Spain, the Radiant Sun Country

No other lesson more widely learnt out of this COVID19 pandemic is the realization that we can work from home. Sure we can!

And working from home actually means working from anywhere.

So, why not move our home, and home office, to Spain?

Barcelona and Madrid’s airports, connected to any major European city within 1 to 2 hours, shorten distances and facilitate commuting, and no other country in Western Europe matches the quality of life of Spain in terms of Cost of Living, Public Health Care, physical and mental well-being, and, of course, Climate & all related outdoor activities in Spain, the country of the Radiant Sun.

Yeah, Spain is great, but what about tax relief and benefits?

Check this out…

The Spanish Tax Special Regime for expats who relocate to Spain due to job offer might significantly reduce your personal taxation. If you are seconded to Spain, you can benefit from it.

Under this Special regime you may opt to be taxed under the Spanish Non-Resident Income Tax Law, even if you are considered as tax resident in Spain, under a fixed rate of taxation of 24% on salaries up to 600,000€ (for the year you become tax resident and the following five years).

This system involves other significant benefits:

  • For example, Investment income and capital gains of tax residents will be taxed only if they are obtained in Spain.

  • Under this Special Regime, you won’t be required to file the form in which you report your accounts, shares, assets, and properties located abroad to the Tax Administration.

  • As per the Wealth Tax, in general, those employees included under this regime are only responsible for the assets they hold in Spanish territory, but not on those located outside of Spain. As an added benefit, taxpayers under the Special Taxation Regime only have to file a tax return if their assets (located in Spain!) at the end of the year exceed 2,000,000€ or the tax return results on an amount payable.  Additionally, in some regions such as Madrid the Wealth Tax have a discount of 99%.

Legal aspects to bear in mind

You really only need to keep in mind four main legal aspects if you are professionally relocating to Spain: Tax (your personal taxes and your company’s taxes), social security (impact on your future pensions), employment contract (requirements under Spanish labor legislation), and immigration.

Tax implications

In accordance with article 76 of the Personal Income Tax Regulations, a foreign company which is not permanently established in Spain and does not carry out any activity in Spain will not be obliged neither to pay corporate taxes nor withhold employee’s personal income tax.

In this scenario, the employee has to manage the tax burden through the corresponding annual income tax return. The foreign employer will not be subject to any tax obligation in the matter of withholdings.

However, your company, as your employer, might have to register in Spain to process your social security contributions and, in doing so, they become effectively registered in Spain (Non-tax resident entity). In this scenario, they can carry out withholdings, too, in addition to social security contributions.

At Adlanter we are experts in international taxation and we understand the importance of proper expat tax planning, which ensures the correct fulfilment of tax obligations and at the same time takes advantage of the different tools that legislation offers to fiscally optimize the displacement of workers in order to reduce costs.

Contact us and we will answer all your questions concerning international tax.

Social Security

Unless you are being temporarily seconded to Spain from either an EU country or from a non EU country with which Spain has subscribed a social security bilateral agreement, if you work from Spain, your employer will have to contribute to the Spanish Social Security on your behalf right from the moment you start working from home in Spain.

In order to do so, your company will need to register with local tax and social security authorities as a Non Resident entity (aka an office of representation, entity not subject to taxation) and process social security contributions on a monthly basis.

This registration is pretty straightforward, and can be processed almost entirely digitally.

By paying Social Security contributions in Spain, you have access to Spanish Public Health System, which is, in accordance with the World Economic Forum, in the top four best healthcare systems in the world.

In those cases where you are relocating from either an EU country or from a non EU country with which Spain has subscribed a social security bilateral agreement, all periods of contributions to the Spanish Social Security system will count with regard to calculating your future pensions.

At Adlanter we can analyze and plan the impact of posting workers on Social Security, both in immediate benefits and in health coverage, the economic benefits arising from illness or occupational accident, and future benefits for retirement.

If you are looking for advice on expat Social Security and working conditions for expatriated workerscontact us and we will answer all your questions concerning international social security.

Employment contract

The inclusion of an employee (either a foreigner or a national) within a country’s labor and social security legislation is determined by the principle of territoriality.

As you will be working in Spain, Spanish labor legislation might impact your working relationship through a number of actions:

  • Collective bargaining agreements, the result of a negotiation between labor unions and employers’ representatives, determine sector by sector the essential conditions of work (salary, working hours, vacations, maternity leave, etc.) as well as the labor relationships (types of work contracts and duration).
  • Working hours; full-time workers in Spain must average a maximum of 40 hours per week of work, calculated on an annual basis, although can be distributed unevenly if a collective agreement is in place
  • The Spanish Salary Guarantee Fund (Fondo de Garantí­a Salarial, FOGASA) works with the Spanish Ministry of Labor (Ministerio de Trabajo) to guarantee compensation of unpaid workers’ salaries as a result of their employer going insolvent, ceasing payments, going into liquidation, or entering into composition with creditors.

Regardless of the principle of territoriality, if your employer is not incorporated in Spain, your payroll will remain in the employer’s country of location.

In that case, the calculation of a shadow payroll would be needed in order to consolidate both Spanish contributions and withholding into your payslip.

If you wish to start a relocation process, at Adlanter we can advise you on everything related to the legislation of the country of origin and of destination, ensuring compliance with legal obligations in both jurisdictions.

Contact with our lawyers and we will make international mobility management easier for you.


EU Nationals

If you are an EU national, you already have the right to reside and work in Spain. Nonetheless, you have to register your residency at the Spanish Registry of EU nationals residing in Spain.

By doing so you will be issued a NIE, foreigner’s identification number, which will be the code by which the Public Administration identifies you, and is needed when obtaining a social security number, your Health Assistance Card, or opening a bank account.

If you are an EU national but your spouse is not, then your spouse will need to process a Residence Card for Family Members of EU Citizens by providing your marriage certificate.

Non EU nationals

If you are not an EU national, you will need a work and residence permit (except if you reside and work in the EU and are temporarily seconded by your employer). In this case, the type of work permit will depend on whether you are a freelance (Entrepreneur’s Residence Permit), locally hired (Highly Qualified work permit) or temporarily seconded (EU Intracompany Transfer work permit).

The general requisites for Spanish work permits are mainly holding a university degree and holding a directive or technician position.

Alternatively, you can process an investment in either financial assets or real estate and obtain the Spanish Golden Visa, which entitles you to work either as an employee or as a freelance, and start your new life-project under the Radiant Sun.

At Adlanter we manage work permits in Spain (processing of the application, requirements, deadlines, renewal, etc.) whether you come to work for yourself or on someone else’s account.

Contact us with no obligation and find out about the types of permits you can obtain.