Understanding the Spanish tax system is essential for residents and businesses operating in Spain. Here's a comprehensive overview of the main tax types and rates.

Types of Tax in Spain

Direct Taxes:

• Personal Income Tax (IRPF)
• Real Estate Tax (IBI)
• Business and Professional Activities Tax (IAE)

Indirect Taxes:

• Value Added Tax (VAT/IVA)
• Wealth Tax
• Stamp Duty (ITP)

Tax Classification by Rate Structure

Proportional Taxes:

• Fixed percentage regardless of income
• Example: VAT with set rates

Progressive Taxes:

• Higher tax rates for higher income levels
• Example: Personal Income Tax

Regressive Taxes:

• Lower tax rates for higher income levels
• Example: VAT on basic goods

Spanish VAT (IVA) Rates

General Rate (21%):

• Applies to most goods and services
• Standard rate for general purchases

Reduced Rate (10%):

• Food and beverages (except sugary and alcoholic drinks)
• Hotel and catering services
• Public transportation
• Street cleaning services

Ultra-reduced Rate (4%):

• Basic foodstuffs
• Books and educational materials
• Medicine
• Face masks
• Affordable housing

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