Non-Domiciled Tax Regime

Taxation

Spain introduced a special tax regime for wealthy expatriates following in the wake of other countries. The goal is to attract high-achievers who relocate to Spain on the back of a job contract. The typical taxpayer profile that qualifies would be a renowned artist or high-ranking corporate employee (i.e. relocated company Director).   

 

Larraín Nesbitt Lawyers can set you up so you can take full advantage of this special tax regime for relocated expatriates enabling you to benefit from unique tax breaks which will drastically cut your tax obligations, always within the Law.

 

The Tax Benefits

 

In a nutshell, this tax scheme allows expat taxpayers to make spectacular savings on paying Income Tax in Spain. If you opt into this scheme you stand to benefit from both income derived in Spain as well as any other worldwide income.

 

  • Spanish Income. The first €600,000 earned from a source within Spanish territory will be taxed at a flat rate of 24% (in lieu of paying the normal tax rate of 45%). As can be surmised, even for earnings whose source is in Spanish territory, the tax savings are huge.
  • Worldwide Income. It is here where this tax scheme truly shines. Spanish Tax Authorities will only tax you on your income derived within Spanish territory. Any other source of worldwide income is tax-exempt (just like with the popular UKs non-dom tax scheme). Needless to say, this advantage offers a hugely attractive prospect for those that hold substantial overseas earnings and interests.
  • Best from both worlds. On opting into this special tax regime, expats will be treated as if they were resident taxpayers but in reality it will be a legal fiction whereby they will benefit as if they were still non-resident taxpayers. So you in fact get the best of both worlds.
  • Five years plus one. It applies on the fiscal year of relocation as well as on the following five years (total up to six years).
  • Exempt from completing tax form 720.

 

Who can apply?

 

  • Expats relocating to Spain as a result of a professional contract. The contract is a sine qua non requirement to opt into this scheme.
  • High-earners.
  • Not to have resided in Spain within the previous 10 years.
  • No earnings derived from a Permanent Establishment in Spain.

 

Legal fees: POA

 

Related article

 

Spain’s Non-Dom Tax Scheme – 8th July 2016


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