Income tax return for residents in Spain working abroad

The income tax return must be made by residents in Spain who work abroad where they have their tax residence. Because they may be subject to double taxation because they must declare in the country where they work and in Spain.

The tax return of residents in Spain who work abroad must be filed where they live. Because the tax residence is established by where the person spends more time during the year.

Where should residents of Spain who work abroad file their income tax return?

People who live in Spain and work abroad can file a tax return when they are tax residents. This according to what is established by the Tax Agency, for this you must comply with the following requirements:

• To stay in the national territory for more than 183 days per year.
• Have minor children or spouse who are economically dependent on the person and live in Spain.
• The base of the main interests and indirect or direct economic activities must be in Spain.
• When the person complies with these requirements, he/she is considered by the tax authorities as a tax resident. Therefore, he/she must file the income tax return in Spain, since he/she is still a taxpayer in the IRPF.
• But residents in Spain who work abroad may be subject to double taxation. This is because they would be obliged to pay taxes in the country where they work and in the country where they reside.
• People who have their tax residence in another country, but receive any type of income in Spain must declare. The tax they must pay is the Non-Resident Income Tax.

What is double taxation?

Double taxation treaties are agreements that establish the rules for the payment of taxes. These are bilateral agreements reached by countries to decide how to divide taxation.

Double taxation occurs when the country where you work withholds taxes on your income from work. Then you are obliged to pay taxes in Spain for the same income.

This means that you are paying for the same income in two different countries. But there are agreements to avoid double taxation, which are agreements signed between countries. The purpose of these agreements is to ensure that each country pays what is due and does not overpay taxes on the same income.

Spain has established agreements to avoid double taxation with all countries belonging to the European Union. Also with almost all the countries of South America and many others.

When you work in a country with which Spain does not have an agreement, you must pay taxes. This is because each country has different ways of taxing.

How do frontier workers file their income tax returns?

Border workers are those who work on a daily basis in a country other than the one in which they live. This is very frequent in localities close to borders and for this there are regulations between the main neighboring countries. Among these are the following:

• The existing agreements with Portugal and France establish that all the income they obtain is taxed in the state where they reside.
• This means that Spanish citizens who cross the border daily to work in these countries only declare in Spain.
• The same happens with people who live in Portugal or France and work in Spain, they only declare in their country.
• Spanish citizens working in Morocco could declare their income in both countries.

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How do non-residents file their income tax returns?

There are two ways in which non-residents can file their income tax return. These are established in the Personal Income Tax Law and are as follows:

• Without permanent establishment: When the person does not have a permanent establishment, for this case the income will be taxed in isolation. To this tax are not subject the persons who have been taxed by the Inheritance and Gift Tax.
• With permanent establishment: Persons with permanent establishment, are taxed on the total of the imputable income, regardless of the place where they are obtained.

Exemptions for work abroad

Article 7p of the Personal Income Tax Law establishes exemptions for work abroad. This right consists of the following:

• Employees working abroad have a maximum of 60,100 euros of salary exempt from IRPF. This depends on the number of days outside Spain.
• Workers who have this right must have the documents certifying their situation. The documents required are the following:
• Justification of the departures from the national territory, of the work done abroad, what the work consists of. He/she must also demonstrate for which company he/she has worked and present the calculation of the exempted remunerations.
• In order to be entitled to this rule, the worker must travel. The work is done for a company that does not reside in Spain and the country where he/she works has a tax similar to the IRPF.

What is the favorite reality show of Spanish residents working abroad? "Survivors: Tax Edition"

What is Non-Resident Income Tax?

The non-resident income tax is a tax established in Spain for income obtained in the territory. This rule applies to companies and individuals not resident in the country.

• Mandatory compliance with this tax arises when the following requirements are met:
• The company or person cannot be a tax resident in Spain.
• When the person or company obtains income in Spanish territory either in kind or in cash that is subject to taxation.
• Non-resident individuals who receive income from real estate.
• The non-resident income tax return must be made on form 210.

Make it simpler with TaxDown

In short, if you are a resident in Spain but work abroad, TaxDown can make your life much easier when it comes to filing your tax return. This platform helps you understand and apply the tax rules, making sure you don't overpay and benefit from all possible deductions. It is easy to use and guides you through every step, saving you time and possible headaches. That's why we recommend using TaxDown to make your tax return simple and efficient.