Developments affecting impatriates in Spain

The impatriate regime in Spain allows individuals that become tax residents in Spain to only pay non-resident income tax (NRIT) for the year they move to Spain and the following five years, with certain particularities, while still qualifying as personal income tax (PIT) payers. This means that income and capital gains obtained abroad will not be taxed in Spain and that NRIT is levied only on Spanish-sourced income and capital gains. On the other hand, income obtained from work and from entrepreneurial activities abroad is taxed at a lower rate (fixed rate of 24% up to €600,000 and a rate of 47% for amounts over €600,000). The impatriate regime is voluntary and, therefore, it is necessary to apply for it, in accordance with the requirements and by the deadline set in the regulations.

Act 28/2022, of December 21, promoting the startup ecosystem, introduced several amendments to the impatriate regime for the purposes of PIT, which came into force on January 1, 2023. It aimed to make moving to Spain an attractive option for workers, professionals, entrepreneurs and investors residing abroad, as explained in our Legal Flash | Key aspects of Startup Act.

Specifically, following the amendment, this tax regime is applicable not only to workers that move to Spain, but also to individuals that move to Spanish territory for any of the following reasons:

• Their work is carried out "remotely, with the exclusive use of IT, telematic or telecommunication systems and resources". These workers are also known "digital nomads".
• They become directors of a company, regardless of whether they are shareholders and of their stake, unless the company is considered a passive company, in which case these directors cannot be considered a party related to it (previously, the requirement not to be a related party was generally applicable).
• They carry out a business activity classified as an entrepreneurial activity.
• They are highly qualified professionals that move to Spain to carry out an economic activity involving providing services to startups or carrying out training, research, development and innovation activities.

The implementing regulation of this regime has been approved under Royal Decree 1008/2023, of December 5, which clarifies certain concepts used to define the group of individuals, employees, professionals, entrepreneurs and investors that, from January 1, 2023, will be able to benefit from this special tax regime (such as highly qualified professionals, and those carrying out entrepreneurial activities or training, research, development and innovation activities).

Moreover, as this regime may be also applicable to the spouse and children of the professional or worker that has moved to Spain ("main taxpayer") from January 1, 2023, the new royal decree introduces other regulatory aspects, namely, the period the main taxpayer’s relatives are given to move to Spain, the deadlines and rules they must observe to benefit from the tax regime, the duration of the special tax regime, and the consequences of waiving the regime or of main taxpayers or their relatives being excluded from it.

Finally, a transitional arrangement has been approved allowing taxpayers to benefit from the regime if they have established their residence for tax purposes in Spain in 2023 as a result of moving to Spanish territory in 2022 or 2023. As the ministerial decree establishing the form to apply for this tax regime has not yet been approved, these taxpayers may apply for the regime on an exceptional basis within six months of the date the ministerial decree comes into force.