Andrew Hallam

Retiring To Spain? Spanish Capital Gains Taxes Might Be Lower Than You Think

It’s tough not to love Spain. It has mountains and beaches, great food and wine. You can find year-round, warm weather. In the winter, you can ski in the country’s mountains. According to, Spain’s cost of living is even lower than Portugal’s. And the World Health Organization says it has a great medical system.

But I can hear your protests now. “What about the taxes?” 

Last year, I wrote a gushing article about retiring in Spain. Several people, however, saw my head in Benidorm’s sand. Spanish taxes, they said, are Sierra Nevada high. Most of the noise came from people living and working in the UAE. They don’t pay income tax or capital gains tax.

One Dubai-based woman wrote, “I’m Spanish and would love to retire in Spain.  But I would have to pay 23 percent capital gains tax on my investments.”

I’ll call her Maria. She had built a diversified portfolio of ETFs. It was worth about Є2 million. Maria believed that if she moved to Spain, and sold an inflation-adjusted 4 percent per year (Є80,000), she would pay 23 percent tax on that withdrawal.  That would total Є18,400 in capital gains taxes.

But Maria was wrong.

She built her entire portfolio while working in Dubai. That means, she wouldn’t have to pay capital gains taxes on the growth she received while living in the UAE. Her dividend taxes were deducted “at source” by her brokerage before they entered the cash portion of her account.

Taxes are individual, so it’s good to consult a qualified tax accountant. But for a rough primer on Maria’s situation, here’s how capital gains taxes work.

Assume Maria moved back to Spain. Her portfolio of ETFs is worth Є2.08 million. In her first day back in Spain, assume she withdraws Є80,000. Fortunately, she wouldn’t pay tax on that money because her portfolio’s growth occurred while she lived in Dubai.

The following year, however, could be different. 

Assume Maria’s portfolio gained 6 percent over her first 12 months soaking up sun on the Costa Brava. That would put her portfolio’s value at Є2.06 million. Some of that growth would have come from dividends, with the rest from capital gains. But for the sake of this example, let’s assume the 6 percent growth came just from capital gains.

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Assume she withdrew another Є80,000 after spending a tax year in Spain.

Here’s how the country’s capital gains taxes work: 

19% tax on the first Є6000 profit

21% tax on profits between Є6000 and Є50,000

23% tax on profits above Є50,000

Maria initially believed she would pay 23 percent tax on her entire Є80,000. But she would only pay capital gains taxes on the portion of growth that occurred while she was a resident of Spain.

For example, if her portfolio gained 6 percent in her first 12 months as a Spanish resident, roughly Є4,800 of that Є80,000 (6%) would constitute a capital gain earned while she lived in Spain.

Here are Spain’s capital gains tax rates again:

19% on the first Є6000 profit

21% on profits between Є6,000 and Є50,000

23% on profits above Є50,000

Because her Є4,800 capital gain is below Є6000, Maria would pay 19 percent tax on that Є4,800.

That means Maria would pay Є912 in tax on that Є80,000 withdrawal.

The longer she’s in Spain, and the more her portfolio grows, the higher the percentage of tax she would pay. That’s because an increased percentage of her withdrawls would constitute profits earned while she lived in Spain.

However, her tax liabilities would be a fraction of what Maria thought they would be.


But what about the wealth tax?

The Spanish government introduced a “solidarity wealth tax” in 2023. People with at least Є3 million in net worth have to pay 1.7 percent to 3.5 percent of their assets each year.

If Maria’s net worth were below Є3 million, she wouldn’t have to pay it.

That’s one more reason for her hit the ski slopes in the winter, enjoy the best beaches in the summer, and stop stockpiling money.

(Note: While the above serves as a basic tax primer, tax liabilities are individual. The wealth tax also has several exeptions that can lower the taxable liability. It’s always best to consult with a qualified tax accountant).


Andrew Hallam is a Digital Nomad. He’s the bestselling author Balance: How to Invest and Spend for Happiness, Health and Wealth. He also wrote Millionaire Teacher and Millionaire Expat: How To Build Wealth Living Overseas

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