Foreign workers relocated to Spanish territory can continue to be taxed as non-residents for the 5 years following their change of residence
Employment income received in Spain by non-resident individuals is taxed under the IRNR (Non-Resident Income Tax) at the established rate of 24% in general and 19% for residents in the EU or in a State of the European Economic Area in which there is an effective exchange of information.
Let us remember that the consideration of being a resident in a given territory is given a priori by residence in the same for more than 183 days in the calendar year.
Thus, a worker transferred to Spain who is forced to remain in Spanish territory for more than 183 days in the year will be considered a Spanish resident and will be subject to income tax, which has a graduated scale.
What does the special regime consist of?
However, individuals who acquire tax residence in Spain as a result of moving to Spanish territory may choose to be taxed under the Non-Resident Income Tax, even though they maintain their status as taxpayers for Personal Income Tax purposes, during the tax period in which the change of residence takes place and during the following five tax periods, provided that the following conditions are met:
a) That they have not been residents in Spain during the ten tax periods prior to the one in which their transfer to Spanish territory occurs.
b) That the movement to Spanish territory occurs as a result of one of the following circumstances:
1. As a consequence of an employment contract, with the exception of the special employment relationship of professional athletes
2. As a consequence of acquiring the status of administrator of an entity in whose capital he does not participate or, if not, when the participation in the same does not determine the consideration of a related entity in the terms provided for in article 18 of the Corporate Income Tax Law.
c) That it does not obtain income that would be classified as obtained through a permanent establishment located in Spanish territory.
In other words, despite being considered a resident in Spain, if the option for this special regime is exercised, the worker transferred to Spanish territory can be taxed on the salaries obtained at a fixed rate of 24% up to 600,000.00 euros of base and at 45% for the following.
How to opt for the special regime
To qualify for this tax benefit, you must submit a notification to the Tax Administration within a maximum period of six months from the start date of the activity as shown in the registration with Social Security in Spain or in the documentation that allows you, where applicable, to maintain the Social Security legislation of origin.
For this purpose, they have enabled form 149, through which the application for entry into the regime is communicated, as well as the possible subsequent resignation.
That document must state:
1. Full identification details of the taxpayer.
2. Identification of the company for which the work will be carried out (payer details).
3. If the company is Spanish, supporting documentation issued by the company acknowledging the employment relationship, the start date as recorded in the Social Security registration, the workplace and its address, and the duration of the contract.
4. If the transfer is from a non-Spanish company, a copy of the transfer letter and supporting documentation stating the start date of the activity as recorded in the Spanish Social Security registration and the duration of the transfer order.
5. Date of entry into Spanish territory.
6. Last country of residence.
If you need to clarify whether or not you meet the requirements for applying this special tax regime, or if you are unsure whether it will be advantageous for your taxation, at Ambit Assessor we have professionals who can help you from both a labor and tax perspective.
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A graduate in Business Administration from the University of Barcelona, she has furthered her training in tax and accounting by attending courses and seminars offered by the EAE Business School, the College of Economists, the Bar Association, and the Terrassa Chamber of Commerce.
She combined her studies with work in the family business and as a substitute in the production audit department of Bimbo SA.
She has spent her professional career at Àmbit Assessor, where she joined in 1991 to support the accounting and tax department, becoming a consultant a few years later.
Since 2000, she has been the managing partner of the company.
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