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Practical Income Manual 2022.

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

Application conditions

Regulations: Art. 46 TRLIRNR and 21 of Regulation IRNR

Taxpayers for non-resident income tax ( IRNR ) who are individuals can request the application of this optional tax regime for Income Tax physical and that meet the following conditions:

  1. That they prove to be residents in a Member State of the European Union or to be residents in 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:

    • Who has obtained, during the financial year in Spain, from income from work and from income from economic activities, at least 75 percent of their total income, or,

    • That the income obtained during the year in Spain has been less than 90 percent of the personal and family minimum that would have corresponded to him in accordance with his personal and family circumstances had he been a resident in Spain and that the income obtained outside of Spain has been, also, lower than said minimum.

  3. That these incomes obtained during the year in Spain have been effectively taxed by IRNR .

Exercise of the option

The exercise of the option to pay taxes for IRPF must be carried out using the application model approved by Order HAP /2474/2015, of 19 November ( BOE of November 24), which will be presented within a period of four years starting on May 2 or immediately following the business day following the following calendar year corresponding to the tax period with respect to which the application of said regime is requested.

Note: If any of the members of the family unit choose to pay taxes under this regime, the deduction established, as of January 1, 2018, by the forty-eighth Additional Provision of the Personal Income Tax Law, will not apply. , for family units formed by tax residents in Member States of the European Union or the European Economic Area, which is discussed in Chapter 16 of this manual.

Content of the regime

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

  • The taxable income will consist of all the 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 Personal Income Tax to all income obtained by the taxpayer during the tax period, regardless of the place. where they occurred 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 part of the taxable base corresponding to the income obtained by the taxpayer in Spanish territory.

  • If the result of the previous operations shows an amount lower than the global amount of the amounts paid during the tax period by the non-resident taxpayer in concept of IRNR on the income obtained in Spanish territory, it will proceed return the excess.

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