ICEX-INVEST IN SPAIN

Taxes

Non-Residents

Individuals and entities not resident in Spain are liable for non-resident income tax on the income and/or gains they obtain in Spain. The key to ascertaining how non-residents will be taxed in Spain lies in whether or not the non-resident has a permanent establishment (PE) in Spain:

With a permanent establishment :  taxpayers obtaining income and/or gains through a PE in Spain are taxed on all the income and/or gains attributable to the PE. Broadly speaking, the PEs in Spain of non-resident individuals or entities are taxed on their net income just like companies resident in Spain, and are subject to the same tax rate (in general, 25% - 28% in 2015-). There is an additional 19% tax on amounts transferred abroad out of income obtained by PEs of non-resident entities, although there are relevant exceptions. Royal Decree-Law 20/2011, of December 30, 2011, has raised the tax rate to 21% for fiscal years 2012, 2013, 2014 and 2015.

Without a permanent establishment:  taxpayers obtaining income and/or gains without the intermediation of a PE are taxed separately on each full or partial accrual of income and/or gains obtained in Spain.  

There are certain exemptions, including amongst others: 

Interest and other income from the transfer of own capital to third parties, as well as capital gains from real estate, obtained without the intermediation of a PE by residents of other EU Member States or by permanent establishments of those residents located in another EU Member State (except tax havens).  

Dividends distributed by a Spanish subsidiary to its EU or EEA Member State parent company in certain cases.

Income paid as a result of the international sale of goods.

Royalties paid by a Spanish resident company (or by a permanent establishment in Spain of a company resident in another EU or EEA Member State) to an “associated” company resident in another EU Member State (or to a permanent establishment of an EU resident company in another Member State) .

 

The tax rates applicable to non-residents without a PE are as follows (notwithstanding the tax treaties signed by Spain and certain special rules where the non-resident resides in an EU country):

TYPE OF INCOME

RATE (%) applicable in 2015

RATE (%) applicable in 2016

General (including royalties)

24 (*)

24 (*)

Dividends

20

19

Interest

20

19

Gains from transfer or redemption of units/shares in the capital or equity of collective investment institutions

20

19

Income from reinsurance transactions

1.5

1.5

Income from air or maritime shipping entities

4

4

Capital gains

20

19

Seasonal foreign workers

2

2

*The rate is 19% for taxpayers resident in other EU or EEA Member States with which there is an effective exchange of information (20% in 2015).

 

Non-residents must appoint a Spanish-resident individual or legal entity as their tax representative in certain cases.

Spain has signed tax treaties with numerous countries. You can see them at www.aeat.es under the “Fiscalidad Internacional” section.

Tax regime for inbound expatriates:

Spanish personal income tax legislation contains a highly attractive regime for personnel assigned to Spain by multinational enterprises, since it allows individuals who become tax resident in Spain as a result of their assignment there to elect to be taxed either under the personal income tax rules or under the non-resident income tax rules during the tax period in which their tax residence changes and for the next five tax periods. If they choose the latter, they are taxed at a standard rate of 24% on the first €600,000 received and at the marginal rate on the remainder of the taxable income.

The requirements to qualify for this regime are:

The inbound expatriate must not have been resident in Spain during the 10 years prior to his or her assignment to Spain.

The assignment to Spain must be the result of an employment contract.

Income that would be classed as obtained through a permanent establishment in Spain cannot be obtained.

This regime does not apply to professional athletes; it does apply (for the first time, starting in 2015) to persons acquiring the status of director of an entity in which they do not own a holding (or in which they do own a holding but which is not a related entity).

 

Persons who had been applying the inbound expatriate regime prior to 2015 (on which date certain aspects of the regime were modified) may choose to continue applying the regime in force at December 31, 2014 by serving notice of their choice to the tax authorities.

 

 



 


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Last updated: 19|06|2015

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