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Practical Handbook for Companies 2021

Change of residence to an EU or EEA Member State

Law 11/2021 of 9 July on measures to prevent and combat tax fraud amends the regulation of exit taxation in order to transpose Council Directive (EU) 2016/1164 of 12 July 2016, which states that such taxation has the function of ensuring that, where a taxpayer moves its assets or tax residence outside the tax jurisdiction of the State, that State must tax the economic value of any capital gains created in its territory, even if such gains have not yet been realised at the time of exit.

Specifically, with effect for tax periods beginning on or after 1 January 2021, through the modification introduced in Article 19.1 of the LIS by Law 11/2021, of 9 July, is replaced in cases of change of residence of an entity to a Member State of the European Union or the European Economic Area that has concluded an agreement with Spain or the European Union on mutual assistance in the recovery of tax debts, the possibility that the taxpayer had to defer payment of the tax debt resulting from the application of the provisions of the first paragraph of said Article 19.1 of the LIS, until the assets affected were not transferred to third parties, xml-ph-0009@deepl.inter.

The option shall be exercised exclusively in the corporate income tax return corresponding to the tax period concluded on the occasion of the change of residence, bearing in mind that the payment of the first fraction must be made during the voluntary tax return period corresponding to said tax period.The due date and payability of the remaining four annual instalments will be demanded together with the late payment interest accrued for each one of them, successively one year after the end of the voluntary deadline for the last tax period. Además, será exigible la constitución de garantías cuando se justifique la existencia de indicios racionales de que el cobro de la deuda se podría ver frustrado o gravemente dificultado.

Finally, sets out the cases in which the splitting will lose its validity, as well as the consequences of this loss.

For more information on the special features of this splitting scheme, see Chapter 6 of this Practical Handbook.