Spanish Senate to ratify amendments proposed by Spanish government expanding regime’s scope

Spanish Senate to ratify amendments proposed by Spanish government expanding regime’s scope
The Spanish special tax regime for non-domiciled individuals (also known as the impatriate regime) regulated under article 93 of the Personal Income Tax Act allows individuals who become tax residents in Spain to choose to be taxed under non-resident income tax ("NRIT") rules—with certain particularities—for the tax year they move to Spain and the following five tax years.
Except for employment income, this means that income and capital gains obtained abroad will not be taxed in Spain. Thus, NRIT is levied only on Spanish-sourced income and capital gains. Domestic rates apply to the savings tax base but employment income is taxed at lower rates (fixed rate of 24% up to €600,000 and 47% for amounts over €600,000).
In an attempt to make moving to Spain an attractive option for employees, professionals, entrepreneurs and investors residing abroad, the Spanish government has proposed several improvements to this special tax regime. In fact, in addition to the proposals initially submitted (see our Legal Flash | New developments affecting funds, entrepreneurs and impatriates), during the parliamentary process, several amendments have been proposed to expand on its subjective scope of application to enable more taxpayers to benefit from the regime. Note that other tax benefits are foreseen, such as those discussed in the Post | New developments concerning carried interest.
The parliamentary process is close to finishing. On November 3, 2022, in a plenary session, the Spanish Congress of Deputies (lower house of parliament) approved the Bill to Promote the Start-up Ecosystem (the “Bill”) and referred it to the Spanish Senate (upper house), so the latter could continue with the parliamentary processing of the Bill, due to finish on November 28 at the latest. We expect the final approval and publication in the Official Gazette of the Spanish State before the end of 2022.
Amendments proposed
Below, we summarize the most significant amendments the Bill aims to introduce for this regime—highlighting in bold those amendments recently proposed—which would come into force from January 1, 2023. The definitive wording of the Bill may vary depending on the amendments included during the deliberations at the Senate:
Finally, the Bill also foresees that, under the impatriate regime, income obtained from entrepreneurial activities, and not only employment income, will be taxed in Spain on a worldwide basis.
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