At UR Global, we are specialized in the management of Spanish subsidiaries in Latin America and international taxation. This grants us great experience in international mobility of workers who are transferred to perform these projects. After managing many transfers, we are able to stand out that the duration of the project and the type or work to be done whether in an office or a building site should be highly considered. In order to meet the needs the companies which annually transfer personnel have, we have created a space for taxation consultancy of expats and international mobility.
Experts in international mobility and expat taxation
We manage the payroll of over 3,000 workers in Latin America, which is why we perfectly know the needs companies have in this matter. In order to solve all your problems, we have an area in consultancy of expat taxation and international mobility.
We offer a great variety of services related to expat taxation and international mobility from our offices in Madrid, Mexico City, Bogota, Sao Paulo, Lima, Santiago de Chile and Lisbon. We work closely to know each project; the consultancy needs and the execution of the obligations that the company and the worker in the place of origin and destination have.
In this regard, we are specialized experts in taxation aspects that play an important role in international transfers. This is because our consultancy in expat taxation has a direct effect in the costs related to a worker transfer and in the fulfilment of the local law. Everything is done with the experience of knowing the exemptions, which we will use to achieve taxation saving for the worker and the company.
Services for expats UR Global
In our business consultancy we offer the following services for expat taxation:
- Elaboration of worker transfer policies
- Paperwork and communication in the place of origin and destination for the transferred personnel
- Visa and work permits in Mexico, Colombia, Peru, Brazil, Chile, Portugal and Spain.
- Taxation consultancy for expats and companies, seeking for taxation optimization of the worker and the company, as well as the fulfilment of the norms in the place of origin and destination.
- Selection of human resources in Mexico, Colombia, Peru, Brazil and Chile with solutions for our clients either outsourcing or in house services.
- Subcontracting of personnel in our payroll for taxation reasons or due to a lack of legal entity in the destination country.
- Preparation of reports and consultancy in mobility situations.
- Analysis of the situation of each worker to determine their tax residence.
- Analysis of the most appropriate salary schemes with the implications and costs of each of them.
- Presentation of the income tax declaration in the destination
- Presentation of the income tax declaration and obtention of the certificate of tax residence in Mexico. The presentation of the income tax in Mexico according to the circumstances could be monthly or annually.
- Procedures in Spain: Before the transfer of the worker:
- Communication of the transfer of the worker to the tax agency in Spain. Model 247 to avoid the paying company to carry out retentions by the IRPF (Personal Income Tax) Law.
- Communicating the transfer of the worker to the Spanish Social Security for the worker to get the corresponding benefits according to the existing agreement between Mexico and Spain.
- Tax-exempt income for the personnel transferred to Mexico who were hired in Spain: It will be analysed according to the situation of each transferred worker with contract in Spain, the tax benefits applicable according to the IRPF Law:
- Work done abroad. Exemption in the art. 7 p of the IRPF Law by the work done abroad (up to 60,100 euros). Management of the reimbursement of unlawful income applicable.
- “Expatriation allowance” not subject if the transfer is done to the workplace (Art 9.A IRPF Law) or for transfers longer than 9 months.
- Allocation of living expenses and accommodation for transfers which are shorter than 9 continuous months.
Frequently asked questions about expat taxation
Expat workers are those who provide services in a temporary or permanent way to the company outside its country of origin. To perform management in the best possible way, it is recommended to contact experts in international taxation.
The general rule in terms of expat taxation is to pay taxes according to the income of the work done in the country where they have taxation residence.
However, there are different exceptions which our specialists in expat taxation will notify you about.
There is an exception for also paying taxes in the country which is the source of income if the work has been physically executed there.
Nonetheless, an exception is applicable to this exception, which is why the definite rule will allow the expats to only pay the taxes in their country of residence if they meet the following requirements:
- A stay shorter than 183 days in the source, the fiscal year considered or any period of 12 consecutive months, and
- Salary paid by an employer who is not a resident in the source, and
- Salary not supported by a Permanent Establishment in the source.
On the other hand, there is an exemption in the art. 7 of the IPRF Law in Spain, which establishes the following information about the income received abroad by the expat personnel who maintain their tax residence in Spain:
“The working output by work effectively performed abroad will be exempted, among others, if they meet the following requirements:
1.º Those works should be performed for a company or an entity which is not a resident in Spain, or a permanent establishment set abroad under the established rules and conditions. In particular, when the designed entity of the work is related to the employer entity of the worker or the one they offer their services to, it should meet the requirements stated in the paragraph 5 of the art. 16 of the restated text of the Society Income Tax Law approved the Real Legislative Degree 4/2004, 5th March.
2.º The territory where the work is performed is applicable of an identical or analogue nature of this tax and is not a territory which has been legally qualified as a tax haven. This requirement will be considered to have been met when the country or territory where the works are performed has signed an agreement with Spain to avoid international double taxation which contains a clause for information exchange.
The exemption will be applicable to the remunerations paid during the days of stay in another country, with a maximum limit of 60,100 annual euros. According to the regulations, it will be possible to establish the process to calculate the daily exempt amount.”
For that reason, specialists in expat taxation seek solving double imposition through this exemption in the case of income received by the expat personnel for their work performed in companies established in Mexico or permanent establishments of Spanish societies in Mexico. For example, this would be the case of a Spanish worker who keeps their fiscal residence in Spain and offer their services to a Mexican subsidiary with whom they have a work contract in force.
Therefore, and as a conclusion, an expat who is a fiscal resident in Spain will uniquely pay taxes in Spain for the income derived from their work performed in Mexico if they have spent less than 183 days in that country. Also, if the salary has not been paid neither by a resident entity in Mexico nor a permanent establishment of a foreign company in Mexico.
Moreover, when there is a tax resident in Spain who has offered their services to a company in Mexico or a permanent establishment of a Spanish company in Mexico, the income received for that work will be exempt of taxation in Spain to a maximum of 60,100 annual euros. Regardless of the partnership who paid directly to the parent company or the subsidiary in Mexico. Considering the most important company is the one they offered their service “to”.
To solve problems with expat taxation, contact us and we will help you with everything which is necessary to optimize your business.