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Spain: Proposed personal taxation changes

Thursday, 04 September 2014   (0 Comments)
Posted by: Author: David Sarda
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Author: David Sarda (BDO Spain)

The Spanish Government has recently published draft legislation aimed at reforming Corporate Income Tax, Personal Income Tax and Non-residents Income Tax. It is intended that the changes will take effect from 1 January 2015. In this article we will focus on the changes affecting individuals.

Non-residents’ tax rates

It is proposed that the general income tax rates for non-residents will be 24% for 2015, with interest, dividends and capital gains being taxed at 20% (19% in 2016).

It is also proposed that the general income tax rate for individuals who are resident in other EU member states or EEA member states which exchange information with Spain will be reduced to 20% in 2015 and 19% in 2016. The rate for interest, dividends and capital gains will also be reduced to 19% in 2016.

Inpatriate regime (‘Beckham Law’)

The draft legislation modifies the special regime for individuals relocating to Spain under a work agreement, under which they are only subject to tax on Spanish sources of income, in the following main ways:

  • the current EUR 600,000 remuneration limit will be abolished;
  • the first EUR 600,000 of income will be taxed at 24%, and the excess over EUR 600,000 will be taxed at 45% (47% in 2015); and
  • professional sportsmen and women will be excluded from the regime, but administrators and directors of companies with less than a 25% interest in the share capital will become eligible.

The amended rules will also apply to individuals who relocated to Spain before 1 January 2015.

New capital gains exit tax

It is proposed to introduce an exit tax on unrealised gains on shares owned by individuals who have been resident in Spain for at least five out of the previous ten tax years. On leaving Spain, the individual would be subject to tax on gains in respect of shareholdings of more than 25% in a company, with a value of over EUR 4m.

This article first appeared on

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