What counts as savings income
| Income | Treatment |
|---|---|
| Bank interest | Savings income, taxed when received |
| Dividends | Savings income; foreign withholding credited within treaty limits |
| Gains on shares and funds | Savings income, on sale or switch (see funds) |
| Gains on property | Savings income for residents |
| Gains on crypto | Savings income when sold or exchanged |
The savings scale
The scale rises in bands from 19% for the first euros of savings income to higher rates for larger amounts; the top rate was increased for very large amounts from 2025. We apply the bands in force for each year.
Investment funds
Switching between investment funds registered in Spain or in the EU that meet certain requirements can defer the gain. Foreign funds that do not qualify, and ETFs, do not benefit. Before moving to Spain, it is worth reviewing your portfolio.
Offsetting losses
Capital losses offset capital gains of the same year; any excess offsets up to 25% of interest and dividends. Remaining losses carry forward four years. Losses on a sale followed by repurchase of the same securities within two months are deferred.
Property and crypto
Residents selling property pay on the savings scale, with the main home exemptions. Crypto is taxed the same way. See selling your main home, crypto tax, income tax rates and our income tax return service.
An illustrative example
Based on situations we commonly see; not a specific client. A Danish investor moved to Mallorca with a portfolio of ETFs and a loss on a sold position. We matched the loss against gains realised the same year and carried the excess forward, reducing the savings tax over the next two returns.
How Castell.tax can help
We prepare the annual income tax return of foreign residents in the Balearic Islands, including foreign pensions, investments, rental income and the foreign tax credit, and we compare joint and individual filing every year. We explain the result in English or German before filing. See our income tax return service or contact us to review your situation before the next campaign.
This page is published by Castell.tax, the tax practice of Castell.law in Palma de Mallorca. It is general information; tax rules and rates change, so check your case with us before filing.
Not sure what you owe? Ask before the deadline
Send us your situation or the letter you received. A tax adviser will tell you what applies, what it could cost and what to file.
Frequently asked questions
At what rate are dividends taxed in Spain?
On the savings scale, starting at 19%.
Can losses be carried forward?
Yes, for four years.
Are fund switches taxed?
Not if both funds qualify for the deferral regime; ETFs do not.
Is foreign dividend tax credited?
Yes, within the limits of the applicable treaty.