Tax study

For the tax year that you are a Spanish Non Tax resident, you will only have to pay taxes in Spain if the cost of your salary is reinvoiced or paid in the end by the Spanish company.

Your foreign employer will not have directly any withholding obligations in Spain. However, if the foreign employer has a permanent establishment in Spain, through a branch, and this permanent establishment is deducting the cost of your salary from its taxable base in the Corporate Income Tax, this permanent establishment will have the obligation to make withholdings on your salary, corresponding to your Personal Income Taxation.

First of all, you would only have to pay taxes in Spain on the sale of your foreign entity if you sell it during a tax year in which you have been a Spanish tax Resident. If that is the case and you are younger than 65 in the tax year you sell the property, you will have to pay taxes on the capital gain you might obtain when selling the foreign property. However, please note that in Spain we have an exemption in Capital Gains in case of reinvestment of the sale price, which works the following way: – You bought the property for 400.000 Euros – You sell the property for 1.200.000 Euros – Your capital gain is 800.000 Euros – You buy a new habitual residence in Spain for 600.000 Euros As you have reinvested a percentage of your sale price (600.000/1.200.000 = 50%), this percentage of the capital gains will be exempt from taxation. Therefore, you would only have to pay taxes on the 50% of the 800.000 Euros of Capital Gain. To benefit from this exemption, you will need: – That the property you are selling was your habitual residency, at least, in the 2 years before the sale. – To acquire the Spanish property in 2 years since the sale of your former Habitual Residency – To start living in the Spanish property in 12 months since the acquisition – To live in this Spanish property for 3 years since the acquisition – To live in this Spanish property for 3 years since the acquisition