What is international taxation?

It answers three basic questions: who is taxed in each country, what income each state may tax, and how to avoid paying twice on the same income.

Key concepts

• Tax residence. This is the starting point. In Spain you are resident if you spend more than 183 days a year in the country, if your main centre of business or economic interests is here, or if you are presumed resident because your spouse and minor children live here (article 9 of the Personal Income Tax (IRPF) Law). Residents are taxed on their worldwide income. Non-residents are taxed only on their Spanish-source income, through non-resident income tax (IRNR).
• Double taxation treaties. Spain has 99 in force. They allocate taxing rights between countries and resolve cases of dual residence.
• Methods for eliminating double taxation. Either exemption, or a deduction for tax paid abroad, such as the one in article 80 of the IRPF Law.
• Special regimes. For example, the regime for inbound workers known as the Beckham Law (article 93 of the IRPF Law), which lets people who move to Spain be taxed as non-residents for six years, or the exit tax for those who leave with large shareholdings.
• Reporting obligations. Modelo 720 (assets abroad), Modelo 721 (crypto-assets abroad), and the automatic exchange of information between tax authorities (CRS and the EU DAC directives), which lets the Spanish Tax Agency see accounts and investments in more than one hundred countries.
• International business taxation. Transfer pricing, permanent establishments, withholding on dividends, interest and royalties, the 15% global minimum tax (Pillar Two) and the BEPS anti-abuse rules.

For individuals, international taxation comes into play in very specific situations: moving to or leaving Spain, receiving a pension or salary from abroad, holding accounts, investments or a home in another country, inheriting assets located elsewhere, or working remotely for a foreign company. In all of these cases, poor planning can mean paying tax twice or being penalised for not reporting.

Taxmind is a firm specialising in international taxation for expats, non-residents and companies doing business in Spain. We help you establish your residence status, apply the right treaties and meet all your obligations.