Find out the criteria of the Spanish Directorate General for Taxation.
Our office often receives queries regarding the taxation of salaries obtained by teleworking from Spain for foreign companies.
A recent Binding Consultation of the Directorate General for Taxation, V0194/2021, sheds light on this issue and concludes that, for tax purposes, «remote» work carried out from the employee’s private home in Spain is considered to be effectively carried out in our country, despite the fact that the results of such work revert to and are used by a foreign company.
This criterion is set out in paragraph 1 of the Commentary to Article 15 of the OECD Model Convention, which establishes that «remote» work is carried out, for tax purposes, at the place where the employee is physically present when carrying out the activities for which the income is paid. Similarly, if, as in the case set out in the binding consultation, the employee receives employment income, on the one hand, for work carried out in the country where the company is domiciled and, on the other, for work carried out «remotely» in Spain, a distinction should be made between the two situations in order to determine which jurisdiction is entitled to tax such income.
Thus, in relation to the «remote» work from Spain, we must distinguish whether the taxable person is a tax resident in Spain or abroad:
– If the teleworker is considered a tax resident in Spain, his worldwide income will be taxed in our territory, so he will have to integrate, in his Income Tax Return, the salaries resulting from his work for the foreign company.
– If, on the other hand, is considered a non-resident for tax purposes in Spain, the Non-Resident Income Tax Act states that income from work is subject to tax when it derives, directly or indirectly, from a personal activity carried out in Spanish territory. Thus, the salary received for «remote» work from Spain would have to be declared for non-resident income tax and, in such a case, would be subject to double taxation.
It should be noted, however, that over and above domestic tax regulations, Spain has signed double taxation treaties with many countries, which may exempt the aforementioned taxation if certain conditions are met and which, if not, provide for measures to avoid the mentioned double taxation.
For this reason, we recommend a study of the specific case, taking into account the particular circumstances involved. Our firm offers International Tax Advice services.
Let contact us, we will be pleased to help you.
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Licenciado en Derecho y Máster en Dirección Fiscal y Financiera de la Empresa por la Universidad de Barcelona, cuenta también con el Postgrado en Derecho de Nuevas Tecnologías de ESADE. Es especialista en derecho fiscal y mercantil societario.
Antes de su incorporación de como gerente de Àmbit Assessor en 1999, trabajó como responsable del departamento Fiscal-Contable del bufete Busquets Terradellas.
Durante años compaginó su trabajo con la docencia, como profesor de Hacienda Pública y Derecho Fiscal de la Universitat Oberta de Catalunya.
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