5 Tax Advantages for Expats in Mallorca: Unveiling the Island’s Fiscal Opportunities

Mallorca is often seen as a Mediterranean paradise for its exceptional quality of life. However, for those planning to move to the island, understanding the fiscal landscape can be a key factor. This article highlights the main tax advantages while clarifying the differences between “expat” and “resident” and correcting common misconceptions about local taxation.

1. Tax Residency: A specific framework but not always advantageous

Becoming a tax resident in Spain means spending more than 183 days a year in the country and being subject to the Spanish tax system. While Spain’s progressive tax brackets (19% to 47%) may seem appealing, the Balearic Islands impose additional regional taxes, making them less competitive for individuals and retirees compared to other regions like Barcelona.

Important details:

• Social contributions in Spain are lower than in France, benefiting active professionals.

• Regional tax surcharges may affect households with high incomes or substantial wealth.

Dray and Partners Assistance: Our team assesses your personal situation to determine whether changing your tax residency is the right option.

2. The "Impatriados" Regime: An opportunity for specific profiles

Inspired by the "Beckham Law," this tax regime aims to attract international talent to Spain. It offers a reduced flat tax rate (24%) on Spanish-sourced income, along with exemptions for certain foreign earnings.

Note:

• This regime applies mainly to recently relocated international professionals and excludes retirees.

• It is a temporary solution, lasting up to six years.

3. Real Estate Investments: A promising fiscal environment under specific conditions

Investing in Mallorca’s real estate market is both a lifestyle upgrade and a financial strategy, thanks to favorable tax conditions.

Key points:

• Capital gains tax: Competitive rates compared to other European countries.

• Rental income: Deductions for maintenance and renovation expenses reduce taxable income.

• Wealth tax: Although Spain applies wealth taxes in some regions, the Balearic Islands offer specific conditions for expats.

4. Inheritance and Gift Taxes: Optimized wealth transfer

The Balearic Islands offer significant allowances and reduced rates for inheritances and gifts, especially for direct heirs.

Specific advantages:

• Reduced rates based on the degree of kinship.

• Significant allowances for direct-line inheritance.

Dray and Partners Assistance: We collaborate with local experts to help you efficiently plan your wealth transfer.

5. Reduced VAT Rates for Specific Services

Certain goods and services in Mallorca benefit from reduced VAT rates, providing financial advantages for everyday life.

Examples:

• 10% on restaurant, transportation, and hospitality services.

• 4% on essential goods.

Why Choose Mallorca and Dray and Partners for Your Relocation?

Relocating to Mallorca as an expat offers much more than a pleasant lifestyle: it’s also an opportunity to enjoy fiscal advantages. However, navigating Spain’s tax systems can be complex without professional guidance.

Services offered by Dray and Partners:

• Personalized tax optimization: Tailored analysis to maximize your fiscal benefits.

• Comprehensive support: From property searches to administrative setup.

• Local expert network: Access to notaries, lawyers, and accountants specializing in expat taxation.

Tax Advantages for Expats in Mallorca: A Reason to Relocate Mallorca combines exceptional quality of life with attractive tax conditions for expats. Whether you’re an investor, entrepreneur, or retiree, understanding these advantages can greatly ease your transition.

Ready to relocate? Contact Dray and Partners today for tailored advice and seamless support to start your new life in Mallorca.