Spanish steps to residence
Since 2004, foreign individuals moving to Spain and becoming Spanish tax residents may elect, provided that several requirements are met, to apply the impatriate regime regulated in article 93 of the Personal Income Tax Act as an alternative to the general tax regime applicable to tax residents.1
The Spanish impatriate regime
The impatriate regime allows qualifying individuals2 to be taxed as if they were non-resident taxpayers – that is, they are only subject to tax on their Spanish source income, with a few particularities. This regime is applicable in the calendar year in which the taxpayer becomes resident in Spain, and during the following five years.
Following this six-year period, if they remain in Spain, the individual will be subject to the general income tax rules applicable to Spanish tax residents.
Requirements
To be eligible for the special tax regime, the following requirements should be met:
- The applicant must not have been tax resident in Spain within the ten years prior to the transfer of residence.
- The transfer of residence must be a consequence of either an employment contract3 or the appointment of the taxpayer as director of a company in which the individual is not a shareholder or, at least, in which such shareholding does not make the individual and the company qualify as related entities under the criteria set out in article 18 of the Corporate Income Tax Act.4
- The taxpayer must not obtain income through a permanent establishment in Spain.
Impatriates’ tax liability
Tax liability is calculated as if the individual were a non-resident taxpayer, considering the following particularities:
Please login to access this content
If you are not a member, find out more about joining STEP or subscribing to STEP articles.