International business trips, what Spanish tax advantages can be applied?

The months of September and January when we like to establish our new goals , projects and in general, when we plan the next few months.

It shouldn’t be any different this year, even though the global pandemic. Everything indicates that “normality” will be back soon and physical presence at work will be require.

During these last two years, we have experienced an almost complete stop of the international business trips, but, as part of the return to normality, these will gradually be reactivated. Technology makes us to be closer to our colleagues, but certain situations require a physical presence in the “work field”.

In view of all this, we wanted to share this post to review certain tax aspects to take into consideration in the cases that work implies international travels or transfers.

What are the differences between the “exempt allowances”, the “exemption for work performed abroad (7p)” or the “destination supplement”?

Companies must be clear about the differences that exist between these concepts and when it may be possible to apply them, or when it is more advantageous to apply one or the other.

All this, with the purpose of optimizing the taxation of the employee or, even, the company’s costs, in cases in which the international assignments are made under the so-called “tax equalization”.

We are going to briefly summarize what each of these exemptions provides:

• • Exempt Allowances

These amounts refer to the additional expenses that occur when an employee is required to work outside their usual workplace. Specifically, when an international movement occurs, the following expenses and amounts will not be subject to tax in Spain:

– justified costs of locomotion expenses if public transport is used or 0.19 euros/kilometer in the case of private vehicle use.

– for accommodation expenses, the amounts that are justified, and,

– with respect to living expenses, up to 48.08 euros if the trip is outside of Spain, which is increased to 91.35 euros if you spend the night abroad.

In relation to this type of allowances, it is important to bear in mind that there is a time limit since they cannot be applied for more than 9 continuous months (regardless of whether there may be a change in the tax year).

• • Destination Supplement

The amounts received by employees assigned outside of Spain, which are considered an excess over what their usual salary would be if they had remained in Spain, are exempt from taxation.

It is important to note that it is understood that there is an assignment when there is a change in the employee’s workplace and it is moved outside of Spain.

• • Exemption for work performed abroad (7p)

This exemption cannot be applied at the same time of the “destination supplement” during the same tax year. However, this exemption can be combined with the allowances described in the first section.

This exemption allows, up to a maximum of 60,100 euros per year, to exempt the salary and other remunerations derived from employment, whether these are habitual or additional, when these are received for work performed physically outside of Spain, for the benefit of a non-resident entity and as far as the country where the services are performed is not a tax haven and has a tax like the Spanish tax.

In the case of internationally mobile employees, it is important to assess which of the above exemptions may be more advantageous. This leads us to remember the importance of having a good International Mobility Policy, issue which we will addressed in a future post.

If you have any questions, or need additional information on this subject, contact us at info@albeatax.com.