Special regime for unpaid amounts, article 93 of the Personal Income Tax Act

Regulations: Article 93 and Transitional Provision 17 of the Personal Income Tax Act; Articles 113 to 120 of the Personal Income Tax Regulation; Order HAP/2783/2015 of 21 December, which approves forms 151 and 149.

(Effective as from 1 January 2023, article 93 of the Personal Income Tax Act that regulates the special tax regime applicable to workers, professionals, entrepreneurs and investors posted to Spanish territory have been amended by the Final Provision of Act 28/2022 , of 21 December, to promote the ecosystem of emerging companies (Official State Gazette of 22 December).The aforementioned amendment reduces the possibility of new groups of people, remote workers, entrepreneurs and professionals, as well as the people in their family centre, to five years of the previous period of non-residence in Spain.  Consequently, in the new regulation of the special regime, two figures will be able to exist, one main taxpayer and other taxpayers associated with it, from its family centre, linked to the principal in terms of the periods of application of the regime)

Individuals who acquire their tax residence in Spain as a result of their travel to Spanish territory may opt to pay tax on non-resident Income Tax, keeping the status of payers of Personal Income Tax (IRPF), during the tax period in which the change of residence is made and during the following five tax periods, when the following conditions are met:

• Until 31 December 2022:

  1. That they have not been residents in Spain for the ten tax periods prior to the period in which they transferred to Spain.

  2. That the transfer to Spain took place as a result of any of the following circumstances:

     1. As a result of a work contract, with the exception of the special working relationship of professional athletes regulated by Royal Decree 1006/1985 of 26 June.

        This condition will be understood to be fulfilled when a working, subordinate or special relationship is initiated other than that indicated above, or a statutory relationship with an employer in Spain, or when the posting is ordered by the employer and there is a travel letter from the employer.

     2. As a result of the acquisition of the status of administrator of an entity in whose capital does not participate or, otherwise, when participation in the same does not determine the consideration of a related entity in the terms set out in article 18 of the Corporation Tax Act.

  3. That it does not obtain income that would be classified as obtained through an EP located in Spanish territory.

• From 1 January 2023 (the new regulation of the scheme applies to taxpayers who acquire their tax residence in Spain from 2023 includes taxpayers who acquire their tax residence in Spain in 2023 as a result of a trip to Spanish territory in the second half of 2022):

  1. That they have not been resident in Spain during the five tax periods prior to that in which they are moved to Spanish territory.

  2. The trip to Spanish territory takes place either in the first year of application of the regime or in the previous year, as a result of one of the following circumstances:

     1. As a result of a work contract, with the exception of the special working relationship of professional athletes regulated by Royal Decree 1006/1985 of 26 June, which regulates the special working relationship of professional athletes.

        This condition shall be understood as fulfilled when a normal or special employment relationship is initiated other than that indicated above, or a statutory relationship with an employer in Spain. Similarly, this condition shall be understood as being fulfilled when the posting is ordered by the employer and there is a letter of travel from the employer or when, without be ordered by the employer, work activity is provided remotely, using exclusive means and computer, telematic and telecommunication systems. In particular, this circumstance shall be understood as being fulfilled in the case of employed workers who have the international remote working visa provided for in Act 14/2013, of 27 September, supporting entrepreneurs and their internationalisation.

     2. As a result of the acquisition of the status of administrator of an entity. If the entity is considered a equity entity under the terms set out in Article 5 (2) of the Act of Corporation Tax, the administrator may not have a shareholding in that entity that determines its consideration as a related entity under the terms set out in Article 18 of Act 27/2014, of 27 November, on Corporation Tax.

     3. As a result of carrying out an economic activity in Spain classified as an entrepreneurial activity, in accordance with the procedure described in article 70 of Act 14/2013 of 27 September.

     4. As a result of carrying out an economic activity in Spain by a highly qualified professional providing services to emerging companies within the meaning of Article 3 of Law 28/2022, of 21 December, on the promotion of the ecosystem of emerging companies, or that it carries out training, research, development and innovation activities, receiving remuneration that represents more than 40% of all business, professional and personal income.

  3. That it does not obtain income that would be classified as obtained through a permanent establishment located in Spanish territory, except in the case provided for in point (b). 3 and 4 of this section.

     They may also opt to pay tax on Income Tax for Non-Residents, maintaining the status of taxpayers for Income Tax of the Individuals, the spouse of the taxpayer referred to in the previous section and their children, under twenty-five years of age or whatever their age in the event of disability, or in the event of a marriage bond, the parent of the parents, provided that the following conditions are met:

     1. That they are moved to Spanish territory with the taxpayer referred to in the previous section or at a later time, provided that the first tax period in which the special regime is applicable has not ended.

     2. That they acquire their tax residence in Spain.

     3. That they meet the conditions referred to in points (a) and (c) of the previous section.

     4. The sum of the tax bases payable by taxpayers in each of the tax periods in which this special regime applies to them, is lower than the tax base of the taxpayer referred to in the previous section.

        The special regime will be applicable during the successive tax periods in which, in compliance with these conditions, it will also be applicable to the taxpayer provided for in the previous section.

Taxpayers who opt to this option are not considered residents for the purposes of applying a Double Taxation Agreement as they are subject to taxation exclusively for incomes obtained from sources located in Spain.

The option, waiver or exclusion from the special regime is carried out using form 149. The documentation provided for in article 119,1 of the Personal Income Tax Regulation must be attached to the notification of the option.

Taxpayers who opt for the Special Scheme must file a special Personal Income Tax return in Form 151, adapted to the content of the scheme.

Withholdings and payment on account

Withholdings and payments on account for personal income tax payments shall be made in accordance with the Income Tax regulations for Non-Residents.

However, the percentage of withholding or payment on account of earned income will be 24%. When the remuneration paid by the same payer of earned income during the calendar year exceeds 600,000 euros, the withholding percentage applicable to the excess will be that in force according to the accrual year (see table).