Foreign employees working in Spain can continue to be taxed as non-residents for five years following their change of residence

Earned income received in Spain by non-resident individuals is taxed under IRNR (Non-Resident Income Tax regime) at a set rate of 24% and at 19% for EU residents or those from a country inside the Europe Economic Area with which there is an effective exchange of information.

An individual’s domicile for tax purposes is the territory they reside in for at least 183 days per calendar year.

Thus, the worker who has moved to Spain and who will reside on Spanish territory for more than 183 days in the year will be considered a Spanish resident and taxed an income tax whose scale is gradual.

What is the special regime?

However, individuals who acquire tax residence in Spain as a result of moving to Spain may choose to pay their tax through the non-resident income regime, although they will retain the status of taxpayer with Personal Income Tax during the tax period in which the change of residence is effected and during the subsequent five tax periods, provided the following conditions are met:

1. They have not been residents in Spain during the ten tax periods prior to the one in which their move to Spain coincides.
2. The move to Spain occurs as a result of any of the following circumstances:
   • As a result of an employment contract, except under the special employment regime for professional sportspeople
   • As a result of the acquisition of an administrator of a company in which they have no shareholding. However, if they do, when said shareholding does not determine the consideration of the related entity under the terms established in Article 18 of the Corporation Tax Law.
3. That they do not receive an income through a permanent establishment located on the Spanish territory.

That is, that despite being considered a resident in Spain, if the option for this special regime is exercised, the worker posted to a Spanish territory can pay tax at the fixed rate of 24% for wages of up to €600,000.00 and at 45% above that.

How to apply for the special regime

To use this tax benefit, the tax administration should be contacted within a maximum period of six months from the date of starting the activity recorded in the Spanish Social Security registry or in any documentation that allows the worker, where appropriate, to maintain the Social Security of their home country.

To this end model 149 has been enabled through which the application for registering in the system is communicated, as well as the possible subsequent deregistration.

That document must state the following:

1. Full personal taxpayer data
2. Identification of the company they will work for (salary payer data)
3. If the company is Spanish, supporting documentation issued by the company which recognises the employment relationship, the date from which the worker has been registered in Social Security, the workplace and address, and the contract’s duration.
4. If this is a relocation from a non-Spanish company, a copy of the letter of posting as well as a document accrediting the start of the activity which has been registered with the Social Security of Spain and the duration of the posting.
5. Date of entry into the Spanish territory
6. Last country of residence.

If you need to clarify whether you meet the requirements to apply for this special regime or whether it is the right option for your taxation purposes, Ambit Assessor, S.L. have professionals who can answer your labour and tax questions.

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Alicia Conesa Garrido

Directora área fiscal y contable at Àmbit Assessor

Diplomada en Ciencias Empresariales por la Universidad de Barcelona, ha ampliado su formación en el ámbito tributario y contable asistiendo a cursos y seminarios impartidos por la Escuela de Negocios EAE, el Colegio de Economistas, el Colegio de Abogados y la Cámara de Comercio de Terrassa.
Compaginó sus estudios trabajando en la empresa familiar y realizando suplencias del departamento de auditoría de producción de Bimbo SA.
Su carrera profesional la ha desarrollado en Àmbit Assessor, donde se incorporó en 1991 para dar soporte al departamento contable-fiscal, convirtiéndose en consultora unos años más tarde.
Desde el año 2000 es socio-gerente de la empresa.

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