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Foreign researchers are recommended to gather some general information and have some knowledge of the basic aspects of the Spanish tax system before coming to live and work in Spain. The Spanish Tax Agency is responsible for the application of the State Tax System. Their web page (www.agenciatributaria.es) is very complete, has an English version and has a special section for non-residents in Spain.
All natural and legal persons in Spain have a tax identification number (NIF)
for all dealings with the Spanish Inland Revenue. For those who do not have
Spanish nationality, this number is the same as their Foreign Identification
Number (NIE).
Direct and indirect taxes
The Spanish tax system has two different types of taxes: direct and indirect
taxes. Direct taxes are levied on income and wealth. This category includes
Personal Income Tax (IRPF), Non-Resident Income Tax (IRNR), Corporate Income
Tax (IS), Succession and Donation Tax (ISD) and Wealth Tax (IP). Indirect taxes
are levied on the consumption of goods and services and, in general, on the
transfer of goods and rights. This category includes Value Added Tax (IVA),
Special Taxes (IIEE), Insurance Premium Tax (IPS) and Wealth Transfer Tax (ITP).
A foreign researcher who comes to Spain for a limited period of time will probably
have to pay IRPF or IRNR (according to his/her residence status), IVA, IIEE
and in rare circumstances, Wealth Tax (IP), Wealth Transfer Tax (ITP), etc…
Personal Income Tax (IRPF) and Non-Resident Income Tax (IRNR)
IRPF and IRNR are taxes levied on the income earned by private individuals according
to their place of residence.
Residence
Depending on whether an individual is or is not resident in Spain, he/she must
pay Personal Income Tax (IRPF) or Non-Resident Income Tax (IRNR)
on the income earned.
A person shall be considered to be a permanent resident in Spain if he/she spends more than 183 days (6 months) per year on Spanish territory. Occasional absence from Spain shall also be taken into account when determining permanent residence, unless the private individual provides proof of tax residence in another country. There are however other considerations to be taken into account, such as the family’s place of residence, close personal or economic ties, or the usual country of residence or employment. Individuals in this situation will have to pay Personal Income Tax (IRPF) on the total income earned worldwide. It is therefore recommended that you are well informed of your personal tax situation when working or conducting research in Spain.
Special Regime for IRNR taxation
Individuals (in this case researchers) who acquire their tax residence in Spain
as a result of being transferred to Spanish territory can choose to be taxed
under Personal Income Tax or Non-Resident Income Tax terms during the tax year
of change of residence and during the following five tax years. This holds true
for individuals:
- Who have not been resident in Spain during the ten years prior to their transfer
to Spain.
- Whose transfer is the result of an employment contract.
- Whose employment activities are carried out in Spain and for a company or
organisation with residence in Spain or for a permanent establishment in Spain
of an organisation that does not have residence on Spanish territory.
- Whose returns generated by the activities performed under the labour agreement
are not exempted from IRNR.
Tax residence certificate
It is possible for an individual to be resident or administrative resident in
a State without being considered tax resident in that State. To be considered
tax resident in a specific State (in this case Spain), the individual must pay
Personal Income Tax (IRPF) on the total income earned worldwide. Tax residence
shall be proven by means of a certificate issued by the competent Tax Authorities
of the country concerned, which will be valid for a period of one year.
Agreements to avoid double taxation
If the researcher is resident in a country that has entered into an agreement
with Spain to avoid double taxation, the provisions of this agreement will apply,
given the fact that in some cases – in light of specific circumstances
– income cannot be subject to taxation in Spain. In these cases, the non-resident
researcher will have to prove that he/she is residing in a country that has
entered into an agreement with Spain by producing a certificate issued by the
Authorities of the country concerned.
For more information on the different types of agreements and an overview of the countries that have entered into an agreement with Spain, please visit the web page of the Ministry of Economy and Finance: www.mineco.es, available in Spanish and English and of the Spanish Tax Agency: www.aeat.es under the chapter “No Residentes”.
Deduction for double international taxation
If the foreign researcher residing in Spain is subject to payment of Personal
Income Tax (IRPF) and has earned income (through returns or property profits)
from outside Spain, a deduction for double international taxation can be applied
to prevent this income from being subject to IRPF in Spain and a similar tax
abroad.
Special regime for researchers (taxpayers) with residence in other
EU Member States
Foreign researchers who are paying IRNR and can provide proof of residence in
another EU Member State, and who have received at least 75% of their income
during the taxable period from employment and economic activities carried out
in Spain (and the income has been subject to IRNR), can ask for the application
of a special regime, so that taxes payable in Spain be calculated in accordance
with IRPF regulations without losing their status of Non-Resident taxpayers.
Fellowships exempted from tax payment:
a) Personal Income Tax (IRPF) payers
If the researcher is paying Personal Income Tax (IRPF), his/her fellowship will
be considered earned income and will therefore be subject to Personal Income
Tax payment. However, in accordance with legal regulations, public fellowships
and fellowships granted by non-profit making institutions under a special regime
(Law 49/2002) are exempted from tax for the conduct of regulated studies, both
in Spain and abroad, at all levels and grades of the education system. This
provision applies to payments made on or after 1st January 2004.
b) Non-Resident Income Tax (IRNR) payers
However, if the researcher is paying Non-Resident Income Tax (IRNR), the fellowships
will be considered economic returns for the working activities carried out in
Spain and will therefore be subject to Non-Resident Income Tax payment. This
occurs whenever the economic returns are obtained through a personal activity
carried out on Spanish territory or through public contributions made by the
Spanish Administration. If the labour activity has been carried out exclusively
abroad and is subject to payment of personal income tax outside Spain, it will
be exempted from IRNR tax.
Some fellowships, though subject to IRNR, are exempted from payment (according
to IRNR regulations) under the following two circumstances:
- Fellowships exempted from payment in accordance with IRPF legislation.
- Fellowships and other financial support received by private individuals, granted
by public Administrations, in accordance with national and international agreements
of cultural, educational and scientific cooperation or the annual international
cooperation plan approved by the Cabinet of Ministers.
The Value Added Tax or VAT (IVA) is an indirect consumption tax, taxing three different types of actions: the provision of goods and services by companies and professionals, the acquisition of goods within the EU, and importations. VAT is borne by the ultimate user only and not by the companies or professionals. The latter collect VAT from their customers and deposit it with the tax authorities by means of tax declarations presented at the Spanish Tax Agency. In the first case, VAT is paid upon the purchase of any product or service. In the second case, VAT is paid upon the entry of goods (with the exception of personal effects) from one EU Member State to another. In the third case, VAT is paid on goods imported from third countries. There are three different types of VAT: kinds of IVA: general (16%), reduced (7%) and super-reduced (4%). The super-reduced VAT rate applies to basic goods or goods of primary necessity. For more information on which goods and services belong to each category, please visit the following website: http://asesores.com/fiscal/tipiva.htm.
Special taxes are taxes levied on the consumption of very specific goods: hydrocarbons (petrol derivatives), alcoholic drinks and tobacco. This category also includes the Special Tax on Certain Means of Transport, levied upon the registration of a vehicle. Please remember that in Spain all new and second-hand vehicles (cars, motorcycles) that are going to be used on national territory by Spanish residents must be properly registered.
Local taxes
Apart from the taxes described above, which are imposed at the national level,
there are also locally levied taxes, which are set by the City Councils. The
most relevant are:
• Property Tax (IBI)
Levied on the assessed value of properties (houses, flats, etc..) and payable
by the property owners or holders of certain property rights.
• Vehicle Tax (IVTM)
Replaces the former motor vehicle tax (IC). It is levied on all motor vehicles
that use the public road.
For more information, please consult the following address:
