Property owners who receive rents and are tax expats will not disqualify as an expat

Non-tax resident wishes to become a tax expat in Spain under the rules set out in the Spanish Income Tax Law, with the singularity that he already owns several rental properties in Spain and is considering contributing them to a Spanish company.

To the extent that requirements are met, this is:

– Not being a Spanish resident in the past 10 tax years;
– Moving to Spain is due to an employment contract or becoming a director of a non-related company; and
– No income may be received for running a business in Spain.

the tax expat will qualify as such and would not lose its status if it received dividends from his Spanish company as long as there is no employment contract nor a directorship appointment.

Spanish tax expats are not entitled to tax exemptions on employment carried out abroad

An employee, who meets the requirements to become a tax expat, moves to Spain due to an employment contract, however, it is mentioned that given the particulars of his job, he will work abroad for 114 days a year.

The question raised is whether the tax expat is entitled to tax exemptions for employment carried out abroad, as provided in the Spanish Income Tax Law.

One of the caveats when becoming a tax expat in Spain is that you are not entitled to certain exemptions in your income tax which are provided for Spanish tax residents; therefore, the expat will be subject to taxation on any employment carried out abroad.

Donating a property to an expat is taxable under the regulations of the Autonomic Region where the property is located

An individual who is already a tax expat and is a resident in Madrid receives as a donation 50% ownership on a property in Madrid.

What regulations are applicable to such donation?

Whenever there is a donation of an asset, other than real estate, the applicable regulation will be wherever the beneficiary has its main residence. However, the applicable regulation when a property is donated is that of where the property is located, hence, in the case in hand, the Madrid regulations.