Working offshore? This is how is taxable your income in Spain.

La vida pirata, la vida mejor… As we say in Spain, living life to the fullest: From Port to Port, an Amazing Overseas Experience. Jokes aside, it is well-known that there are no countries or strict regulations on the high seas. However, this doesn’t exempt you from paying taxes. If you work on a cruise ship, a vessel, or an oil platform, here’s what you need to know to fulfill your tax obligations.

Where am I tax resident?

The main rule for being a Spanish tax resident is residing in Spain for more than 183 days. It’s important to be aware that even sporadic absences are considered as if you were in Spain. The Dirección General de Tributos (DGT) confirms that even if you work outside the country for more than 6 months, you will still be considered a Spanish tax resident unless you provide a tax certificate proving your tax residency in another country.

Another crucial point to consider is that if your partner and child are living in Spain while you are residing outside the country, there is no room for debate – you are automatically considered a Spanish tax resident in that situation. Therefore, it is highly probable that you will be classified as a Spanish tax resident.

How does the income tax work?

The situation for expatriates is no different from the rest of the Spanish population. For more detailed information, you can refer to our article on income tax.

Your primary concern here lies in the location of your employer’s base, as it determines whether you can potentially apply for the double taxation treaty or not. The country where your employing company is established holds precedence, regardless of your physical presence in that country. Often, these companies are situated in tax havens to reduce their tax burden. If this is the case for you, unfortunately, you won’t be eligible to apply for the double taxation treaty or any exemption.

Is there is any exemption for working overseas?

The Tax Agency states that if you are a Spanish tax resident and your annual earnings are below €60,100, you are not required to pay taxes in Spain until you reach that limit. However, certain conditions must be met, including:

• You must be employed by a company that is based outside Spain.
• The country where the company is located should charge a similar income tax and not be considered a tax haven.
• You, as the employee, must physically leave Spain to carry out your work.

If you fulfill these requirements, you are eligible to claim this exemption, which means you will only be liable to pay taxes in the country where your employing company is based.

Double taxation treaty?

Let’s consider a scenario where you cannot qualify for the previous exemption, or you do, but your earnings exceed €60,100. In this situation, it becomes essential to refer to the double taxation treaty between the countries involved. In general, most countries follow a similar pattern. If you spend more than 183 days in Spain, Spain can claim taxes on your income, but you can apply for the double taxation treaty benefits in your tax return.

As you can see, the options vary depending on each individual case. Our recommendation is to seek a tax consultation with our tax expert, Rafael, who will assist you in clarifying all your questions and providing you with peace of mind.