Taxes in Mallorca for Expats – What You Need to Know

Moving to Mallorca means dealing with the Spanish tax system. For expats, there are several key considerations – from double taxation agreements to wealth tax and special reporting obligations.

When do you become tax resident in Spain?

The 183-day rule is decisive: anyone spending more than 183 days per calendar year in Spain becomes a full tax resident. This means your worldwide income is taxed in Spain – not just income earned in Spain.

Key tax types

Income Tax (IRPF)

Spanish income tax is progressive, ranging from 19% to 47%. The Balearic Islands add a regional surcharge. Allowances and deductions exist but are structured differently from other European countries.

Wealth Tax (Impuesto sobre el Patrimonio)

The Balearic Islands levy a wealth tax. The allowance is 700,000 euros (plus 300,000 euros for your primary residence). Assets above this are taxed at 0.28% to 3.45%.

Property Tax (IBI)

The Impuesto sobre Bienes Inmuebles is a local property tax charged by the municipality, typically 0.4% to 1.1% of the cadastral value.

Double taxation agreements

Most European countries have agreements with Spain regulating which country has taxation rights for different income types. Generally, if you live in Spain, you pay taxes there. Pensions are usually taxed in Spain (exception: government pensions from some countries).

Important: You must actively deregister from tax authorities in your home country.

Modelo 720 – Reporting overseas assets

Every tax resident in Spain with overseas assets exceeding 50,000 euros (bank accounts, securities or property) must file Modelo 720. Deadline: 31 March of the following year. Penalties for non-reporting were reduced following an EU ruling in 2022.

Filing your tax return

The annual tax return (Declaración de la Renta) must be filed between April and June. The Spanish tax authority (Agencia Tributaria) offers an online service but it is often insufficient for expats with complex situations.

Tip: A local tax advisor is the best investment for most expats.

Back to our moving to Mallorca guide.