Spain

EXPATRIATE AND EMPLOYER TAX COMPLIANCE AND ADVISORY
Tax rate Progressive scale of rates with a general 45 percent marginal rate (although this rate can vary depending on the Autonomous Community.
Tax period Calendar year.
Tax residency / Domicile according to domestic law An individual is resident in Spanish territory when any one of the following circumstances apply:
• They have stayed longer than 183 days in Spanish territory over the calendar year. In order to determine the permanence in Spanish territory, occasional absences are included, except if the taxpayer accredits their residency in another country. In the case of countries or territories labelled as tax havens, the Tax Administration can demand proof of stay in that tax haven over a period of 183 days within the calendar year.
• They situate the main base or centre of their activities or economic activities, directly or indirectly, in Spain.
• They have dependent not legally separated spouse and/or underage children who are usually resident in Spain. This latter situation accepts evidence to the contrary.
Tax registration Any individual or entity, resident or no resident in Spain, who has relations with the Spanish Tax Authorities, must have a Tax Identification Number (NIF) granted by this one, which will have to be included in all tax returns and forms.
Employment income definition Any remuneration and benefit in cash or in kind received by an employee for services rendered under an employment agreement (e.g. school fee reimbursements, benefits in kind, cost of living allowances, home leave reimbursements, housing allowances).
Examples of tax exemption As tax residents are subject to taxation on their worldwide income, in principle, work income obtained from services rendered abroad will be taxable. However, an exemption may be applied as long as, among others, the following conditions are met.
• Services are physically rendered out of Spain for the benefit of a non-resident company or a permanent establishment located abroad.
• The country where the services are rendered is not a tax haven and has a tax similar to Spanish PIT (this requirement will be regarded to be met when the country or territory in which the services are performed has a Tax Treaty to avoid double taxation in force with Spain with an exchange of information clause).
The income that may benefit from this exemption has an annual maximum limit of EUR 60,100.
Eventual tax treaty provisions should also be considered
Reimbursement of actual expenses related to relocating an employee should not be considered as income, provided they cover travel expenses, or living allowance for the taxpayer and his/her family during the move, and they are documented through the corresponding invoice. In addition, expenses connected with moving personal goods, provided that they are duly justified through the corresponding invoice, should not be considered as income.
Certain benefits in kind provided by the company to the employee, such as meal vouchers up to a daily amount of EUR 11, nursery vouchers, public transport vouchers within certain limits, medical insurance premiums up to a maximum annual amount of EUR 500 per family member covered, etc. can be exempt from taxation under certain conditions.
Specific expatriate concession Individuals who become Spanish tax residents as a consequence of their assignment to Spain may opt between being taxed as Spanish tax residents taxed on their worldwide income according to the PIT progressive scale, or as a non-resident.
Under this special regime the 24% non-resident rate will only be applicable to taxable employment income up to EUR 600.000 while any employment income exceeding that amount will be taxable at the marginal rate applicable to tax residents, 45%.
Relocated workers may benefit from this special regime for the tax period in which the change of residence takes place and for the next five periods.
In order to be taxed under this special regime, relocated workers will have to fulfil the following conditions:
• Having not been residents in Spain for the 10 tax periods prior to their relocation.
• The assignment to Spain is derived from an employment contract or becoming director of a company in which no have shares, or else when the shareholding in that company does not result in it being regarded as a related entity.
• The taxpayer does not obtain income that would qualify as being obtained through a permanent establishment situated in Spain.
Income of board members Remuneration received will be employement income taxable.
Tax returns The annual personal income tax (PIT) return is presented between April and June of the year
following the year that is being declared, through Form 100. From the result, the amounts paid are deducted (instalment payments and withholding taxes). In case of the option for the relocated workers special regime the Form that must be filed is 151.
Tax payments In general terms, individuals, legal persons and other entities residents or non-residents in Spain that are carrying on business activities in Spanish territory with or without Permanent Establishment, shall be subject to withhold obligation in relation to the employment incomes they pay.
The withholdings are calculated according to a progressive scale based on the amount of taxable income that is expected to be paid during the tax year and the family status of the employee.
TAX TREATIES
Employment income / income from board members Article 15/16 Model OECD Tax Treaties
INTERNATIONAL SOCIAL SECURITY
Cross border employments EU Regulation No 883/2004 and EU regulation No. 1408 / 71.
Exception under Art 16 of Reg. 883/2004
and Art 17 of Reg. 1408/71
Generally applicable.
Social Security Cost as % from gross salary and absolute amounts The Spanish social security system is made up of several schemes offering a wide range of benefits.  This system includes benefits for common sickness and accidents, occupational disease and accidents at work, unemployment, invalidity, retirement, death and survival and unemployment. The contributions, which are applied on the basis of contributions, are distributed between the employer (approx. 32%) and the employee (6.35%), with a maximum monthly contribution basis of 3751.20 euros.  Once there is a causal event that could lead to the collection of a benefit or pension, it must be reviewed whether the requirements established for each of them are met.
IMMIGRATION
Work permit EU, EEA and Swiss citizens have the right to work in Spain without a permit.
Most non-EU citizens will need a work permit to work in Spain.
Visa Citizens from any State of the European Union, Switzerland, Norway, Iceland and Liechtenstein only need a valid national identity document or passport. Citizens from the United Kingdom and Ireland will require a passport since their countries are not members of the Schengen Area.
Nationals of another country need a visa to enter into Spain. Visas must be applied for in person or through a duly accredited representative at the Spanish Diplomatic Mission or Consular Post of the district in which the applicant legally resides.
Residency permits / registration certificate Citizens become residents if they spend more than 90 days in Spain.
There are two places where you can obtain a “Spanish residencia”: Spanish National Police stations are properly assigned to issue NIE numbers, or Spanish Embassy of the country in which the applicant legally resides.
Driving license Citizens from a European Economic Area (EEA) country (EU plus Iceland, Norway and Lichtenstein) are free to drive in Spain using their existing driver’s license for the first two years of residence in Spain, although they must register their details with the traffic authorities after six months. Citizens from outside the EEA may drive in Spain using their existing foreign driver’s license for up to six months after they have registered for residency in Spain. If the foreign license is not in Spanish, an official translation or an International Driving Permit (IDP) is required.
STOCK OPTION PLAN Benefited employees for this stock option plan can apply specific tax benefits.
ARTICLE 15 OF THE OECD MODEL
183 days
Notion of employer
Existence of a permanent establishment
Ángel Baena
Partner
Send Email
Direct line:+34 934 947 750
Address: Diputació, 260. 08007 – BARCELONA
www.mazars.es

 

Pilar Boria
Tax Manager
Send Email
Direct line:+34 934 947 750
Address: Diputació, 260. 08007 – BARCELONA
www.mazars.es