Spain's exit tax taxes unrealised capital gains when a taxpayer relocates their tax residence abroad. For individuals, Article 95 bis LIRPF taxes latent gains on shares and equity interests exceeding statutory thresholds when a contributor ceases to be a Spanish tax resident. For companies, Article 19 LIS taxes assets that leave the scope of Spanish tax jurisdiction when a company transfers its domicile or a permanent establishment abroad.
In practice
What Is the Exit Tax in Spain
Spain’s exit tax prevents latent gains from escaping taxation when a taxpayer leaves the Spanish tax jurisdiction. There are two distinct regimes: one for individuals (Art. 95 bis LIRPF) and one for companies (Art. 19 LIS).
Exit Tax for Individuals (Art. 95 bis LIRPF)
Article 95 bis LIRPF, introduced by Law 26/2014, requires taxpayers who cease to be Spanish tax residents to include unrealised capital gains on shares and equity interests in their final IRPF return, provided one of the following thresholds is exceeded:
- The aggregate market value of the relevant shareholdings exceeds EUR 4,000,000, or
- The market value of a stake in a single entity exceeds EUR 1,000,000 and the interest held is at least 25 per cent.
The taxable gain is the difference between the market value at the date of departure and the original acquisition cost.
Deferred Payment for EU/EEA Movers
If the taxpayer relocates to an EU Member State or EEA country with an effective information exchange arrangement, the tax may be paid in five equal annual instalments without interest. If the taxpayer returns to Spain within five years, they may apply for a refund of the tax paid.
Exit Tax for Companies (Art. 19 LIS)
Article 19 of the Corporate Income Tax Act (LIS) taxes assets that cease to be linked to a Spanish permanent establishment or whose ownership is transferred to another state, incorporating into the taxable base the difference between market value and tax value of those assets.
Distinction from the US Exit Tax
Spain’s exit tax should not be confused with the US equivalent under Section 877A of the Internal Revenue Code, which applies to US citizens and long-term residents who relinquish their citizenship or permanent residency.