Change of residence to a Member State of the European Union or the European Economic Area

Law 11/2021, of July 9, on measures to prevent and combat tax fraud modifies the regulation of exit taxation, with the aim of transposing the Directive ( EU ) 2016/1164 of the Council, of July 12, 2016, which states that the purpose of said taxation is to guarantee that, when a taxpayer moves his assets or his tax residence outside the tax jurisdiction of the State, said State must tax the economic value of any capital gain created in its territory, even if such capital gain has not yet been realized at the time of departure.

Specifically, with effect for tax periods beginning on or after January 1, 2021 , through the amendment introduced in article 19.1 of the LIS by Law 11/2021, of July 9, 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 entered into an agreement with Spain or the European Union on mutual assistance in the collection of tax credits, 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 the aforementioned article 19.1 of the LIS, until the affected assets were transferred to third parties, by the possibility of splitting said payment , also at the request of the taxpayer, for equal annual fifths .

The exercise of option will be carried out exclusively in the Corporate Tax return corresponding to the tax period concluded on the occasion of the change of residence, taking into account that the payment of the first fraction must be made within the voluntary declaration period corresponding to said tax period. The maturity and enforceability of the four remaining annual fractions , will be demanded together with the late payment interest accrued by each of them, successively after one year from the end of the voluntary declaration period corresponding to the last tax period. Furthermore, the constitution of guarantees will be required when there is justified evidence that the collection of the debt could be frustrated or seriously hindered.

Finally, the cases in which the fractionation will lose its validity are collected, as well as the consequences of said loss.

You can consult the particularities of this fractionation regime in Chapter 6 of this Practical Manual.