Non-resident taxation

When Spain joined the European Union, the door was opened for new foreign businesses in Spain. Many Europeans founded their company in our country, which led to the need for a single regulation for taxing non-residents. In this way, the Non-Resident Income Tax Law (IRNR) emerged.

What is the Non-Resident Income Tax and where is it applied?

The IRNR is a direct tax that taxes the income obtained in Spain by individuals and entities (companies) not residing in our territory.

The tax is applied throughout the Spanish territory. However, the regional tax regimes, international agreements and the specialities of the Canary Islands, Ceuta and Melilla, among other aspects, must be considered.

Who is required to file non-resident income tax returns?

The IRNR will obligate the following people or entities:

• Natural persons or entities that are not residents in Spain and that obtain income in our country, unless they pay personal income tax.
• Foreign natural persons who are in Spain as members of diplomatic missions or consular offices.
• The income allocation entities incorporated abroad and that are present in our territory.

How is it determined whether a person is a resident of Spain?

To know whether a person is a resident or not in Spain for IRNR taxation, the IRPF rules are applied in a negative sense. That is, according to the Personal Income Tax Law, a natural person is a resident of Spain:

• When you stay in Spain for over 183 days during a calendar year.
• When you have a base of activities or economic interests in Spain.
• When the spouse and minor children live in Spain.

In the case of legal persons, the criteria are established in the Corporate Tax Law so that it will be understood that they are residents of Spain when:

• They have been established according to Spanish law.
• Your domicile is in Spain.
• Its headquarters are in Spain.

There may also be the case of entities under the income attribution regime established abroad and carrying out their activities in Spain. In this case, they must also file a non-resident income tax return.

How is IRNR declared?

The IRNR is presented using Form 210 (Income Tax for Non-Residents without permanent establishment). The submission deadlines are as follows:

• Income derived from the transfer of real estate (sale of an apartment, for example): 3 months from 1 month after the transfer.
• Imputed income from urban real estate: calendar year after accrual (December 31 of each year).
• Rest of income:
  • If the result is to be entered: first 20 days of April, July, October and January.
  • If the result is zero quota: January 1 to 20 of the year following the accrual.
  • If the result is to be returned: as of February 1 of the year following the year of accrual.