The assault came amid simmering tensions over Catalonia's independence drive, with many supporters of Spanish unity alleging they are the target of a "hate campaign" by secessionists.
Some separatists, meanwhile, say they have been assaulted by their opponents.
A 55-year-old man, Victor Lainez, died on Tuesday four days after he was hit on the head with a metal bar outside a bar in the northeastern city of Zaragoza, the capital of the region of Aragon, which neighbours Catalonia.
Lainez, who was wearing suspenders bearing the red and yellow colours of the Spanish flag, got into an argument with the alleged attacker, Rodrigo Lanza, and three other people, a police spokesman said.
Witnesses told local media that Lanza and the three others began yelling at Lainez and calling him a "facha", or fascist, because of his suspenders.
When Lainez left the bar, Lanza, 33, allegedly ran after him and hit him from behind with a metal bar before running away, leaving him unconscious, according to local media reports.
The Falange, a far-right party that was dominant under dictator Francisco Franco, said later that Lainez, who was from Catalonia, was a supporter.
His death comes just days ahead of a knife-edge election in Catalonia on December 21st which will chart the course of Spain's secession crisis, and it has sparked angry denunciations on the campaign trail from across the political spectrum.
Gabriel Rufian, a member of Spain's parliament for the far-left, pro-independence ERC party, said the murder was "intolerable", adding that people should be free to think and wear whatever they wanted.
Interior Minister Juan Ignacio Zoido of Spain's conservative Popular Party, said "I want to live in a country where nobody is assaulted or insulted for wearing a flag."
A judge on Thursday ordered that Lanza be remanded in custody without bail pending a homicide investigation.
Lanza served five years in jail for throwing a rock at a Barcelona municipal police officer who was trying to evict him and other squatters from a building in 2006.
The policeman suffered spinal injuries that left him a quadriplegic.