Cessation of employment or administrative activity: exclusion from the special Non-Resident Income Tax regime

The Directorate General of Taxes (DGT) has clarified the consequences of ceasing to perform the activity that prompted the adoption of the special taxation regime for non-residents. The central issue lies in whether a taxpayer can maintain this tax treatment until completing the maximum period of six years, even if they cease their employment or administrative activity.

What the DGT has ruled

The inquiry asks whether it is possible to continue paying taxes under the special regime until the end of the initial application period. The DGT has determined that failure to meet the determining conditions for the application of this regime leads to its exclusion. In this specific case, as no new employment or administrative relationship is initiated, the requirement established in Article 93.1.b) of the Personal Income Tax Law (LIRPF) is not met. Consequently, in accordance with Article 118.1 of the Personal Income Tax Regulations (RIRPF), the taxpayer will be excluded from the regime.

What this means for you

This criterion has a direct impact on seconded employees or administrators who lose the activity that originated their adoption of the regime. The exclusion is not postponed until the end of the fiscal year; instead, it takes effect during the tax period in which the non-compliance with the requirements occurs. This implies that the loss of employment or administrative activity results in the immediate end of the tax benefit for the corresponding fiscal year.

What should be done

It is necessary to evaluate the situation of those residents who are under this special regime and whose professional or management activity is nearing its end. The loss of the status of employee or administrator triggers tax exclusion according to current regulations. It is recommended to analyze the continuity of the requirements demanded by the LIRPF and the RIRPF to determine the exact moment when the application of this tax treatment will cease.