Salary, benefits and equity

It is for anyone considering, planning or carrying out a move to Spain. It covers tax on pay only. It does not include a gross-to-net calculator, work permits for remote work or tax for the self-employed (autónomos).

Start with "How payroll withholding (retención) works on your Spanish salary". It shows how an employer withholds tax from each payment, and the later pages build on it. If you will keep a foreign employer, go next to "Paid by a foreign employer while living in Spain". If you are still deciding how to move your pay across, "Planning the handover of your pay when you move to Spain" gives the whole picture.

Key rules

• Meal vouchers: Meal vouchers and canteen benefits are tax-free up to 11 EUR per day.
• Health insurance: Employer-paid health insurance is tax-free up to 500 EUR per year for each person covered, or 1,500 EUR for each person with a disability.
• Work-abroad cap: The exemption for work done abroad is capped at EUR 60,100 a year.
• RSU taxation: RSUs are taxed as employment income when the shares are delivered, not when they are granted.
• Option taxation: Stock options are taxed as employment income when you exercise them, not at grant or vesting.
• Paying in instalments: You can split the tax due on your return into two instalments: 60% at filing and 40% by early November.

Salary, benefits and equity: the whole process, step by step

• Decide how your pay will be handled: keep your foreign payroll, move to a Spanish payroll, or take unpaid leave: Before you move

• Check which country's social security applies to you and get the right certificate or registration: Before you start working from Spain

• Tell your new Spanish employer in writing about family changes that affect withholding: Before the payroll is processed, normally within the month of the change

• Report any change that raises your withholding rate: Within 10 days of the change

• Check your tax residence for the arrival year, which is decided for the whole calendar year: After 183 days in Spain, or sooner if your main economic interests are in Spain

• File your annual return, declaring foreign-paid salary as employment income and claiming any foreign tax credit: Campaign usually runs from April to 30 June

• Pay the second instalment if you split the tax due: 60% at filing and 40% by early November: By early November

• Wait for any refund of excess withholding: The tax agency has six months from the end of the filing period, or from filing if later, before it owes late-payment interest

Documents you may need

Identity and residence

• Work and residence authorisation — Planning the handover of your pay when you move to Spain

Income and work

• Proof that you paid tax abroad on the same income — Paid by a foreign employer while living in Spain
• Assignment or secondment letter from your employer — Exemption for salary earned working abroad (trabajos realizados en el extranjero)
• Your employment contract — Exemption for salary earned working abroad (trabajos realizados en el extranjero)
• Employer consent or relocation letter — Planning the handover of your pay when you move to Spain
• A written statement of your trips for your employer — Exemption for salary earned working abroad (trabajos realizados en el extranjero)
• Proof of your employer's tax and social security registration details — Planning the handover of your pay when you move to Spain

The home and the lease

• Contract amendment or new Spanish contract — Planning the handover of your pay when you move to Spain

Other documents

• A list of your travel dates and the places where you worked abroad — Exemption for salary earned working abroad (trabajos realizados en el extranjero)
• Proof that your work benefited the foreign entity — Exemption for salary earned working abroad (trabajos realizados en el extranjero)
• A1 certificate — Paid by a foreign employer while living in Spain, Planning the handover of your pay when you move to Spain

Salary, benefits and equity: questions that cross several articles

Do I have to file a tax return if I earn less than 22,000 euros?

Not necessarily: employees with one payer and under 22,000 euros a year need not file. With more than one payer the limit is 15,876 euros if the later payers paid over 1,500 euros in total. You can still file voluntarily to claim a refund.

Is my foreign salary taxed in Spain if I am a tax resident?

Yes, Spanish tax residents are taxed on worldwide income, including salary from a foreign employer. A treaty and a foreign tax credit can relieve double tax, and work done abroad may qualify for a capped exemption. Read "Paid by a foreign employer while living in Spain" and "Exemption for salary earned working abroad (trabajos realizados en el extranjero)".

Which country's social security do I pay into if my employer is abroad?

Normally it is the country where you physically do the work, so usually Spain. Exceptions include postings of up to 24 months with an A1 certificate and bilateral agreements for non-EU cases.

Can I be taxed on income I earned before I moved to Spain?

Yes, if you count as resident for the arrival year, because residence covers the whole calendar year and the year is not split. Treaty rules and credit for foreign tax can reduce the double tax. The special regime for new arrivals is one option to check. Read "Paid by a foreign employer while living in Spain" and "RSUs, stock options and employee share plans while living in Spain".