Taxation of investment funds, all the details

Find out everything you need to know about how investment funds are taxed.
Investment funds are one of the most popular products among Spanish investors. Professional management, a wide range and favorable taxation are some of its main attractions. In this article, we will explain everything you need to know about the taxation of investment funds.
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Tax-free transfer

One of the great advantages of investing in a fund is that, when changes are made to the investment portfolio, it is not necessary to pay tax for selling shares and buying new shares. This happens because investment funds can take advantage of what is called a transfer, which allows payment to the Tax Agency to be avoided if the profits obtained are used to acquire new shares in an investment fund. The only time when capital gains (or losses) are taxed is when they are paid out. That is, you can perform whatever transfers between funds you want without any kind of impact in terms of tax. This option, which other investment vehicles do not have, is very useful for adapting your portfolio to new circumstances and rethinking new strategies.

Taxation of investment funds

Investment funds are subject to personal income tax, under income from savings, as capital gains or losses. At the time of the redemption, there will be a 19% withholding; the final tax rate will be subject to the following scale, depending on the amount of the gain:

  • Up to €6,000: 19%.
  • From €6,000 to €50,000: 21%.
  • Over €50,000: 23%.

These rates apply to the whole of Spain, with the exception of the Basque Country and Navarre, where they are taxed as follows:

Basque Country:

  • Up to €2,500: 20%.
  • From €2,500 to €10,000: 21%.
  • From €10,000 to €15,000: 22%.
  • From €15,000 to €30,000: 23%.
  • More than €30,000: 25%.

Navarre:

  • Up to €6,000: 20%.
  • From €6,000 to €24,000: 24%.
  • Over €24,000: 27%.

How to declare an interest in an investment fund to the Tax Agency


When it comes to paying taxes on the gains (or losses) generated by an investment fund, a number of considerations need to be taken into account. The first is that there are deductible expenses, such as subscription, management, custody and redemption fees.

Another consideration that should be taken into account is that all capital movements included as capital gains in personal income tax are included, which means losses arising from an investment fund can be offset by gains from other investment products, or even offset in the four years following the year in which the loss occurs. For example, if in 2018 you had losses of €1,000 and the following year you obtain gains of €4,000, in 2019 you only need to pay tax for total gains of €3,000.

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In addition, since the reform of 2015, the options for offsetting have been extended. So a capital loss can not only be offset by a capital gain, but it can also be offset by investment income, such as the interest received from a deposit. There is a limit, which is 25% of the positive balance of this investment income.

In short, it is important to know how investment funds are taxed in terms of personal income tax to see the advantages available when choosing this investment product compared to any others. At BBVA, we know that it is not always easy to be aware of all the relevant tax considerations for investment funds. This is why we offer our customers BBVA Invest, a personalized advice service on the most suitable investment options based on your preferences and objectives. Go to bbva.es or visit any of our branches for more information about this service.

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