If you live in Spain and plan to move to another country, you should learn about the "exit tax." Yes, sometimes you have to pay a tax when you cease to be a tax resident in Spain. But only affects entrepreneurs or investors with 10 years or more of tax residence in Spain.
It is a tax payable on capital appreciation in shares or companies. This increase in value from the purchase price to the Spanish item is considered a gain. And the same rates are applied as for the IRPF. It must be pay within three months since ceasing to be a tax resident in Spain.
The exit tax was created in 2014 to prevent taxpayers with a certain amount of capital from leaving Spain before selling their companies or shares. It was a practice that allowed not paying for the profits obtained from that sale. Therefore, this tax does not tax the profits, but the revaluation that the capital has had since it was obtained until it leaves Spain.
Cases in which payment must be made
Specifically, you will have to pay the exit tax in Spain if:
- You have been a tax resident in Spain for at least 10 of the last 15 years.
- You have 4 million euros or more in shares, participations in companies or investment funds.
- You own more than 25% of the property of a company and your share is worth more than 1 million euros.
It does not apply to real estate, bank accounts, or pensions.
If it's time to pay, it's time to pay before the Tax Agency by means of a complementary self-assessment. And it is payable within three months of leaving Spain. The tax rate can be up to 26%. Let's see it in an example. A company was created by contributing €300,000 and that part is now worth €1 million. This is a revaluation of 700,000 euros. The rate of 26% is applied, so you will pay €182,000.
Exceptions that allow not paying
There are exceptions that exempt the payment of the exit tax. If you you are relocating temporarily for work reasons you do not pay it. But you will have to present documentation to the Tax Agency and pay an amount of money as a guarantee. If you return to Spain within five years you are exempt from paying the tax and the guarantee will be returned to you.
If you are based in a country of the European Union or Schengen Area you do not pay the exit tax either. But if you sell the shares before 10 years and leave the European Union or the Schengen Area, you will have to pay the tax.
And there's another situation, which isn't an exception but can be used to recover capital. Let's suppose you move to another country and pay the exit tax. But after a few years, you return to Spain and haven't yet sold your shares or interests in a company. In this case you can request a refund of the taxes paid.
Can Exit Tax be avoided or reduced?
Yes, with good tax planning. Some strategies include:
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Transferring assets before leaving Spain
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Dividing shares if there are several partners
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Evaluate the timing of the exit based on the revaluation of the assets
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Apply for double taxation agreements (depending on the destination country)
It's important to consult with an international tax advisor before moving, especially if you have significant assets or business interests.
How do you know if you're going to lose your tax residency in Spain?
Tax residency is lost when:
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You do not stay more than 183 days a year in Spain
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Your center of economic or family interests moves abroad
Simply changing your registered address isn't enough. The Treasury analyzes several factors to determine whether you have truly ceased to be a tax resident.
Several assumptions to take into account
The regulations include an extensive regulation of situations and cases. For example, which moment is taken into account for determine the value of the shares. It would be very extensive to explain here each case provided for in the law. We recommend consulting a specialist in case of doubts.
For those thinking of leaving Spain: Even if you don't have to pay exit tax, you'll likely have to file a tax return. It's a common misconception that if you leave Spain mid-year, there's nothing you can do with the Tax Agency. Even if you only live in Spain for a few months of the year you move and cease to be a tax resident, you may have to file your personal income tax return the following year.
Our services
At MBT Abogados, we advise foreigners and residents undergoing expatriation or returning to their home countries. We can help you with:
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Evaluate whether the Exit Tax applies to your situation
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Calculate the possible tax impact
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Submit the necessary tax forms
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Planning your exit with legal and tax efficiency
Write to us by email or WhatsApp for a free initial evaluation. We're based in Barcelona and work with clients from all over the world.
FAQs
Does the Exit Tax apply if I sell my house? No, it only affects certain financial assets, not real estate.
If I leave Spain for less than a year, do I have to pay Exit Tax? Only if you effectively lose your tax residency. If you maintain your center of interests in Spain, you will remain a resident for tax purposes.
Do I have to pay Exit Tax if I move within the EU? Yes, but payment can be deferred in some cases.
Do I need to declare anything to the Treasury before I leave? Yes, you must report the loss of tax residency using forms 030 and 113.
