Date Published: 10/11/2025

Eleven smart tax moves to make in Spain before New Year that could save you thousands

Act now or miss out on legitimate ways to reduce your 2026 Spanish tax bill

The 2026 tax season might feel like a distant worry, but savvy taxpayers know that the final weeks of 2025 are prime time for financial housekeeping. The clever folk at economic and tax website TaxDown have outlined the best strategies for trimming your tax bill, all perfectly legal and remarkably straightforward.

The catch is that you need to act before the clock strikes midnight on December 31 for these measures to count.

1. Take advantage of flexible compensation

If your employer offers flexible compensation, you're leaving money on the table by not using it. This system lets you redirect part of your salary towards expenses like transport, meals or childcare, all of which are exempt from income tax. The result is a lower taxable income and more cash in your pocket each month.

2. Turn generosity into tax savings

Feeling charitable? Your donations can work double duty. You can deduct 80% of the first €150 you give to an NGO, plus an additional 35% for anything beyond that. Stay loyal to the same organisation for more than two years and that second percentage jumps to 40%. Political party donations also qualify for tax relief.

3. Balance your investment wins and losses

Had a rough year on the stock market or with cryptocurrencies? Use those losses to offset your gains. You'll only pay tax on the difference. So if you made €10,000 on one investment but lost €2,000 on another, you're only taxed on €8,000. It's a silver lining to those disappointing portfolio moments.

4. New to Spain for work?

If you've relocated to Spain for employment, the Beckham Law might be your ticket to significant savings. This special tax regime allows you to pay a flat rate of 24% for six years instead of the progressive rates that can climb as high as 47%. Worth investigating if you're a recent arrival.

5. Boost your pension and cut your tax bill

Pension plan contributions directly reduce your taxable income. You can put away up to €1,500 per year on your own and if your employer chips in too, that ceiling rises to €10,000. It's money for your future that the tax office can't touch today.

6. Consider filing jointly

Married or living with your partner and have children together? Filing a joint tax return often delivers better results, particularly if one of you earns significantly less than the other. The potential savings can reach €3,400, which is nothing to sniff at.

7. Sell your home tax-free after 65

Once you hit 65, selling your main residence comes with a nice perk. Any capital gain is completely exempt from tax, as long as you've owned the property for at least three years. It's one of the few times the tax system actively rewards getting older.

8. Buy and sell without the tax headache

Selling your house and buying another? If you reinvest the entire proceeds into a new main residence, you won't pay income tax on the profit. It's designed to help people move up or down the property ladder without being penalised.

9. Landlords can write off more than they think

Renting out a property? Don't forget to deduct legitimate expenses like repairs, insurance, property tax (IBI) and community fees. These reduce your net rental profit, which means less tax to pay. Keep those receipts organised.

10. Working abroad has its advantages

Spent part of the year working outside Spain? You might be able to exclude up to €60,100 of your income from the taxable base, assuming the country has a tax agreement with Spain. It's a substantial benefit for anyone with an international career.

11. Green home improvements pay dividends

Renovations that boost your home's energy efficiency aren't just good for the planet and your utility bills. They also qualify for tax deductions between 20% and 60% of the cost, with a maximum of €15,000 spread over four years. Solar panels, better insulation and efficient heating systems all count.

And don’t worry: these aren't dodgy loopholes or aggressive tax avoidance schemes. Rather, they're perfectly legitimate provisions built into the Spanish tax system, but they only work if you act before the year ends.

Put it off and you'll be kicking yourself come tax season.

Image: Freepik

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