Taxes and Allowances in Spain: Costa Blanca North and Valencia

Taxes and allowances for Dutch people in Spain? How does that work? Ugh… The least enjoyable job on the list. You'd far rather be daydreaming about the prettiest sunny little bays and your Ibiza-style interior.

Contents

• Spanish income tax (IRPF) explained
• Families with children: the tax benefits in Spain
• Single parents: special arrangements
• Older people on AOW alone or a small pension
• ‘Familia numerosa’: large families in the Comunidad Valenciana
• Subsidies and discounts in the Comunidad Valenciana (Costa Blanca North)
• Spain vs the Netherlands: allowances, health insurance and wealth tax
• The comparison at a glance
• No large family, but plenty of ambition?
• Enjoy Spain to the full with the right grasp of taxes and allowances

You've had enough. That rat race and the sky-high costs in the Netherlands… you're done with it. After the holiday you know for sure. Over a café con leche, in the sunshine on the terrace of your holiday home, the two of you make the decision. You're going to Spain. The sun shines. Costs are lower and people here are more relaxed. Time to move.

But how do income tax, allowances and tax breaks actually work in your new home country? Don't worry: in this blog we take you through the most important taxes and allowances (do they even exist?) for Dutch people becoming resident in Spain, and in the Comunidad Valenciana in particular, in plain language. We look at how Spanish income tax (IRPF) works, and what benefits there are for families (from one child to several), single parents and older people on a small pension.

We also dive into the special familia numerosa status (large families) and the extras the Valencia region offers, such as discounts on transfer tax, public transport, childcare and energy. We don't want children ourselves. So until recently this was a long way from our world. But it matters enormously if you want to emigrate. Finally we compare the Spanish system with the Dutch one, from allowances to the deemed-return levy on savings. That way there are no surprises when you move. And you can be sure you're heading into Spanish life nice and relaxed, because you've done the right sums.

Don't let the tax side put you off: with the right information you keep Hacienda on your side and you can enjoy Spanish life to the full!

Spanish income tax (IRPF) explained

As a tax resident in Spain you pay income tax, IRPF (Impuesto sobre la Renta de Personas Físicas), on your worldwide income. So how do taxes and allowances work for Dutch people in Spain? IRPF is progressive, much like in the Netherlands, but the bands and rates are slightly different. For 2023 (filed in 2024), for example, the following national bands applied:

• 0 – €12.450: 19% tax rate
• €12.450 – €20.199: 24%
• €20.200 – €35.199: 30%
• €35.200 – €59.999: 37%
• €60.000 – €299.999: 45%
• More than €300.000: 47%

These percentages are marginal per band. If you earn €22.000 gross, for instance, you pay 19% on the first €12.450, 24% on the next €7.750 and 30% on the remaining €1.800. Every autonomous region has a say over part of the rates, but the Comunidad Valenciana applies practically the same bands as the national ones above.

Tax year and deadlines: The Spanish tax year is the same as the calendar year. The annual filing period (la campaña de la renta) usually runs from the beginning of April to the end of June of the following year. You then file for the year before. A small tip: let your gestor do it. Then you know for certain it's done properly.

If you live in Spain for more than 183 days a year, or your main economic interests are in Spain, you count as a tax resident. You then have to file a tax return here. There are exceptions, though. If your only income is employment or pension income from a single Spanish payer and it comes to less than about €22.000 a year (or under €15.000 with more than one employer), you are exempt from filing. That means many Dutch pensionados living on AOW alone sometimes fall outside the filing obligation, and we'll come back to that shortly.

Deductions and tax credits:

Instead of the Dutch tax credits (reductions on the tax you owe), Spain works with tax-free minimums and deductions. Everyone is entitled to a personal tax-free amount (mínimo personal) of € 5.550. Older people get an extra exemption on top of that: if you're over 65, another €1.150 is added (a total of €6.700), and over 75 even €1.400 more (a total of €8.100). In concrete terms that means part of your income stays untaxed. On top of that there are mínimos por descendientes. These are extra tax-free amounts for children. We'll go into those in more depth later. Certain expenses are (to a limited extent) deductible, such as Spanish pension contributions and some charitable gifts. The Valencia region also has deductions of its own, for example for rent paid or certain medical costs. The system of allowances such as zorgtoeslag or huurtoeslag simply doesn't exist in Spain. Instead the government supports people through tax breaks, price caps or free services (think free education).

Tip: In Spain income tax is partly withheld by employers during the year (retenciones on your salary or pension). The annual return is the moment to settle up whether you've paid too much or too little. It pays to consult a local gestor or tax adviser for your first return. That way you know for sure you're using every benefit you're entitled to, certainly if your family situation is unusual.

Families with children: the tax benefits in Spain

We were rather surprised when clients told us that a large family in Spain brings tax benefits with it. Isn't our planet quite full enough already? Moving to Spain with children can work out well for tax. The Spanish tax system supports families through higher tax-free amounts per child and through extra credits for (large) families. But don't forget: the allowances we know in the Netherlands don't exist here. Or at least they work differently and the amounts are different.

Tax-free threshold per child:

For every child (descendiente) who is financially dependent on you (usually up to 18, or up to 25 if still studying) you may exempt an extra slice of your income from tax. Nationally that is roughly €2.400 for the first child, €2.700 for the second, €4.000 for the third and €4.500 for the fourth and any after that. In the Comunidad Valenciana these amounts are in fact a little higher. Here you get €2.640 for the first child, €2.970 for the second, €4.400 for the third and €4.950 for the fourth and any after that. There's a bonus too: for children under the age of 3 you may count another €3.080 of tax-free income on top of the above (in Valencia). This is meant to offset the high costs of the first few years and in practice means young families pay less tax. So don't forget that there is no kindgebonden budget or child allowance here. What you do get is a tax break.

To illustrate: say you live in Valencia and have two children aged 8 and 5. Your personal income is, let's say, €30.000. Thanks to the mínimo por descendientes you may leave € 2.640 + € 2.970 = €5.610 of your income untaxed. Your effectively taxed income therefore drops, which is worth a few hundred euros in tax. The more children, the bigger the total exemption. Large families logically benefit most from this, not least because the deduction rises with each child.

Extra tax credit for (working) parents in Spain:

Alongside the exemptions above there are also family credits. An important one is the credit for working mothers with young children. If you have children under 3 and you work (employed or self-employed), in Spain you can claim what is known as the deducción por maternidad. This is a refund of up to €1.200 a year per child under 3 (payable as €100 a month). Since 2023 the scheme has even been extended to mothers receiving unemployment benefit or a pension. And if you also pay for childcare or a crèche, the credit can rise by another €1.000 (depending on the costs you incur). This “childcare credit” effectively works as a Spanish version of the Dutch kinderopvangtoeslag. In a modest form, mind you, and through the tax return afterwards. The nice thing is that you can also have this €100 a month paid out monthly in advance (by applying through model 140). That way you feel the benefit in your budget straight away instead of waiting for a tax refund. Do note: this tax bonus is per working mother (or father), not necessarily per child, and it cannot be combined with any ingreso mínimo vital child benefit. So it's wise to get advice on exactly how to apply for it once you live and work here.

Child-related payments in Spain on the Costa Blanca North:

Unlike the Netherlands, Spain has no universal child benefit landing in your account every quarter for each child. For a long time there was a small payment (prestación por hijo a cargo of €24 a month). But it was income-dependent and for most families it has been scrapped or absorbed into another minimum-income programme. Support for families in Spain therefore comes mainly in the form of the tax reductions described above and through free or subsidised services. Education is free from the age of 3, for instance. And childcare has recently become free too. For Dutch families that takes some getting used to: you don't receive money for your children directly, but you do pay noticeably less tax and less for services.

Source: Caixa bank.

Single parents: special arrangements

If you're a single parent moving to Spain with your children, there are extra tax benefits to support you. First of all, as a single parent you can opt for a joint tax return as a one-parent family (unidad familiar monoparental). In Spain married couples may file jointly and then receive a fixed reduction (around €3.400) on their taxable income. A similar benefit exists for one-parent families. You file as the only adult together with your child or children, and you receive an extra fixed amount of €2.150 exempted from your income. This credit only applies if you aren't living with a new partner or with the other parent. It's a bit like the Dutch single-parent tax credit of years gone by, although here it is handled through the tax return. €2.150 less taxable income easily saves you somewhere around €400–€800 in tax, depending on your income.

In 2018 Spain also introduced an extra tax credit especially for single parents with two or more children. It is sometimes called the ‘cheque familiar’ for one-parent families. It is the same credit of €1.200 a year (that is, €100 a month) that large families also receive. Do you have two children and are you unmarried or widowed, with no right to maintenance from another parent? Then you qualify. You can claim this €1.200 back through the annual return or have it paid monthly, just as with the arrangement for large families. The measure recognises that a single parent with two kids has it financially almost as tough as a traditional large family.

Good to know: To benefit from the above you will often have to produce a family book or an extract from the population register, and for the €1.200 scheme show that you receive no maintenance from an ex-partner. The definition of ‘familia monoparental’ (one-parent family) requires the parent to be solely financially responsible for the children. Get advice on this from the Spanish tax office or a tax adviser; in practice gestores often help with applying in good time for the monthly payment via form 143. Again: bring in your gestor. This is tricky material.

Besides tax support there are other forms of help. Some regions, Valencia among them, officially recognise the status of familia monoparental (one-parent family), much like familia numerosa. With it you can claim certain discounts (on public transport or school materials, for example) comparable to those for large families. Since 2023, for instance, the Comunidad Valenciana has extended the reduced transfer tax (when buying a house) to one-parent families. Ask the Servicio de Familias Monoparentales in the Valencia region how to apply for a certificate if you think you qualify.

Source: Agencia Tributaria

Older people on AOW alone or a small pension

Many Dutch people who come to live in Spain are retired or taking early retirement. The classic winter migrants. Happily, the Spanish system also offers a few benefits for older people on a modest income. But at the same time, make no mistake. What we consider a low income is quickly a good income here. So you may well end up paying more tax here than you would in the Netherlands. Above we already mentioned the raised tax-free allowance for the over-65s (at least €6.700 of income exempt) and the over-75s (€8.100 exempt). As a result, older people often pay little or no tax on their first band of income.

Concretely: the Dutch AOW state pension for a single person is around €1.300 gross a month (€15.600 a year). Suppose that is your only income and you are 67. With the €6.700 exemption (65+), €8.900 remains taxable. On that part you pay 19% = about €1.691 a year. But Spain also has a special reduction on employment and pension income (reducción por rendimientos del trabajo) for low incomes. That can push the effective tax burden on incomes around €14.000 down further still. In practice it comes down to this: if all you have is AOW, you will probably pay less than €100 a month in Spanish income tax. Buuut… in the Netherlands you would pay no income tax at all on that same income thanks to the general tax credit. Spain reaches a similar result through the combination of exemptions and a low first band.

Besides tax benefits there are also social benefits for older residents. Pensionados in Spain often get a discount on public transport (many municipalities issue a cheap seniors' pass, and nationally the over-65s travel by train at a discount). But on the Costa Blanca North I personally think public transport is rubbish. If you live up the mountain you have to get in the car to go anywhere first. That really is different from the Netherlands. On the medical side: if you are resident in Spain as a pensioner (with a so-called S1 form from the Netherlands), you are entitled to public healthcare. But the quality doesn't really compare with the Netherlands. You would really want to be in the private system. You want 'care', not just treatment. As a pensioner you usually pick up medicines at around 90% off the price (long-term medication often costs only a few euros). That isn't a tax benefit, but it makes a considerable difference to your wallet compared with the situation in the Netherlands, where you have an excess to pay. There are local subsidies too: some municipalities give a small annual bonificación on the property tax (IBI) for pensioners on low incomes, or an energy cheque once a year in winter. It's worth asking at your local council (ayuntamiento) which discounts for older people exist. You also get a discount at the sights, by the way. Like the castle in Denia ;).

Note: Do you receive a Dutch company pension alongside your AOW? Under the tax treaty between the Netherlands and Spain, private pensions are taxed in Spain (and you are often given an exemption in NL). Government pensions (ABP for former civil servants, for example) usually remain taxable in the Netherlands. Getting this right is essential to avoid being taxed twice. Once you are a tax resident in Spain you have to declare your worldwide income here, but to prevent double taxation you can then reclaim or offset the tax paid in NL. This may go a bit deep for a blog, but it is worth keeping in the back of your mind if your pension comes from several sources. Here too: make sure you have a good adviser in both Spain and the Netherlands.

‘Familia numerosa’: large families in the Comunidad Valenciana

Do you have three or more children? Then in Spain you will come across the concept of “familia numerosa”, officially recognised large families. A family with two children one of whom has a disability or a one-parent family with two children with no right to maintenance can also be classed as numerosa under certain conditions. It is definitely worth applying for familia numerosa status, because it opens the door to all sorts of benefits. A family like the Jellies (you know, from Een Huis Vol) would have plenty of advantages here.

Applying for recognition: You apply for the Familia Numerosa title with the regional authorities. In the Comunidad Valenciana you do this through the Generalitat Valenciana (Inclusión / Bienestar Social department). You then receive an official certificate or card identifying your family as numerosa (general or special category). Category General is generally for families with 3–4 children, category Especial for 5 or more children (or 4 children below certain income limits, or with one child with a disability)

Tax benefits: We have already mentioned some of them:

• €1.200 tax credit: Large families in category General get €1.200 a year off their income tax (the cheque familiar). That works out at €100 a month and it can be paid monthly. For Especial (very large families) the amount is €2.400 a year. On top of that, every extra child above the threshold (so the 4th child in a cat. General family, or the 6th in Especial) raises the credit by €600 a year. That means, for example, that a family with 4 children in cat. General gets €1.800. And 5 children €2.400, and so on. These are substantial amounts that come straight off your final assessment. You can also choose to receive this “family credit” monthly in advance (just as with the single-parent credit).
• Regional tax rebate: Separately from the national €1.200, the Valencia region provides a small extra deduction for large families on the regional tax. Recently that was €300 for cat. General and €600 for Especial (below certain income limits). This scheme fluctuates; check the deducciones autonómicas Comunidad Valenciana each year to see whether you qualify. €300 may not be enormous, but every little helps – it is literally extra money back on your return.
• Reduced transfer tax (ITP): This is one of the biggest benefits for large families wanting to buy a house in Valencia. The standard rate of the Impuesto de Transmisiones Patrimoniales (transfer tax on the purchase of a resale home) is 10% in this region. But recognised familias numerosas get a sharply reduced rate of just 3% on the purchase of a property that becomes their main home. Since 2024 this reduction has also been extended to recognised one-parent families. There are conditions attached: the property may cost no more than €180.000 (in our region that is already tricky and the children will have to share a room) to qualify for the 3% rate; above that amount the normal rate or an intermediate rate applies. So it sounds better than it will probably turn out to be. Even so, it can save tens of thousands of euros when buying a house. (Example: on a house of €180.000 a familia numerosa saves €12.600 in tax. You pay €5.400 instead of €18.000!). Tip: make sure your familia numerosa title is in order before the deed of sale is signed, so the notary can apply the reduced rate.
• Lower municipal charges: Many municipalities in the Comunidad Valenciana give large families a discount on local taxes and levies. You can often get a discount on the waste charge or on IBI (property tax). Ask at your ayuntamiento; sometimes it is 50% off IBI above a certain amount, or a fixed discount if your property meets certain conditions (e.g. value below X, or if it is your first home).
• Other financial benefits: Large families usually get a discount on passport and identity card fees, on driving licence renewals and other administrative charges. In Valencia, for instance, there is a reduction on certain examination fees and permits. It may not be the first thing you think of, but they are nice little windfalls the Spanish government offers as a token of appreciation for larger families.

Discounts on services: Besides the hard euro benefits there are all kinds of practical ones:

• Public transport: As a familia numerosa you get a standard national 20% discount on train and bus tickets (category General) or 50% off (Especial). This applies to RENFE train tickets and to many bus companies, for example. In the city of Valencia and on Metro Valencia you also get 20% or 50% off season tickets and travel cards. That adds up if your family goes on outings or the children travel to school by public transport.
• Culture and leisure: Families with numerosa status often get a discount at museums, zoos, theme parks and cultural institutions. The Ciudad de las Artes y Ciencias in Valencia, for example, gives 15% off for every family member on presentation of the familia numerosa card. Private companies often have family passes or extra discounts for large families too (sometimes there are even offers at supermarkets or clothing shops). The Spanish Federation of Large Families keeps an overview of such benefits (members of the Familias Numerosas association get extra deals on top).
• Education: When grants are awarded or places at popular schools are allocated, large families often get priority or extra points. Universities sometimes charge lower enrolment fees for children from large families. There are also extra grants for school books and materials for families numerosas.
• Energy and telecoms: Large families automatically qualify for the Bono Social on electricity, a government-subsidised discount tariff. At the moment that can be worth up to 50% off your electricity bill (a temporarily increased percentage in 2025). All you have to do is show your familia numerosa proof to your energy company and switch to the regulated tariff. Many phone and internet providers also offer special family bundles (mostly commercial, but worth a mention).

In short, familia numerosa status is a key that opens many doors. As a Dutch family with several children in Spain it is sensible to arrange this recognition with your council or region as soon as you can. It saves you money year after year and lifts your net disposable income considerably, which is welcome now that you are probably running a bigger house or have more mouths to feed. It is also a form of recognition: Spain celebrates large families as an important part of society, and you can tell from these benefits.

Source: Mujer y Madre Hoy.

Subsidies and discounts in the Comunidad Valenciana (Costa Blanca North)

Besides the tax benefits, the Comunidad Valenciana also has subsidies and discounts that lower your cost of living. We have mentioned a few already, but here are the most important ones – relevant to new residents, even if you don't fall into the large-family category.

• Free childcare (0–3 years): In the Netherlands parents know the kinderopvangtoeslag well (and sadly the troubles around it too). The Valencia region has chosen a different solution: from September 2024 childcare is free for all children from 0 to 3 at registered nurseries. This was a recent measure by the regional government to widen parents' freedom of choice and remove the cost barrier. Previously the bono infantil gave you an amount per month per child (depending on income and age, between €90 and €180 a month) to pay the crèche with. The aim now is for all places to be free of charge. It is being introduced in phases (first free for 2–3 year olds, then progressively younger groups). Ask your chosen escuela infantil or guardería for the latest position. In cities such as Valencia there is also a cheque escolar for children aged 0–6, which amounts to an extra municipal subsidy if your income is below a certain threshold. The key message: childcare swallows far less of your net income in Spain than in the Netherlands, certainly now that the doors are opening free of charge in the CV.
• Education and student grants: State primary and secondary education in Spain is free. You often do have to buy school books, but in the Comunidad Valenciana the Xarxa de Llibres programme is up and running: a book lending-and-returning scheme through which you get a large part of the cost back after the first year and can reuse books in later years. Families on lower incomes are also entitled to a discount on school lunches (comedor) or to free meals. For universities there are government grants (becas) that look a lot like Dutch studiefinanciering in gift form – topped up by, for example, a special beca from the Generalitat Valenciana for students from large families or one-parent families.
• Public transport and mobility: We have already touched on the transport discounts for large families and older people. On top of that the Valencia region often offers residents season tickets at reduced rates. There is a Tarjeta Mobilis Jove for under-30s, for instance, which gets them discounted travel on the tram and metro. In some municipalities children under a certain age travel free on public transport. Across Spain there is also the recently introduced discount on train tickets for frequent travellers and even free season tickets for commuters on Cercanías (local trains) – measures brought in during 2023 and 2024 to encourage public transport. Check with your local transport office which passes are worth having as a newcomer. And do you own a car? Don't forget that as a resident you have to put your car on Spanish plates (with a one-off import tax), but that after that you will often pay less road tax than in NL. Car insurance is generally cheaper here too, which indirectly brings your costs down.
• Housing and moving: When buying a house we talked about the reduced ITP for certain groups. On top of that the Valencia region (and Spain generally) has relatively low annual property tax compared with Dutch municipal charges. If you rent rather than buy, and your income is low, you can apply for rent support through the regional government. These are ayudas al alquiler opened up periodically, through which you can get a percentage of your rent back. It is not a system like the Dutch huurtoeslag (available monthly to everyone below an income threshold). They are more like pots of money you have to apply for, with only a limited number of people qualifying. Ask at the town hall or at the PROP Generalitat desks about current rent-support programmes (Plan de Vivienda). First-time buyers under 35 and incomes < €24k are sometimes given preference. Transfer tax on a first home has also been reduced for young people (just 6% ITP in the CV)
• Energy and utilities: The Bono Social eléctrico already mentioned applies not only to large families but also to people on a low income or pensioners below a certain threshold. As a new resident, apply for the Bono Social with your electricity supplier (all the big companies have forms for it). If you meet the criteria (income limit or family situation), you currently get 42,5% off your electricity tariff (temporarily higher because of government support in 2025; normally 25%). For the “severely vulnerable” it can even be around 65%. A family with two children counts as vulnerable, for instance, if the combined income is below roughly €1.600 net a month – which halves the electricity bill, not bad in times of high energy prices. There is also the Bono Social Térmico, a discount on your gas bill or other heating costs, which is granted automatically if you have the electric Bono Social. In practice you receive a one-off payment each year (usually a few tens of euros to a little over €100) into your bank account towards gas and heating.
• Subsidies for going greener: If you buy a home here, keep an eye on the subsidies for solar panels, heat pumps and insulation too. There are schemes both nationally and regionally (e.g. NextGen EU funds) through which you can get back up to 40-50% of such investments via subsidies or tax deductions. Making your home greener is therefore extra attractive. And if you drive electric, there are purchase subsidies (Plan MOVES) giving up to €7.000 off a new electric car, or €1.300 off an electric scooter, for example. These schemes do change from time to time, so get information from the council or the dealer.

As you can see, the Spanish system is not as direct as the Dutch one with its monthly allowances, but you still arrive at comparable support by all sorts of routes. It sometimes takes a bit of digging and a few forms, but the result is that – as long as you are well informed – you never have to give up quality of life because of the move. In fact, many Dutch people find their net disposable income is higher in Spain thanks to the often lower costs (house prices, groceries) and the extras we have listed above.

Spain vs the Netherlands: allowances, health insurance and wealth tax

So how does the Spanish system compare with the Dutch one? Let's line up the biggest differences and similarities:

• Income tax rates:
• Both countries have progressive rates, but the details differ. In the Netherlands (2025) a working person pays 37% income tax on income up to around €73.000, and 49,5% on anything above that. I always find it hard to take that half your income goes to the tax office. In Spain the rate starts climbing from lower incomes onwards (incomes here are much lower): from €12.450 it rises to 24%, and above €60.000 you are already at 45-47%. So the top rate in NL only kicks in at a much higher income than in Spain (73k vs 60k). Against that, Spain has a low starting rate of 19% up to €12.450, while in NL even the first euros of salary for someone below state pension age are taxed at 37% straight away (contributions included). The Netherlands compensates for that with generous tax credits, though. On balance the tax burdens are comparable for middle incomes, but very high incomes are taxed slightly more heavily in Spain. As a Dutch national, do also look into the Beckham law. For pensioners it is a different story: above state pension age NL has a lower rate (19% up to €40.000) because the AOW contribution falls away, which Spain does not have. Even so, the higher exemptions in Spain (65+/75+) mean older people are relatively lightly taxed in both countries.
• Tax credits vs exemptions:
• The Netherlands lowers tax through credits against the assessment (algemene heffingskorting, arbeidskorting and so on), which means low incomes often effectively pay no tax. Spain achieves that through the mínimo personal y familiar, in other words by exempting parts of your income. The effect is comparable: an average income with two children will have a large part tax-free or taxed at a low rate in either country. The Dutch system of allowances, money paid straight to you for health premiums, rent or children, does not exist in Spain. Instead Spain makes sure certain costs are low or zero to begin with. Health insurance is the clearest example: in the Netherlands you pay hefty premiums every month but can receive zorgtoeslag, while in Spain public healthcare for residents is free (funded through taxation). So you do not need zorgtoeslag, because you have no premiums to pay as you do in NL (at most a small contribution towards medicines or certain specialist procedures). Huurtoeslag is another example: it does not exist in any general form, but rents in Spain (certainly outside the big cities) are often lower and local subsidies are possible. Kinderbijslag / kindgebonden budget: the Netherlands gives a fixed amount per child (regardless of income) and extra budget for low incomes. Spain gives no universal child benefit, but through tax credits and free childcare the support still reaches families, if more indirectly. It does mean that in Spain people in work benefit more from the child credits than those not working (who benefit from the free services but cannot cash in a tax credit if they have little or no income).
• Healthcare and social contributions:
• In the Netherlands your payslip shows national insurance contributions alongside wage tax, whereas in Spain IRPF effectively covers both tax and a kind of contribution towards public services. As an employee in Spain you separately pay social security contributions (Seguridad Social) through your employer (roughly 6-7% of your salary, plus 30% paid by the employer), which insure you for pension, sick pay and unemployment. In NL these contributions are partly integrated into payroll tax. As a pensionado with AOW from NL you pay no separate health premium in Spain; the Netherlands withholds a small percentage of your AOW as a treaty contribution for healthcare, so that Spain gives you access to care. That is something to be aware of: you no longer receive monthly zorgtoeslag as in NL, but you also save €130+ a month in health premiums. Unless you pay extra for private care, that is. Which really is advisable. On balance, as a pensioner you are usually better off in Spain on that point.
• Deemed-return levy vs wealth tax:
• A sore point for many Dutch people with savings or investments is the box 3 levy. For years the Netherlands used a deemed return (taxing, say, 4% of your assets at 30%), which came down to 1,2% wealth tax a year regardless of the actual return. By now (2024/2025) this is in transition towards a system closer to the real split between savings and investments, with an exemption of €57.000 per person and a rate of 36% on the deemed return. In practice that works out at roughly 0,5% – 1% of your savings in annual tax, depending on how much is savings versus investments (shares, property). Spain approaches wealth differently: first of all there is no tax on a deemed return. Interest, dividends or capital gains you actually receive are taxed in Spain (at 19% – 28% in the investment income bracket). But if you have savings in the bank earning next to no interest, you pay no annual tax on them in Spain. In the Netherlands you do (until the system has been fully reformed). On the other hand, Spain does have a genuine wealth tax, Impuesto sobre el Patrimonio, which hits the wealthy on assets above a high threshold. In the Comunidad Valenciana wealth up to €600.000 per person is exempt (the national base amount is €700.000, but the region may adjust it). What is more, your main home is exempt up to €300.000 of its value. If as a tax resident here you have, say, €1.000.000 in net assets (excluding your house up to 300k), then around €100.000 is taxable after exemptions. The rates are progressive, from about 0,25% rising to 3% for really large fortunes. In our €1 million example the wealth tax would come to a few hundred euros. So plenty of people with ordinary assets simply fall under the exemptions and pay €0 wealth tax in Spain, whereas in the Netherlands they might have been paying an amount every year through box 3. For very wealthy families (assets > €1 to 2 million) Spain is not necessarily a tax haven, but for most people it works out neutral or favourable. Note: this patrimonio tax is a separate thing alongside income tax; you have to file a separate return for it if you go over the threshold (usually at the same time as the IRPF return, or just an informative return if you stay below the threshold but still have to file because of, for example, foreign assets above €2 million). One more important point. If you become resident here and sell off the properties you own in the Netherlands, you will have to pay tax on that there. So think this through very carefully.
• Other differences:
• Like the Netherlands, Spain levies inheritance and gift tax, but since 2024 Valencia has had a 99% exemption for inheritances between (grand)parents and (grand)children and between spouses. That means you pay practically no inheritance tax within the immediate family, a considerable difference from the Netherlands, where it can still be substantial depending on the situation. A similar near-exemption applies in Valencia to gifts made during your lifetime within the family. The gain on the sale of your own home is also exempt from tax in Spain under conditions (if it was your main home and you reinvest the proceeds in a new main home, or if you are over 65 and it was your main residence, you do not have to pay plusvalía estatal on the gain). In the Netherlands the gain on your own home is untaxed, except that it can then count in box 3 again. Note that this is different if your children still live in the Netherlands and are taxable there. Get that properly checked. These are details, but they can matter if most of your wealth is in bricks and mortar. Finally, VAT (IVA) in Spain is 21% (a reduced rate of 10% on food and 4% super-reduced on books among other things), comparable to the Netherlands (21% standard, 9% reduced).

The comparison at a glance

To sum up, a short table setting the broad strokes of the Netherlands and Spain side by side:

Note: The table above gives a general picture. Individual situations may differ, so always get personal advice from the right experts. But it should be clear: although Spain and the Netherlands shape their support differently, the end result in many cases is that as a Dutch person in Spain you are no worse off and sometimes even better off in terms of net income and services. Do also check how inheriting from Spain works in the Netherlands. We are well aware that this is a tangle of information. And that there are a great many exceptions. So really do get proper advice.

No large family, but plenty of ambition?

Are you moving to Spain for an employed job or as a director of a Spanish company? Then you may be able to use the so-called ‘Beckham Law’, a special tax regime for foreign professionals settling in Spain. Our accountant has plenty of experience with it. We would be happy to put you in touch with him.

What does it involve?

• You pay 24% tax on your Spanish income up to €600.000.
• You pay no tax on foreign assets (such as savings, property or investments in the Netherlands).
• The regime applies for 6 years and has to be applied for within 6 months of registering with the Seguridad Social.

Who is it interesting for? For people on a good salary with little need for family-related tax benefits. If you opt for this regime, you cannot use the credits for large families or single parents.

Enjoy Spain to the full with the right grasp of taxes and allowances

Moving to Spain, and to the Comunidad Valenciana in particular, means enjoying sun, sea, a relaxed rhythm of life and… a new tax system to get to know. Taxes and allowances for Dutch people in Spain really are different from what we are used to. At first it may feel overwhelming: different rules, no more blue letters from the Dutch Belastingdienst but Spanish forms and terms like IRPF, modelo 100, Hacienda. Gibberish, perhaps. But not impossible. So there are safety nets and tax benefits. But it really matters to be advised by good advisers. Don't go by the blogs and articles you find online. We are not experts either and we are happy to refer you on to our accountant or gestor. We will gladly find you an expert. So that with the right knowledge and preparation you can make a well-considered decision.

With this knowledge in your pocket you can go on integrating with an easy mind. Go ahead and taste the good Spanish life, literally and figuratively. From the paella (arroz) and the local markets to the annual declaración de la renta in May. In the end you will find the Spanish taxman is quite liveable with. But make no mistake. Spain really is a country of little rules. Still, Hacienda can be your friend once you know which benefits apply to you. That leaves you more to spend on terraces, days out and making lovely memories under the Mediterranean sun. And don't forget that incomes here are a good deal lower. Disfruta y adelante, enjoy it and go for it, because your new chapter in Spain may be different on the bookkeeping side, but above all it is richly filled with quality of life and wonderful food.

With these points under your belt you can carry on your Spanish adventure with confidence, knowing that you are getting the most out of it financially. You will survive the taxes in Spain. ¡Mucha suerte! 👒☀️