Administrators may apply the special Personal Income Tax (LIRPF) regime when moving to Spain

Access to the special taxation regime for displaced persons arriving in Spain is subject to strict causality requirements. The Dirección General de Tributos (DGT) has specified the limits that administrators must meet, especially when the entity they serve is of a wealth management nature.

What the DGT has ruled

The inquiry analyzes the applicability of Article 93 of the Personal Income Tax Law (LIRPF) in cases where the move to Spanish territory occurs due to the need to perform administrative functions. The criteria establish that the relocation must be a direct consequence of acquiring said status.

In the event that the entity is a wealth management company, the regulations impose an additional restriction: the administrator cannot hold a stake that makes them a related party. According to the ruling, if the professional maintains a stake of less than 25%, this legal limit is met, provided it can be proven that the move to Spain is primarily caused by the exercise of their position as an administrator.

What this means for you

If you are a professional moving to Spain to assume the management of an entity, the possibility of taxing under the special regime depends on the relationship between your position and your residence. Simply arriving in the country is not enough; it is necessary to demonstrate that the change of residence is a requirement for performing your administrative duties.

For those managing wealth management companies, the level of participation in the capital is a determining factor. Maintaining a stake below the related-party threshold is an essential requirement to avoid losing the right to this preferential tax treatment.

What you should do

It is necessary to analyze the capital structure of the entity in which administration will be exercised before formalizing the move. Proving the causality of the relocation will be a key element before the Tax Administration. It is recommended to assess each particular situation, especially regarding the nature of the company and the percentage of ownership held, to ensure compliance with the requirements of the LIRPF and the LIRPF Regulation (RIRPF).