B Law & Tax
26 March 2024

The Spanish Tax Office mitigates tax impact on expatriate workers returning to Spain

The Ministry of Finance has introduced measures to mitigate the tax impact on the return or arrival of expatriate professionals to Spain in the second half of the year. This action aims to put an end to the double taxation faced by workers who change residence to settle in Spain on a long-term basis.

Previously, expatriate employees and managers, as well as teleworkers, who arrived or returned to Spain between July and December faced a tax penalty. The Directorate General of Taxes (DGT) has eliminated this tax obstacle, which obliged these professionals to be taxed as non-residents on their employment income during the months of their relocation, generating a double tax burden as they also had to comply with tax obligations in their home countries.

The recent DGT consultation clarifies the calculation of the period of less than 183 days in a year required by the regulations to determine tax residency. 

This measure provides an advance in legal certainty when interpreting clauses in Double Taxation Conventions (DTC) that directly affect internationally mobile workers.

In addition, it is noted that this response also benefits teleworkers who move to Spain in the second half of the year and establish their tax residence in Spain in the following year.

Generally speaking, workers who arrive in the second half of the year and acquire Spanish tax residence in the following year face double taxation on their earned income in the year of arrival. 

The binding consultation published by the DGT clarifies whether the computation of the 183 days should include only the period in which the taxpayer has been a non-tax resident in Spain or also the period in which he/she will already be a tax resident in Spain.

The conclusion reached by the DGT is that, if the taxpayer does not stay in Spain for a period not exceeding 183 days in aggregate in a given tax year, while complying with certain requirements, he will not be subject to taxation as a non-resident in Spain, provided that he acquires tax residence in the country in that tax period.

This decision allows foreign workers, under certain conditions, not to be taxed in Spain on their employment income during the period of their relocation, which removes a barrier to the posting of teleworkers who wish to establish their residence in Spain in the second half of the year.

B Law & Tax International Tax & Legal Advisors.


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