The ultimate guide for expats

Being an expat comes with its fair share of challenges—especially when it comes to handling tax obligations both in your home country and your new one.

In this guide, we’ll break down what it really means to be an expat, how it differs from being an emigrant or an immigrant, and share key tips on how to work and manage your taxes while living abroad.

Let’s dive in!

What does it mean to be an expat?

Being an expat means living and working in a country other than your own for a set period of time. It’s an exciting experience, often linked to international job opportunities.

Expats are often sent abroad by their companies to work in a branch or subsidiary in another country.

Unlike immigrants, whose goal is to settle permanently in a new country, expats usually keep their residence and ties to their home country, with the expectation of returning someday. While living abroad, expats face new challenges and find opportunities for personal and professional growth.

Differences between expats, emigrants, and immigrants

It’s important to understand the differences between these terms:

• Expat: An expat is someone who temporarily lives in a country other than their own, usually because they’ve been sent abroad by their employer to work at a branch or subsidiary.
  For example, Juan is hired by a company in his home country to work at a foreign branch for two years. During this time, he remains a citizen of his home country and plans to return once his contract ends.
• Emigrant: An emigrant is someone who leaves their home country to settle permanently in another. People emigrate in search of better job opportunities or living conditions.
  For example, María decides to leave her home country to pursue better work opportunities. She moves permanently, obtains citizenship in her new country, and establishes her home and life there.
• Immigrant: An immigrant is someone who moves to a new country with the intention of staying permanently. Immigrants seek a new life and may acquire citizenship or legal residency in their host country.
  For example, Pedro flees his home country due to political conflict and seeks refuge abroad. He applies for asylum, eventually gains legal residency, and becomes a productive member of his new society.

Understanding these terms is essential, especially when it comes to knowing your rights and responsibilities—including tax obligations—in each situation.

Working as an expat

Working as an expat means doing your job in a country different from your home country. It’s an exciting opportunity, but it also comes with challenges—like adjusting to a new work culture, facing language barriers, and building new professional relationships.

Here are a few things you can expect when working abroad:

• A different work culture and language
• New opportunities for professional growth
• A valuable multicultural experience

All of this involves adapting to a new professional environment, which means you’ll need to stay on top of the administrative and legal procedures required in your host country. Doing things right from the start helps you avoid penalties or extra charges that could affect you financially.

At TaxDown, we’re here to guide you through the whole process—so you can file everything accurately, quickly, and stress-free. We’ve got your back!

What you need to know about taxes as an expat

If you’re working outside of Spain, you may be eligible for tax exemptions and deductions that significantly reduce your tax burden. But to stay on the right side of the Spanish Tax Agency, you’ll need to meet certain requirements and file everything correctly.

1. IRPF exemption for work abroad (Article 7p)

One of the best tax perks for working abroad is the well-known Article 7p of the Spanish Income Tax Law (IRPF), which allows you to exempt up to €60,100 per year from taxes if you meet these conditions:

• You are still a tax resident in Spain.
• You work physically abroad for a foreign company or as part of an international group.
• The country you work in is not a tax haven and has a tax treaty with Spain.

🤑 With this, you can recover a large portion of the income tax withheld from your salary—no extra paperwork required. It’s applied directly in your Spanish tax return.

2. Foreign tax credit for double taxation

If you’ve already paid taxes on your income in the country where you work, you can deduct that amount in your Spanish tax return, so you don’t get taxed twice on the same income. This is called avoiding double taxation.

📌 Keep in mind: you can only deduct up to what you’d owe in Spain. If the foreign tax is higher, you can’t claim the extra back.

3. Excluded excess remuneration regime

This tax benefit is aimed at public officials, diplomats, and employees sent abroad by Spanish companies to certain destinations. It allows you to exclude from IRPF the “excess” or additional income received for working abroad.

⚠️ Important: this can’t be combined with Article 7p. You’ll need to choose the one that gives you the greater benefit.

4. Exemption for short-term assignments

If you work abroad for just a few days or weeks, you can still benefit from Article 7p on a proportional basis. There’s no need to be abroad for a full year, just meet the required conditions.

David has just saved €482 on his tax return thanks to the Beckham Law.

Learn how to save >

What can TaxDown do for you?

• Personalized tax advice: Our tax experts, specialized in expat taxation, are ready to give you personalized guidance on your specific situation—and help clear up any doubts you might have!
• Save you loads of money and time: We know how important it is to get everything right to avoid penalties and make sure you apply all the tax benefits you’re entitled to. That way, you can focus on what really matters in your life abroad.
• Tax prep and filing made easy: Let’s be honest—doing taxes is a pain. With TaxDown, forget about those confusing forms and complicated processes. We take care of it all for you.
• Security and confidentiality: Your tax data is private and deserves top-notch protection. That’s exactly what we offer—your privacy is our top priority. We simplify the complex world of international taxes so you can stay compliant without the stress.

No matter where you are in the world, TaxDown is here to help you.