Fellows of a European University Institute must verify their tax residence

Determining tax residence and the correct taxation of research fellowships are critical aspects for professionals carrying out their activities in international institutions. Recently, the Directorate General of Taxes (DGT) has addressed the situation of researchers receiving income from a European University Institute and the application of possible exemptions.

What the DGT has resolved

The inquiry focuses on determining whether the income received by a fellow of a European University Institute is exempt from taxation in Spain, under the Convention establishing said institution. The DGT points out that the exemption does not operate automatically simply by virtue of being a fellow.

To determine the tax obligation, it is necessary to analyze two fundamental factors:

• Tax residence: It must be verified whether the researcher maintains their tax residence in Spain or moves to another country (such as Italy, according to the Spain-Italy Convention) in accordance with the Personal Income Tax (IRPF) Law and the TRLIRNR.
• The nature of the income: The application of the exemption provided in the Institute's specific Convention depends on the classification of the income and the residence status of the beneficiary.

What this means for you

If you are a researcher or fellow receiving financial aid from a European University Institute, you cannot assume that such income is automatically exempt from taxes in Spain. The exemption depends strictly on your tax residence situation and how your stay abroad is categorized.

If your stay outside the country is considered a sporadic absence and you maintain tax residence in Spain, you must declare that income following the general rules, unless the specific requirements of the Convention are met. Conversely, if you change your tax residence to another State, the taxing power will depend on what is established in the applicable double taxation treaties.

What should be done

Given this situation, it is necessary to perform a detailed analysis of the stay and the source of the income. It is recommended to:

• Evaluate the number of days of stay in Spain to determine tax residence.
• Analyze the content of the Convention establishing the European University Institute and its relationship with the double taxation treaty with the destination country.
• Verify the legal nature of the fellowship and its fit within the IRPF regulations.

Each situation is unique, so it is fundamental to assess the particular circumstances of each case to avoid contingencies with the Tax Administration.