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Practical manual for Income Tax 2021.

Optional personal income tax tax regime for taxpayers residing in other Member States of the European Union

Conditions of application

Regulations: Art. 46 TRLIRNR and 21 of Regulation IRNR

The application of this optional tax regime for the IRPF may be requested by taxpayers of the Non-Resident Income Tax ( IRNR ) who are natural persons and who meet the following conditions:

  1. They must prove that they are residents of a Member State of the European Union or that they are residents of a Member State of the European Economic Area with which there is an effective exchange of tax information.

  2. That the taxpayer proves any of these circumstances:

    • That you have obtained during the fiscal year in Spain from work and from economic activities, at least 75 percent of your total income, or,
    • That the income obtained during the year in Spain has been less than 90% of the personal and family minimum that would have corresponded to him/her according to his/her personal and family circumstances had he/she been a resident in Spain and that the income obtained outside Spain has also been less than said minimum.
  3. That these incomes obtained during the year in Spain have actually been taxed by the IRNR .

Exercise of the option

The exercise of the option to pay taxes under the IRPF must be carried out using the application form approved by Order HAP /2474/2015, dated November 19 ( BOE of the 24th), which must be submitted within four years from May 2nd or the next business day following the calendar year corresponding to the tax period for which the application of said regime is requested.

Note: If any of the members of the family unit chooses to pay taxes under this regime, the deduction established, as of January 1, 2018, by the Forty-eighth Additional Provision of the Income Tax Law, will apply for family units formed by tax residents in Member States of the European Union or the European Economic Area, is discussed in Chapter of this Manual.

Content of the regime

In accordance with the provisions of article 46 of the TRLIRNR , approved by Royal Legislative Decree 5/2004, of March 5, and in 21 to 24 of the Regulation of the IRNR , approved in the sole article of Royal Decree 1776/2004, of July 30, the content of the optional regime is the following:

  • Taxable income will consist of all income obtained in Spain by the taxpayer in the tax period.

  • The applicable tax rate will be the average rate, expressed with two decimal places, resulting from applying the rules of IRPF to all income obtained by the taxpayer during the tax period, regardless of where it was produced and whatever the residence of the payer, taking into account the personal and family circumstances of the taxpayer that have been duly accredited.

  • The tax rate will be the result of applying the average tax rate to the portion of the taxable base corresponding to the income obtained by the taxpayer in Spanish territory.

  • If the result of the above operations is less than the total amount of the amounts paid during the tax period by the non-resident taxpayer in the form of IRNR on income obtained in Spanish territory, the excess will be refunded.

Note: The taxpayer to whom this optional regime applies will not lose his status as a taxpayer for the Non-Resident Income Tax.