If your company sends you to work temporarily outside Spain while you keep your Spanish tax residency, there are specific tax exemptions designed for this type of posting that can considerably reduce your tax bill during that period.
The exemption for work performed abroad
Employment income received for work actually carried out abroad can be exempt from income tax up to a set annual limit, provided several requirements are met: the work must be done for a company or entity not resident in Spain (or a permanent establishment located abroad), and the destination country must have a tax similar in nature to income tax (this generally doesn't apply if the destination is a tax haven).
The excess allowance regime as an alternative
As an alternative to the above exemption (the two are mutually exclusive for the same worker and period — you must choose one or the other), there's the excess allowance regime, which exempts the excess paid over the total pay the worker would have received had they stayed in Spain, when that excess is paid specifically to compensate for the posting (per diems, expatriation allowances).
Which one is more advantageous depending on your situation
- The exemption for work performed abroad tends to be more advantageous when the posting is long and total pay is high, since it applies to the whole of the employment income earned during the posting, not just the pay "excess."
- The excess allowance regime may be preferable for shorter postings or when the specific expatriation allowance is the most significant part of the pay difference.
Don't confuse this with changing your tax residency
These exemptions are designed for workers who keep their tax residency in Spain while working temporarily abroad. If your posting is so long or permanent that you become a tax resident of another country (exceeding, among other criteria, 183 days spent in that country during the calendar year), your tax situation changes completely — you stop being taxed in Spain on your worldwide income and start being taxed under the rules of the country where you become resident.
The importance of properly documenting the posting
To apply either of these exemptions, it's essential to be able to prove the actual days worked abroad, the relationship with the foreign entity that benefits from the work, and the other required conditions, through documentation such as posting letters, contracts, or company certificates.
Always check your specific case
Given the complexity of these rules and their many specific requirements, it's worth consulting a tax advisor specializing in international taxation before applying either of these regimes on your tax return.
Simulate your reference withholding in Spain
Our income tax calculator lets you estimate what your withholding would be if you were taxed normally in Spain, as a point of comparison against the benefit of these specific exemptions.