QROPS ADVICE: Taxation of Expatriates Living in Spain

Expatriates living in Spain will be classified as either resident or non-resident. An individual is considered resident if:
􀂃 They spend more than 183 days in Spanish territory in a calendar year or,
􀂃 Their principal place of business, professional or economic interest is based in Spain or,
􀂃 Their spouse and/or dependent children are habitually resident in a Spanish territory (unless the individual is separated from
their family, or can prove tax residence elsewhere)
In Spain there is no concept of a part tax-year. An individual will be considered to be resident or non-resident for the whole tax year according to the above rules and taxed accordingly.
Income tax is raised in two parts: the majority is raised by the central government, with a smaller percentage being raised at a regional level by the ‘Autonomous Community’ in which the individual is living. The ‘Autonomous Communities’ also control inheritance/gift tax rates. If the ‘Autonomous Community’ does not establish its own tax scales then a default tax scale is applied.
Income generated from employment for services rendered in a foreign country is tax exempt up to a limit of €60,100 (2009),provided that the work is performed for a company or entity non-resident in Spain, or for a permanent establishment located in a foreign country and provided that a tax similar to the Spanish Personal Income Tax is applied in the territory where the work is performed. In addition, the territory must not be considered a ‘tax haven’ by the Spanish tax authorities. At present, the UK Dependent Territories of the Channel Islands and the Isle of Man, as well as the UAE, Hong Kong and Singapore, are all included on a ‘blacklist’ of tax havens maintained by the Spanish Tax Authorities.

full details at http://www.ailo.org/common/externalPage.asp?intURL=/publications/default.asp&extURL=/downloads/Spain_2009.pdf