Can expats cancel Spanish tax debt (Hacienda)?

Can expats use the Second Chance Law for tax debt?

The discharge of unpaid debts (exoneración del pasivo insatisfecho, EPI) is open to any individual acting in good faith, whether or not they run a business (art. 486 TRLC). The law does not ask for Spanish nationality or legal residence. What matters is that your centre of main interests is in Spain (art. 3.1 of Regulation (EU) 2015/848 and art. 45 TRLC). It is presumed to be where you habitually live or, if you are self-employed, your principal place of business. In practice you will need identification and a tax number (NIE).

The application is signed by a lawyer and a procurador, the court representative that art. 6.2 TRLC requires. It goes to the Commercial Section of the Court of Instance (Sección de lo Mercantil del Tribunal de Instancia) of your province, which hears insolvency proceedings (concurso de acreedores) whatever the debtor's civil or business status (art. 87.7 LOPJ). If you have already left Spain, read our guide on leaving Spain with debts first: where you now live may decide which court can hear your case.

Good faith has a legal meaning here: you must not fall within any of the exclusions in art. 487.1 TRLC, which form a closed list, as the Supreme Court confirmed in STS 264/2026, of 18 February (ECLI:ES:TS:2026:440). The judge checks them of their own motion, even if no creditor objects (arts. 498.2 and 502.1 TRLC).

How the €10,000 public debt limit works

Two Supreme Court judgments of February 2026 change the numbers considerably (STS 260/2026, ECLI:ES:TS:2026:436, and STS 264/2026, ECLI:ES:TS:2026:440):

• Public claims ranked as subordinated are discharged in full and do not use up the cap. Surcharges and interest of any kind fall into that class (art. 281.1.3.º TRLC).
• The scale applies to each public creditor separately and to every public-law claim, whichever administration collects it. What you owe the AEAT is counted apart from what you owe the TGSS or your town hall.

For the principal owed to each public creditor: up to €5,000, all of it is discharged. At €10,000, €7,500 is discharged and €2,500 remains. From €15,000 upwards, the discharge is capped at €10,000. Within that limit, the discharged amount is applied in reverse order of ranking and, inside each class, by the age of the debt (art. 489.1.5.º TRLC).

Relief for public debt is only available in your first discharge (art. 489.3 TRLC).

Illustrative example (hypothetical figures)

A self-employed expat in Gran Canaria owes the following:

Applying the law as the Supreme Court reads it:

• AEAT: the €2,400 in surcharges and interest is discharged in full. Of the €12,000, the first €5,000 is wiped out, plus half of the remaining €7,000: €8,500 discharged and €3,500 still owed.
• TGSS: the €1,400 is discharged in full. Of the €7,000, €6,000 is discharged and €1,000 is still owed.
• Agencia Tributaria Canaria: the €4,000 is below €5,000, so it would be discharged in full. The Canary Islands section below explains why this is conditional.

Out of €26,800 in public debt, €4,500 would remain payable, and that part stays enforceable after the discharge (art. 490 TRLC). With €40,000 of principal owed to the AEAT, by contrast, €30,000 survives. When most of what you owe is tax principal, the Second Chance Law reduces the debt but may not solve the problem on its own.

Can autónomos cancel Social Security debt?

Partly, on the same terms as tax debt. Unpaid autónomo contributions are owed to the Social Security General Treasury (TGSS), a separate public creditor with its own scale (art. 489.1.5.º TRLC). Late-payment surcharges are subordinated claims (art. 281.1.3.º TRLC), so they are discharged in full.

Canary Islands: IGIC, cabildos and town halls

IGIC, the Canary Islands' equivalent of VAT, is managed by the Agencia Tributaria Canaria, not by the AEAT. The wording of art. 489.1.5.º only provides a partial discharge for AEAT and Social Security debts. The Supreme Court, however, has held that it covers every public-law claim, whether collected by the AEAT or by a regional, provincial or local administration, with a separate scale for each creditor (STS 260/2026, ECLI:ES:TS:2026:436).

The Agencia Tributaria Canaria is a regional tax administration, and cabildos (island councils) and town halls are local ones, so each should have its own €10,000 scale. No judgment the firm has reviewed mentions the Agencia Tributaria Canaria, so this is the firm's reading of the Supreme Court's doctrine.

Are tax fines and penalties cancelled?

Criminal fines and penalties for very serious administrative infringements are not dischargeable (art. 489.1.6.º TRLC). A final penalty for a very serious tax, Social Security or labour infringement in the ten years before your application also bars the discharge altogether, unless you paid it in full before applying (art. 487.1.2.º TRLC). The Supreme Court has upheld this ground of exclusion because a very serious tax infringement generally involves fraudulent means: STS 259/2026, of 18 February (ECLI:ES:TS:2026:441).

A penalty for a serious infringement bars the discharge only if it exceeds 50% of the amount of AEAT debt that can be discharged under art. 489.1.5.º, again unless paid in full (art. 487.1.2.º, second paragraph, TRLC). Fines for minor infringements, and for serious ones under that threshold, rank as subordinated claims (art. 281.1.4.º TRLC). Under the Supreme Court's doctrine, subordinated public claims are discharged in full.

A final prison sentence in the last ten years for a crime against the Treasury or Social Security also bars the discharge, even if suspended, where the maximum penalty for the offence is three years or more. The exception is where criminal liability has been extinguished and the financial liabilities arising from the crime paid (art. 487.1.1.º TRLC).

Debt from a company you ran: derivación de responsabilidad

As a rule, Hacienda can only claim a company's tax debt from you after an administrative decision, adopted after hearing you, that declares you liable and sets the amount: the acuerdo de derivación de responsabilidad (art. 41.5 LGT).

Read literally, art. 487.1.2.º TRLC bars the discharge for anyone with a final decision of this kind in the previous ten years, unless the debt has been paid in full. The Supreme Court has narrowed that rule. It treats derivation as a way of securing payment of the company's debt, so the decision only bars the discharge when it stems from fraudulent conduct by the director comparable to a very serious infringement (STS 264/2026, ECLI:ES:TS:2026:440). The court ruled the same way that day on derivations under art. 43.1.a) LGT (STS 263/2026, ECLI:ES:TS:2026:438) and by the TGSS (STS 261/2026, ECLI:ES:TS:2026:437).

The same judgment points out that a derived debt is not a penalty, so it cannot be ranked as subordinated. It therefore falls within Hacienda's €10,000 scale and is not discharged in full like surcharges and interest. In the case behind STS 264/2026, the debtor is identified in the first-instance judgment by an NIE, the number assigned to foreign nationals, and the Supreme Court granted him a partial discharge.

Can Hacienda freeze your bank account during the process?

Applying for the concurso does not, on its own, stop Hacienda from attaching your account (an embargo). The court's declaration of concurso changes that:

• No new enforcement, tax enforcement included, can start against the assets of the estate (art. 142 TRLC).
• Enforcement already under way is suspended from the date of the declaration (art. 143.1 TRLC). The judge cannot, however, lift administrative attachments already in place (art. 143.2 TRLC).
• If Hacienda's attachment order predates the declaration, Hacienda may carry on once the judge declares that the attached asset is not needed for your professional or business activity (art. 144.1.2.º TRLC).

If Hacienda has already attached your account, give your lawyer the date of the attachment order. That date decides whether art. 144 can apply.

In the payment-plan route, the effects of the concurso end with the provisional discharge and are replaced by those of the plan (art. 498 ter.2 TRLC).

Hacienda instalment agreement (aplazamiento) or a discharge?

An instalment agreement with Hacienda (aplazamiento or fraccionamiento) is designed for a temporary inability to pay on time (art. 65.1 LGT). Late-payment interest keeps accruing (art. 65.5 LGT) and a guarantee may be required (art. 65.3 LGT). Tax you were required to withhold cannot be deferred (art. 65.2.b LGT). VAT, or IGIC in the Canary Islands, that you charged to customers can only be deferred if you prove they never actually paid it (art. 65.2.f LGT).

For lasting insolvency, an instalment agreement only spreads out a debt you cannot pay, while a discharge reduces it. There are two routes. With liquidation of your assets, or directly when there is nothing worth liquidating (concurso sin masa), the judge grants the discharge in the decision that closes the concurso or, if a creditor objects, in a separate ruling (arts. 501 and 502 TRLC). With a payment plan, there is no liquidation and the plan lasts three years as a rule, or five years if your main home is not sold or the payments depend mainly on your income (art. 497 TRLC).

The plan must show how you will meet the debts that cannot be discharged (art. 496.2 TRLC), but the Supreme Court has ruled that a non-dischargeable claim cannot be included in the plan's payment schedule (STS 260/2026, ECLI:ES:TS:2026:436). The balance still owed to Hacienda is paid outside the plan, which is where an aplazamiento under art. 65 LGT may help.

Paperwork the court will ask for

The court will want your income tax (IRPF) returns for the last three years, both those you filed and those you should have filed (arts. 495.1 and 501.3 TRLC). In the payment-plan route, art. 495.1 TRLC also requires the returns of the other members of your family unit (unidad familiar). If you were tax resident in Spain and never filed, sort that out before applying. Our tax guide for expats explains when you count as resident.

The application must also list all your creditors with their addresses (art. 7 TRLC), foreign ones included. Tax and Social Security claims from other countries can be lodged in a Spanish concurso, subject to reciprocity, and are admitted as ordinary claims (art. 739.2 TRLC). No rule or judgment the firm has found says whether the €10,000 scale applies to them. If you also owe money in the United Kingdom, see our guide on UK debts and the Second Chance Law after Brexit.

The procedure is conducted in Spanish. If you have to give evidence and do not speak it, an interpreter can be appointed (art. 143 LEC and art. 231.5 LOPJ). Documents in another language must come with a translation (art. 144 LEC).

What it costs and how to start

The firm's fee for a Second Chance Law case is €999 when there is no particular complexity. With many creditors, property or a large public debt, it can rise to €4,500. Both figures include IGIC and the procurador, and the fee is agreed in writing before work starts. Details are on the fees page, and the Second Chance Law page explains the whole procedure.

The firm is based in Las Palmas de Gran Canaria and handles cases anywhere in Spain by video call. To have your Hacienda and TGSS debt reviewed, request an appointment and have a recent statement of what you owe each administration to hand.