Special regime for expatriates art. 93 Personal Income Tax Law

Regulations: Article 93 and Transitional Provision 17 Law IRPF ; Articles 113 to 120 of the Personal Income Tax Regulations; Order HAP /2783/2015, of December 21, approving models 151 and 149 and Order HFP /1338/2023, of December 13, approving the new models 151 and 149.

(With effect from 1 January 2023, Article 93 of the Personal Income Tax Law, which regulates the special tax regime applicable to workers, professionals, entrepreneurs and investors relocated to Spanish territory, has been amended by the Third Final Provision of Law 28/2022, of 21 December, on the promotion of the start-up ecosystem (BOE of 22 December).The aforementioned amendment reduces the prior period of non-residence in Spain to five years and extends the possibility of opting for the special regime to new groups of people, teleworkers, entrepreneurs and professionals, as well as to members of their family unit, under certain conditions.  Consequently, in the new regulation of the special regime there will be two figures, a main taxpayer and other taxpayers associated with him, coming from his family nucleus, linked to the main taxpayer in terms of the periods of application of the regime)

Individuals who acquire tax residency in Spain as a result of moving to Spanish territory may choose to pay Non-Resident Income Tax, while maintaining their status as taxpayers of Personal Income Tax (IRPF), during the tax period in which the change of residence takes place and during the following five tax periods, when the following conditions are met:

• Until December 31, 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 an employment contract, with the exception of the special employment relationship of professional athletes regulated by Royal Decree 1006/1985, of June 26.

        This condition will be deemed to be met when an employment relationship, ordinary or special, other than the one indicated above, or statutory, is initiated with an employer in Spain, or when the transfer is ordered by the employer and there is a transfer letter from the employer.

     2. As a consequence of acquiring the status of director of an entity in whose capital he does not participate or, otherwise, when the participation in the same does not determine the consideration of a related entity in the terms provided for in article 18 of the Corporate Tax Law.

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

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

  1. That they have not been residents in Spain during the five tax periods prior to the one in which they move to Spanish territory.

  2. That the transfer to Spanish territory occurs, either in the first year of application of the regime or in the previous year, as a result of any of the following circumstances:

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

        This condition will be deemed to be fulfilled when an employment relationship, ordinary or special, other than the one indicated above, or statutory, is initiated with an employer in Spain. Likewise, this condition will be deemed to be met when the transfer is ordered by the employer and there is a letter of transfer from the employer or when, without being ordered by the employer, the work activity is carried out remotely, through the exclusive use of computer, telematic and telecommunications means and systems. In particular, this circumstance will be deemed to be fulfilled in the case of employees who have the visa for international teleworking provided for in Law 14/2013, of September 27, on support for entrepreneurs and their internationalization.

     2. As a consequence of acquiring the status of administrator of an entity. In the event that the entity is considered a patrimonial entity in the terms provided for in article 5, section 2, of the Corporate Tax Law, the administrator may not have a stake in said entity that determines its consideration as a related entity in the terms provided for in article 18 of Law 27/2014, of November 27, on Corporate Tax.

     3. As a result of the realization in Spain of an economic activity qualified as entrepreneurial activity , in accordance with the procedure described in article 70 of Law 14/2013, of September 27.

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

  3. That he 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 letter b).3.º and 4.º of this section.

     The spouse of the taxpayer referred to in the previous section and his or her children, under twenty-five years of age or whatever their age in the case of disability, or in the event of non-existence of a marital bond, the parent of these children, may also choose to pay the Non-Resident Income Tax, while maintaining the status of taxpayers for the Personal Income Tax, provided that the following conditions are met:

     1. That they travel 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 applies to the taxpayer has not ended.

     2. That they acquire their tax residency in Spain.

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

     4. That the sum of the taxable bases of the taxpayers in each of the tax periods in which this special regime applies to them is less than the taxable base of the taxpayer referred to in the previous section.

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

Taxpayers who choose this option are not considered residents for the purposes of applying a Double Taxation Agreement, as they are subject to taxation only on income they obtain from sources located in Spain.

The option , waiver or exclusion from the special regime is carried out using form 149 . The communication of the option must be accompanied by the documentation provided for in article 119 of the Personal Income Tax Regulations.

As of December 16, 2023, the date of entry into force of Order HFP/1338/2023, of December 13, the new model 149, approved in the aforementioned Order, replaces the previous one approved in Order HAP/2783/2015, of December 21.

Taxpayers who opt for the Special Regime must submit a special IRPF declaration in form 151 , adapted to the content of the regime.

The new form 151 of “Personal Income Tax Return. Special regime applicable to workers, professionals, entrepreneurs and investors relocated to Spanish territory" approved in Order HPF/1338/2023, of December 13, will be used for the first time for the presentation of the declaration corresponding to the 2023 tax period to be submitted in 2024. Declarations corresponding to tax periods prior to 2023 will continue to use Form 151 approved in Order HAP/2783/2015, of December 21.

Withholdings and payment on account

Withholdings and payments on account for personal income tax will be made in accordance with the regulations on non-resident income tax.

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