International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Spain: New tax regime applicable to capital gains due to change of residence


One of the most significant changes introduced in the latest reform of the Spanish Personal Income Tax Law (PIT Law) was the establishment of an exit tax, which is levied on certain unrealised capital gains on shares and other financial assets when a taxpayer transfers his residence outside Spain.


Eduardo Gómez de Salazar

Antonio López López

However, this is not an original provision in Spanish tax law because it already exists, or has existed, in the laws of some other EU nations and OECD member countries, which provide for 'exit taxes'.

Further, this is not the first time that the PIT Law has changed the usual tax treatment of certain income types as a result of a change of tax residence. This is something that already happens, so to speak, when a Spanish individual changes his tax residence to a territory classed as a tax haven, or with the inclusion in the taxable income of income that has not yet been taxed as a result of a change of tax residence.

The changes to the Spanish tax regime in the PIT Law entered into effect on January 1 2015. Under the rules, when a personal income taxpayer, who has maintained a Spanish tax status for 10 of the last 15 tax periods, transfers their residence to a new state, they must file a final Spanish tax for the last tax period they are resident in Spain. If the taxpayer owns shares or units in entities (including collective investment undertakings) the market value of which exceeds €4 million ($4.5 million) (or €1 million if they own more than 25% of the entity), they must include the positive difference between the market value of those shares or units on the due date of the last tax period for which they must file a Spanish tax return and the acquisition cost of those shares or units.

If the taxpayer changes their residence for work reasons to a country that is not considered a tax haven, or if the host country is a jurisdiction with which Spain has signed a tax treaty with an exchange of information provision, they may request a deferral of the tax debt by providing guarantees and bearing any late payment interest on the debt.

If the taxpayer relocates to an EU country, or a country in the European Economic Area (EEA) with an effective exchange of information, they will not have to pay or defer the exit tax as a result of this change of residence. The tax will only have to be paid, if within the 10 years following the last year the taxpayer was resident in Spain, one of the following circumstances arises:

  • The taxpayer transfers the shares or units inter vivos;

  • The taxpayer forfeits their status as a resident in the EU or EEA; or

  • The taxpayer breaches the regulatory reporting requirements.

Since its approval, this tax regime has been the subject of myriad comments and critiques relating to such questions as the valuation methods applied to the capital gains, or the regime's justification and validity under EU law.

On the one hand, there has been talk of extending the effects of the judgments issued by the European Court of Justice in relation to exit taxes approved by other EU member states and the tax sovereignty conflicts that may arise between those states and EU law with respect, among other issues, to the freedom of establishment or the double taxation that these kinds of gains may suffer, since there are no mechanisms that eliminate this type of double taxation in Spanish law or in the tax treaties yet.

It has also been argued that although it is aimed at taxing large fortunes, in practice it has entailed a limitation for entrepreneurs since it affects the creation, competiveness and growth of Spanish start-ups when they seek to expand their businesses abroad.

Recently, new uncertainty has arisen as to the future application of this regime in cases of transfers of tax residence to the UK, particularly since the Brexit vote, as it is unclear whether the UK will be a member of the EEA or not. This may lead to significant changes in the context of the exit tax for taxpayers who transfer their tax residence to the UK.

In light of the above, taxpayers who may be changing their tax residence should seek professional advice that examines whether this exit tax will be triggered and, if so, the alternatives available to at least defer it.

Eduardo Gómez de Salazar ( and Antonio López López (

Garrigues, Madrid


more across site & bottom lb ros

More from across our site

Two months since EU political agreement on pillar two and few member states have made progress on new national laws, but the arrival of OECD technical guidance should quicken the pace. Ralph Cunningham reports.
It’s one of the great ironies of recent history that a populist Republican may have helped make international tax policy more progressive.
Lawmakers have up to 120 days to decide the future of Brazil’s unique transfer pricing rules, but many taxpayers are wary of radical change.
Shell reports profits of £32.2 billion, prompting calls for higher taxes on energy companies, while the IMF warns Australia to raise taxes to sustain public spending.
Governments now have the final OECD guidance on how to implement the 15% global minimum corporate tax rate.
The Indian company, which is contesting the bill, has a family connection to UK Prime Minister Rishi Sunak – whose government has just been hit by a tax scandal.
Developments included calls for tax reform in Malaysia and the US, concerns about the level of the VAT threshold in the UK, Ukraine’s preparations for EU accession, and more.
A steady stream of countries has announced steps towards implementing pillar two, but Korea has got there first. Ralph Cunningham finds out what tax executives should do next.
The BEPS Monitoring Group has found a rare point of agreement with business bodies advocating an EU-wide one-stop-shop for compliance under BEFIT.
Former PwC partner Peter-John Collins has been banned from serving as a tax agent in Australia, while Brazil reports its best-ever year of tax collection on record.