Act 26/2014 of November, 27th 2014 on the Spanish Personal Income Tax (IRPF) establishes a new taxation event with regard to capital gains when taxpayers change their tax residence out of Spain.
General regime:
Applicable to taxpayers who have been Spanish residents during 10 of the 15 previous tax periods.
Taxation when and provided that the following requirements are fulfilled:
• The market value of shares exceeds an aggregate value of 4.000.000 euros; or
• Stakes over 25% and the market value of the shares exceeds the amount of 1.000.000 euros.
Special regime:
Conditions required for deferral of tax debt payment:
Temporary move based in employment reasons to a country or territory that is not considered a tax heaven or to a country with a Double Taxation Treaty to avoid double taxation with effective exchange of information.
Possibility to defer payment of tax debt and its extinction if the taxpayer becomes again a taxpayer under Personal Income Tax within the term of 5 financial years (which can be extended to a following 5 more years based on employment reasons).
Change of Tax Residence to another state of the EU or European Economic Area (EEA):
• Exemption of payment if the country where the taxpayer has moved to has subscribed a Double Tax Treaty to avoid double taxation with effective exchange of information.
• A communication system with the Tax Administration is established for a period of 10 financial years.
Capital gains will only be taxed when during the term of the following 10 financial years the following events take place:
• The shares are sold.
• The individual looses his residence in the EU or EEA.
• Non-fulfilment of the obligation of communication with Tax Administration.
Tax heavens:
These regimes will be applied when the change of residence takes place to a country or territory deemed as tax heaven.
Capital gains will be taxed in the last tax period in which the taxpayer has his residence in the Spanish territory.
If shares or securities are transferred, the acquisition value will be deemed as the market value.
The information contained in this note should not be regarded in itself as specific advice on the matter discussed, but only a first approach to the subject. Therefore it is highly recommended that the recipients of this note search professional advice about their particular case before taking specific measures or actions.