Earned income

Internal regulations

Regulations: article 13.1.c) Law IRNR

In accordance with internal regulations, work income is understood to be obtained in Spanish territory in the following cases:

• In general, when they derive, directly or indirectly, from a personal activity carried out in Spanish territory.

• Public remuneration paid by the Spanish Administration, unless the work is provided entirely abroad and such income is subject to a personal tax abroad.

• The remuneration of employees of ships and aircraft in international traffic paid by resident entrepreneurs or entities or by permanent establishments located in Spanish territory, unless the work is provided entirely abroad and such income is subject to a personal tax abroad. .

Likewise, according to internal regulations, certain income is exempt :

Regulations: article 14.1 letters a) and b) IRNR Law

• Public scholarships and scholarships granted by non-profit entities to which the special regime regulated in title II of Law 49/2002, of December 23, on the tax regime of non-profit entities and tax incentives for patronage and, since January 1, 2015, scholarships granted by banking foundations regulated in Title II of Law 26/2013, of December 27, on savings banks and banking foundations in the development of their social work activity, received to pursue regulated studies, both in Spain and abroad, at all levels and grades of the educational system. Likewise, public scholarships and those granted by non-profit entities and, since January 1, 2015, banking foundations mentioned above for research in the field described by Royal Decree 63/2006, of January 27, by which approves the Statute of research personnel in training, as well as those granted by them for research purposes to civil servants and other personnel at the service of the Public Administrations and to the teaching and research staff of universities.

• Scholarships and other amounts received by natural persons, paid by Public Administrations, under international agreements and conventions of cultural, educational and scientific cooperation or under the Annual International Cooperation Plan approved by the Council of Ministers.

• Work income in kind of article 42.3 of the Personal Income Tax Law :

  • Deliveries to employees of products at discounted prices that are made in canteens or company canteens or social commissaries

  • The use of goods intended for the social and cultural services of the employed personnel

  • Premiums or fees paid to insurance entities for illness coverage

  • The provision of preschool, infant, primary, compulsory secondary, high school and vocational training services by authorized educational centers to the children of their employees, free of charge or at a price lower than the normal market price.

  • The amounts paid to the entities in charge of providing the public service of collective passenger transport with the purpose of promoting the movement of employees between their place of residence and the workplace,

  • The delivery to active workers, free of charge or at a price lower than the normal market price, of shares or participations of the company itself or of other companies in the group of companies.

Agreement

In the case of residents in countries with which Spain has signed an Agreement to avoid double taxation, generally the income received from employment carried out in Spain can be taxed by the Spanish State, except if three circumstances occur together: that the non-resident does not remain in Spain for more than 183 days during the fiscal year considered, that the remunerations are paid by a non-resident employer and that these remunerations are not supported by an EP or a fixed base that the employer has in Spain.

Taxation

Regulations: articles 24, 25 and 26 Law IRNR

Income obtained without EP mediation must be taxed separately for each total or partial accrual of the income subject to tax.

In general, the tax base will consist of the full amount, that is, without deduction of any expenses.

However, in the case of taxpayers residing in another Member State of the European Union or in a State of the European Economic Area in which there is an effective exchange of information (with effect from July 11, 2021, the regulatory references made to States with which there is an effective exchange of tax information are understood to be carried out to States with which there are regulations on mutual assistance regarding the exchange of tax information in the terms provided for in Law 58/2003, of December 17, General Tax, that is applicable. See Annex V ), to determine the tax base, the following expenses may be deducted:

1. In the case of natural persons, the expenses provided for in the Personal Income Tax Law, provided that the taxpayer proves that they are directly related to the income obtained in Spain and that they have a direct and inseparable economic link with the activity carried out. in Spain.

2. In the case of entities, the deductible expenses in accordance with the provisions of the Corporate Tax Law, provided that the taxpayer proves that they are directly related to the income obtained in Spain and that they have a direct and inseparable economic link with the activity carried out in Spain. Spain.

When, in accordance with internal regulations and, where applicable, the Convention, work income can be taxed in Spain, it will be taxed at the general tax rate in force:

• Residents EU , Iceland, Norway and, since 07-11-2021, Liechtenstein: 19%
• Rest of taxpayers: 24%

Particular cases :

• The income from the work of natural persons not resident in Spanish territory, provided that they are not taxpayers of Personal Income Tax , who provide their services in Diplomatic Missions and Consular Representations of Spain abroad, when not applicable The application of specific rules derived from International Treaties to which Spain is a party, are taxed at the tax rate of 8%.

• Work income received by non-resident individuals in Spanish territory under a fixed-term contract for seasonal foreign workers, in accordance with the provisions of labor regulations, is taxed at the tax rate of 2%.

Deductions: Only the following may be deducted from the tax rate:

• Deductions for donations, in the terms provided in the Personal Income Tax Law and in the Law on the tax regime of non-profit entities and tax incentives for patronage.

• The withholdings that would have been made on the income.