I.- Special scheme for workers posted to Spain

Due to professional purposes, workers posted to Spanish territory and who establish their habitual residence in Spain, are considered to be taxpayers of Personal Income Tax (IRPF, the abbreviation of “Impuesto sobre la Renta de las Personas Físicas”), with the singularity that, if they meet the legal requirements, they may opt to be taxed according to the rules of the Non-resident Income Tax (IRNR, the abbreviation of Impuesto sobre la Renta de No Residentes).

Currently, workers posted to Spain are taxed at a fixed rate of 24.75% if their salary does not exceed 600,000€ per year. With the proposed Tax Reform, workers, together with company managers, who may qualify for the scheme, will be taxed at a fixed rate of 24%.

II.- Non-residents in Spanish Territory

Those who are not established in the Spanish territory, but nevertheless seek income in Spain, have to be taxed through Non-resident Income Tax. In general terms, the tax rate is currently 24.75%, but will also be reduced to 24% after the Tax Reform.

Furthermore, following the Tax Reform, those taxpayers who reside in another Member State of the European Union where an effective exchange of information with Spain exists, will enjoy a lower tax rate: 19%. The targets of this tax are the following: incomes such as real estate income, capital income, employment income, imputed income and capital gains.

III.- Non-resident entities in Spanish Territory

Developments for non-resident entities that obtain income in Spain will also be provided for by the Reform, as follows:

  • Exemption from dividends that have been distributed from Spanish subsidiaries to parent companies located in other Member States, on the condition that an effective exchange of tax information exists between the two countries.
  • When the entities cease or transfer their business abroad, they will have to take into account the difference obtained by the sale thereof, when presenting the corresponding Income Tax declaration.

Once approved, the Draft Tax Reform Bill shall enter into force on January 1st 2015.

 

 

Vilá Abogados

 

For more information, please contact:

va@vila.es

 

10th July 2014