Expatriate taxation

At UR Global we are specialized in the management of Spanish subsidiaries in Latin America and international taxation. This means that we have extensive experience in the international mobility of workers who are displaced to carry out all these projects. After the management of many displacements, we can emphasize that the duration of the project and the type of work to be performed, whether it will be in an office or on site, must be taken into account. In order to respond to the needs of companies that annually move personnel, we have created a space for advice on expatriate taxation and international mobility.

Experts in international mobility and taxation of expatriates

We manage the payrolls of more than 3,000 workers in Latin America, so we know perfectly the needs that companies have in this regard. In order to solve all your problems, we have an expatriate tax advice and international mobility department.

From our offices in Madrid, Mexico City, Bogota, Sao Paulo, Quito, Lima, Santiago de Chile and Lisbon we provide a wide range of services related to expatriate taxation and international mobilitywith proximity to get to know each project, the needs of consultancy and the performance of obligations that both the company and the employee have at origin and at destination.

In this regard, we are particularly experts in tax aspects, which play a key role in these international transfers, since our advice in expatriate taxation has a direct impact on the costs linked to the employee’s travel and compliance with local regulations, but with the experience of knowing their exemptions, which we will seek to take advantage of to achieve tax savings for the employee and the company.

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If you would like to make an inquiry about our business management services, please fill out the inquiry form.

Experts in international mobility and taxation of expatriates

In our business consultancy we offer the following services in expatriate taxation:

  • Elaboration of policies for the displacement of workers.
  • Formalities and communications at origin and destination for displaced personnel.
  • Visas and work permits in Mexico, Colombia, Peru, Ecuador, Brazil, Chile, Portugal and Spain.
  • Tax advice for the expatriate and the company, seeking tax optimization for the employee and the company, as well as compliance with regulations at origin and destination.
  • Human resources selection in Mexico, Colombia, Peru, Brazil and Chile with solutions to our clients, either as outsourcing or in house services.
  • Outsourcing of personnel on our payroll for tax reasons or because the company has no legal entity in the destination country.
  • Report preparation and advice in mobility situations.
    • Analysis of each employee’s situation to determine his or her tax residence.
    • Analysis of the different most appropriate salary schemes, with the implications and costs of each one of them.
  • Presentation of the tax return at destination.
    • Filing of income tax returns and obtaining a certificate of tax residency in Mexico. The presentation of the rent in Mexico, depending on the circumstances of each individual, may be monthly or annual.
  • Formalities in Spain: Prior to the worker’s posting:
    • Communication of the employee’s posting to the Tax Agency. Form 247 to authorize the paying company to stop making personal income tax withholdings.
    • Communication of the employee’s posting to the Spanish Social Security so that, by virtue of the existing Agreement between Mexico and Spain, the employee can benefit from the corresponding advantages.
  • Exempt income for personnel relocated to Mexico under contract in Spain: The tax benefits applicable under the Personal Income Tax Law will be analyzed according to the situation of each employee relocated to Mexico under contract in Spain:
    • Work performed abroad. Exemption under article 7p of the Personal Income Tax Law for work performed abroad (up to 60,100 euros). Management of the refund of undue income, if applicable.
    • “Expatriation bonus” not subject if there is a transfer of the work center. (Art 9.A Personal Income Tax Law), for trips lasting more than 9 months.
    • Allowances for subsistence and living expenses for trips lasting less than 9 continuous months.

Frequently asked questions about expatriate taxation

Expatriate workers are those workers who provide temporary or permanent services for the company outside their country of origin. In order to carry out the procedures in the best possible way, it is advisable to contact experts in international taxation.

The general rule regarding the taxation of expatriate personnel is that they are taxed on income from work performed in the country in which they are resident for tax purposes.

However, there are several exceptions that our expatriate tax specialists will bring to your attention.

There is an exception for taxation also in the country of the source of income, if the work has been physically performed there.

However, an exception to this exception applies, so that the final rule will be that the expatriate will only be taxed in his country of residence if the following requirements are met:

  • Presence of less than 183 days in the source State, in the taxable year under consideration or in any consecutive 12-month period; and,
  • Remuneration paid by a non-resident employer in the source State; and
  • Remuneration not supported by a Permanent Establishment in the source State.

On the other hand, there is an exemption, in Article 7 of the Spanish Personal Income Tax Law (IRPF), which establishes the following regarding income received abroad by expatriate personnel who maintain their tax residence in Spain:

Among other income, income from work received for work effectively performed abroad shall be exempt, subject to the following requirements:

1.º That such work is carried out for a company or entity not resident in Spain or a permanent establishment located abroad under the conditions established by regulations. In particular, when the entity receiving the work is related to the employee’s employer or to the entity in which the employee provides services, the requirements set forth in section 5 of Article 16 of the revised text of the Corporate Income Tax Law, approved by Royal Legislative Decree 4/2004, of March 5, 2004, must be complied with.

2.º That in the territory in which the work is carried out a tax of an identical or analogous nature to that of this tax is applied and that it is not a country or territory that has been classified by regulations as a tax haven. This requirement will be considered fulfilled when the country or territory in which the work is carried out has signed an agreement with Spain to avoid double international taxation that contains a clause for the exchange of information.

The exemption will be applied to the remuneration accrued during the days of stay abroad, with a maximum limit of 60,100 euros per year. Regulations may establish the procedure for calculating the daily exempt amount.”

Thus, the expatriate tax specialists, through this exemption, seek to solve the problem of double taxation in the case of income received by expatriate personnel for work performed for companies based in Mexico or permanent establishments of Spanish companies in Mexico. This would be the case, for example, of a Spanish worker who maintains his tax residence in Spain and provides his services to the Mexican subsidiary of the Spanish company with which he has a current employment contract.

Therefore, and as a conclusion, an expatriate tax resident in Spain will be fully taxed in Spain on income derived from work performed in Mexico if he/she has spent less than 183 days in Mexico and the remuneration has not been paid by a Mexican resident entity or by a permanent establishment of a foreign company in Mexico.

Likewise, In the case of a tax resident in Spain who has rendered services for a company resident in Mexico or a permanent establishment of a Spanish company in Mexico, the income received for this work will be exempt from taxation in Spain, up to a limit of 60,100 euros per year. All of the above regardless of which company has made the actual payment to the employee for the rendering of services. That is, it does not matter whether he has been paid directly by the parent company or by the subsidiary in Mexico, the important part being the company “for” which he has been rendering his services.

To solve problems with expatriate taxation, contact us and we will help you with everything to optimize your business.


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