Exit tax: How might it affect you?

The exit tax in Spain (art. 95 bis LIRPF) is a levy applied to individuals who cease to be tax residents in a country. Its purpose is to prevent tax avoidance by taxing latent capital gains (unrealized gains) on shares or participations before the taxpayer transfers their assets to another jurisdiction. Pre-move planning is essential to manage its impact.

What is the exit tax in Spain?

The exit tax in Spain—also known as the departure tax or emigration tax—is a tribute that levies accumulated latent capital gains on certain shares or participations when an individual ceases to be a tax resident in Spanish territory. In other words, the Spanish Tax Agency (Hacienda) can subject the increase in value of these assets to taxation even if they have not been sold yet.

It is regulated under Article 95 bis of Law 35/2006 on Personal Income Tax (LIRPF), under the heading “Capital gains due to change of residence,” and entered into force on January 1, 2015. The rule considers that, at the time of losing tax residency, a capital gain occurs equivalent to the difference between the market value of the participations and their original acquisition value.

The rationale is to prevent gains generated during the years of residence in Spain from escaping taxation through a strategic change of residence. This is not an exclusively Spanish measure: the European Directive 2016/1164 (ATAD) against tax avoidance obliges all EU member states to have some form of exit tax.

Who is affected by the exit tax? The two requirements that must be met

The exit tax does not apply to everyone who leaves Spain. For it to come into play, two conditions must be met simultaneously:

1. Time requirement

Having been a Spanish PIT (IRPF) taxpayer for at least 10 of the last 15 tax periods prior to the last financial year declared as a resident. This excludes most expatriates with short stays, but fully affects those who have been linked to the Spanish tax system for a decade or more.

Important: Years taxed under the special regime for displaced workers (Beckham Law, art. 93 LIRPF) do not count for these purposes, since during that period taxation is applied as a non-resident, not as an IRPF taxpayer in the full sense.

2. Asset requirement

The taxpayer must hold shares or participations that exceed one of these thresholds (alternative, non-cumulative conditions):

If neither of these limits is exceeded, the exit tax is not applicable.

How is the exit tax calculated?

The tax base is the difference between the market value of the participations on the date of departure and their original acquisition value. This unrealized gain is integrated into the savings tax base of the last IRPF return submitted as a resident in Spain, and is taxed according to the current savings tax scale:

Payment is made in the tax return corresponding to the year of the relocation, through a supplementary self-assessment without penalties, interest, or surcharges derived exclusively from this provision. If the change of residence takes place in 2026, the exit tax gain is included in the 2026 IRPF, submitted during the 2027 tax campaign.

Can the payment of the exit tax be deferred?

Yes, and in many cases, this is the key to planning. The regulations provide for deferral mechanisms depending on the country of destination:

Relocation to the UE, EEA, or Switzerland

If the destination is a Member State of the European Union, the European Economic Area with an effective exchange of information, or Switzerland, the payment of the exit tax can be automatically deferred until the participations are actually transferred, with a maximum deferral period of ten years.

During this period, the taxpayer must comply with communication obligations: inform the AEAT (Spanish Tax Agency) of the destination State and address, any changes of address, and the maintenance or transfer of ownership of the shares. Failure to comply with these obligations entails the immediate incorporation of the gain into the taxable base.

Relocation to third countries (USA, UK, Mexico, etc.)

If the destination is outside that perimeter, there is no automatic deferral. The tax must be paid in the financial year of the move, which makes prior planning especially necessary.

Relocation to a tax haven

In this case, the exit tax applies regardless of the length of residence in Spain, without needing to exceed the usual asset thresholds. Furthermore, the market value on the date of departure becomes the new acquisition value for the purposes of future transfers.

Exit tax for corporate entities: Corporate Income Tax

The exit tax does not only affect individuals. For companies, the regulation is found in Article 19.1 of the Corporate Income Tax Law (LIS), substantially amended by Law 7/2021 on Tax Fraud Prevention.

When a company transfers its tax residence outside of Spain or transfers assets abroad, it must include the difference between the market value and the tax value of those assets in the Corporate Tax base. If the transfer is to an EU or EEA Member State, the tax debt can be split into five consecutive tax periods.

Permanent establishments that cease their activity in Spain or relocate to another territory are also regulated, in accordance with Article 18 of the recast text of the Non-Resident Income Tax Law (IRNR).

What happens if you return to Spain?

The regulations include an important safeguard for moves that ultimately prove not to be permanent. If you return to Spain within five years following the move—extendable to ten in duly justified cases—and you have not transferred the participations, you can request the rectification of the self-assessment and recover the amount paid for the exit tax.

What needs to be done before leaving

The most frequent mistake is analyzing the tax consequences of the exit tax after having started the relocation. In many cases, the tax is not applicable because the time or asset requirements are not met, but the only way to know for sure is to perform the analysis beforehand.

When it does apply, a prior analysis allows you to:

• Confirm whether there is an actual obligation to pay tax
• Quantify the real economic impact of the relocation
• Choose the most efficient timing to change residence
• Explore alternatives for asset reorganization
• Determine if the destination country allows for an advantageous deferral
• Properly document the deregistration as a resident in Spain

There is an additional detail that should not be overlooked: tax residence does not change simply by physically moving. The Tax Agency analyzes the set of personal, family, and economic circumstances to determine where the effective center of interests is maintained. A poorly documented departure can lead to Hacienda not recognizing the change of residence and continuing to consider the taxpayer as a resident in Spain—which would generate a double tax obligation that the exit tax, originally, intended to avoid.

Frequently Asked Questions about the exit tax in Spain

Does the exit tax in Spain affect investment funds? Yes. In addition to shares and participations in companies, Article 95 bis LIRPF can also apply to participations in collective investment institutions (investment funds) when the established asset thresholds are exceeded.

What tax models are involved? The capital gain derived from the exit tax is declared in Form 100 (IRPF), as a supplementary self-assessment for the last tax year as a resident. In cases of deferral due to relocation to the EU/EEA, there are specific communication obligations before the AEAT.

Can I avoid the exit tax legally? Not “avoid” it, but you can plan for it. If the requirements are met, the tax obligation exists. What is possible is to structure the move in such a way that the impact is minimized: choosing the right timing, taking advantage of the deferral if the destination allows it, or exploring asset reorganizations prior to the change of residence. Each case requires an individualized analysis.

Does the time spent under the Beckham Law count towards the exit tax? No. The tax years spent under the special regime of Article 93 LIRPF (Beckham Law) are not computed as periods as an IRPF taxpayer for the purposes of the 10-year time requirement.

What happens to the exit tax if the destination is the United Kingdom? Following Brexit, the United Kingdom is no longer part of the EU or the EEA. Therefore, a relocation to the UK does not grant the right to an automatic deferral of the tax debt. The exit tax must be liquidated in the tax year of the relocation.

Regulations and official sources

• Article 95 bis Law 35/2006 on IRPF — BOE
• AEAT INFORMA Query No. 137260 on exit tax
• EU Directive 2016/1164 (ATAD) — European Commission
• Article 19.1 Corporate Income Tax Law — BOE

Are you thinking about changing your tax residence?

At GR International Advisors, we analyze your situation before you make the decision: whether the exit tax applies to your case, how much it entails economically, and how to structure your departure in the most efficient way.

We work with international executives, entrepreneurs, and investors operating between Spain and abroad. Every case is different.

The information contained in this article is for guidance purposes only and does not constitute individualized tax advice. Each situation requires a personalized analysis by a qualified professional.