Madrid, Catalonia, Valencia or Andalusia? The same income, four very different tax bills

17 hours ago

8 min read

STAGE TWO OF THE EXPAT JOURNEY: CHOOSING WHERE

By Julio César Sánchez, Co-Founder, Business Expats

a couple of expats enjoying sunshine in Spain — Madrid, Catalonia, Valencia or Andalusia — what the same salary actually costs, region by region.

Almost every client I work with goes through the same journey. Thinking about it, choosing where, deciding, moving, settling in, and then growing and passing it on. Most of the expensive mistakes I see happen early, at the second step, when people are choosing where in Spain to live.

Whether you are coming from New York, London, Munich, Paris or Amsterdam, you are probably comparing Spanish cities on weather, schools and flights. Very few people compare them on tax, and that is where the gap is widest. Spain has 17 autonomous communities and each one sets its own share of income tax, its own wealth tax and its own inheritance tax. The same salary can cost you more than €23,000 a year more in one region than in another.

So I ran the numbers for the four regions our clients ask me about most: Madrid, Catalonia (Barcelona), the Valencian Community (Valencia and Alicante) and Andalusia (Málaga, Marbella, Seville).

Comparing Madrid, Barcelona, Valencia or Málaga for your move? The tax difference is often the single biggest line item in the decision.

COMPARE MY REGIONS

Before the regions, look back at home

There is one thing I always check first with a new client: what their home country will still tax once they leave. Here Americans and Europeans live very different realities.

If you are American, the IRS comes with you

The US taxes its citizens on their worldwide income wherever they live. Moving to Spain adds a second tax system, it does not replace the first one. You keep filing a 1040 and an FBAR every year, and the tax you pay in Spain is credited against your US bill.

That changes how you should read the tables below. Under the general Spanish regime, Spanish tax on a high salary is usually higher than the US bill, so the IRS ends up collecting little or nothing extra. Under the Beckham regime, with its flat 24%, high earners can still owe the IRS the difference. And if you did not cut ties properly, your old state may keep claiming you, California and New York especially.

If you are European, your home country may send you off with a bill

Europe taxes by residence, so once you become a Spanish resident your home country mostly lets you go. Mostly. Some countries tax you on the way out:

Country	What follows you to Spain	Who is affected
United Kingdom	Inheritance tax on your worldwide assets for 3 to 10 years after you leave (rules in force since April 2025)	Long-term residents, meaning UK resident in 10 of the last 20 tax years
Germany	Exit tax on unrealised gains in company shares (Wegzugsteuer), payable in instalments if you move within the EU	Holdings of 1% or more in any company
France	Exit tax on unrealised gains, deferred automatically if you move within the EU	Residents for 6 of the last 10 years with shares worth €800,000 or more, or a stake of 50% or more
Netherlands	A preservative assessment on gains, collected only if you sell or on another trigger event*	Holdings of 5% or more

*Netherlands: for anyone emigrating since 15 September 2015, the preservative assessment no longer lapses after 10 years. It stays open indefinitely and is collected only on a trigger event, such as selling the shares, certain dividend distributions or moving outside the EU or EEA.

For founders this is often the biggest number of the whole move, and it is settled before you even choose a region.

Income tax, up to €23,500 a year apart

Spanish income tax has two halves. One is a state scale that is the same everywhere, the other is a regional scale that each community sets. Imagine an executive with €350,000 of taxable salary, roughly $400,000, under the general regime in 2026:

Region	Top marginal rate	Tax on €350,000	Effective rate
Madrid	45%	about €142,900	40.8%
Andalusia	47%	about €149,400	42.7%
Catalonia	50%	about €156,300	44.6%
Valencian Community	53.85%	about €166,300	47.5%
Beckham regime, any region	24% up to €600,000	€84,000	24%

Rounded figures using the 2026 state and regional scales, calculated on taxable base before personal allowances and regional deductions.

Over five years, the difference between Madrid and Valencia adds up to more than €117,000.

Now the twist if you qualify for Beckham. The regime replaces both scales with a flat 24% on employment income up to €600,000, paid entirely to the state. The same €350,000 costs about €84,000 in Madrid, Barcelona, Valencia or Málaga alike. For a Beckham executive the region barely matters for income tax. It matters a lot for what comes next.

Investment income is the same everywhere

Dividends, interest and capital gains are taxed on a separate savings scale that no region can change, from 19% on the first €6,000 up to 30% above €300,000. A €1 million gain on a stock sale costs the same in Barcelona as in Madrid. If most of your income comes from investments, do not choose your region for its income tax. Choose it for the next two taxes.

Wealth and inheritance, where the regions really split

As a Spanish resident under the general regime you pay wealth tax on your worldwide net assets. Your brokerage account counts, your home back in the US or Europe counts, and depending on how they are set up even retirement accounts can count. Spain also taxes heirs who live here, generally under the rules of the region where the person who passed away lived.

Region	Wealth tax	Total on €5M net wealth	Inheritance to children	Tax on €500k to an adult child
Madrid	100% relief	about €22,100*	99% relief	about €900
Andalusia	100% relief	about €22,100*	99% relief	about €900
Valencian Community	0.25% to 3.5%, first €2M exempt from 2026	about €39,200	99% relief	about €900
Catalonia	0.21% to 3.48%, first €500k exempt	about €59,800	Progressive, mainly for spouses	about €28,000

*The state Solidarity Tax on Large Fortunes applies above €3M of net wealth at 1.7% to 3.5%, and any regional wealth tax paid is credited against it, so it works as a floor. Your main home is exempt up to €300,000. Income figures use 2026 scales on taxable base before personal allowances, rounded.

Below €3 million of net wealth, Madrid and Andalusia charge nothing. Valencia raised its exemption to €2 million this year, so it charges little below that level, but above it the bill climbs quickly. Catalonia starts at €500,000 and is also the outlier on inheritance. Under Beckham, wealth tax only reaches assets located in Spain, so a client with €5 million worldwide and an €800,000 home in Madrid pays almost nothing. Inheritance tax, on the other hand, does not change with Beckham. And for Americans, there is no estate tax treaty between the US and Spain, so the two systems have to be coordinated on purpose.

So which region fits you?

There is no single winner, and honestly that is the point. It depends on how you earn and what you own.

A high earner without Beckham. Madrid has the clearest edge, followed by Andalusia. Valencia has the highest top rate of the four, although it is lowering its scale gradually from 2026.
A Beckham executive. Income tax is the same everywhere, so lifestyle can decide. Just remember the six years end, and from year seven the regional scale applies in full.
A founder after an exit or an investor with real wealth. Madrid and Andalusia are the strongest below €3 million. Above that, the solidarity tax adds a floor of its own, but Valencia and Catalonia stay clearly more expensive.
A family thinking about succession. Madrid, Andalusia and Valencia treat children almost tax free. Catalonia does not.

One last thing I always tell clients. Residency is not a box you tick. If you live in Barcelona but register in Madrid to save tax, the Tax Agency can move you back to the region where you actually spend your time, with surcharges on top. Where you live has to be real.

What comes after choosing where

Choosing your region is stage two. Next comes deciding your regime, then the move itself, settling in, and later growing and protecting what you build. I have put together two free guides that walk through the whole journey with numbers:

For Americans: The US to Spain Tax Map 2026.

The treaty, both foreign tax credits, Beckham against the general regime, social security and the twelve red flags I see most.

Download the guide

For Europeans: Moving from Europe to Spain, your 2026 checklist.

Exit taxes, treaties and social security for the UK, Germany, France and the Netherlands.

Download the guide

And if you would rather talk it through, book a Strategic Tax Fit session with me. We will model your situation in the regions you are considering, under Spanish rules and those of your home country, before you sign a lease.

Choosing where is stage two of the journey. Let's model your situation, region by region, before you sign a lease.

BOOK A CONSULTATION

Julio César Sánchez is Co-Founder of Business Expats, where he leads the international tax advisory work for founders, executives and investors moving to Spain or running their business from here. julio.sanchez@businessexpats.com

General information only, not personalised tax, legal or investment advice. Figures are illustrative, rounded and based on 2026 rules, which regions can change every year. Sources: Spanish Personal Income Tax Law 35/2006 (consolidated text, 30 September 2026). 2026 regional income tax scales for Madrid, Catalonia, the Valencian Community (Law 5/2026) and Andalusia. Law 38/2022 on the Solidarity Tax on Large Fortunes. Regional wealth and inheritance tax laws. UK Finance Act 2025. German §6 AStG. French art. 167 bis CGI.

Frequently Asked Questions

Which Spanish region has the lowest income tax for high earners?

Under the general regime, Madrid currently has the lowest combined top marginal rate (45%) among the four regions compared here, followed by Andalusia (47%), Catalonia (50%), and the Valencian Community (53.85%, though it's being lowered gradually from 2026).

Does the region I live in matter if I qualify for the Beckham regime?

Not for income tax — the Beckham regime applies a flat 24% on employment income up to €600,000, paid entirely to the state, so the figure is identical whether you're in Madrid, Barcelona, Valencia or Málaga. It matters again once the six-year regime ends and the regional scale applies in full, and it matters for wealth and inheritance tax throughout, which the regime doesn't flatten the same way.

Which region is best for wealth tax?

Madrid and Andalusia currently apply a 100% relief on regional wealth tax, so residents there owe nothing below the state-level Solidarity Tax on Large Fortunes threshold of €3 million in net wealth. The Valencian Community exempts the first €2 million as of 2026, and Catalonia's exemption is far lower, at €500,000.

Which region is best for leaving an inheritance to my children?

Madrid, Andalusia and the Valencian Community all apply a roughly 99% relief on inheritance tax for children, making the effective tax on a typical family inheritance close to zero. Catalonia does not apply the same blanket relief to children — its scale is progressive and reserved mainly for spouses, so the same inheritance can cost materially more there.

Can I just register my tax residency in a lower-tax region while actually living elsewhere?

No. Spanish tax residency has to reflect where you actually live and spend your time. If the Tax Agency determines your registered region doesn't match your real residence, it can reassign you to the correct region and apply surcharges on top.

Does moving to Spain mean my home country stops taxing me?

It depends on your nationality and situation. US citizens continue to be taxed by the IRS on worldwide income regardless of where they live, so Spain adds a second system rather than replacing the first. Several European countries also apply exit taxes or trailing rules — the UK on worldwide assets for inheritance tax purposes, Germany and France on unrealized gains in company shares above certain thresholds, and the Netherlands on substantial shareholdings — that can follow you to Spain even after you become a Spanish resident.