions on the upkeep of the property.
The amount you would pay on rental income of €25,000 would largely depend on what your expenses were.
The Tax Agency states that the reduction for renting can be from 50 to 90 percent, depending on the case.
It only applies to properties intended for primary housing though, not for tourist use.
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In general, those who earn income in a conventional manner have a higher tax burden in Spain than those who earn capital gains or invest.
This may not always be the case though as it all depends on deductible expenses, social security payments, where you live and your personal circumstances.
If you truly want to know how much you will end up paying, it’s worth hiring a tax professional who can work out what you’d pay for your individual situation.
Our reporters at The Local are not tax experts, so if you’re unsure of anything regarding your payments you should contact a professional gestor or tax lawyer.
