Claiming Personal Income Tax (IRPF) Withholdings Upon Losing Tax Residency in Spain

Did you know that if you move out of Spain before July 2nd, you can claim a portion or even all of the withholdings from your employment income?

You have moved abroad for work. You have changed your life, your home, and your routine. However, upon reviewing your accounts, you realize that the Tax Agency still holds a significant part of your money.

This is a common situation: during the year of your move, your Spanish employer withheld taxes as if you lived in Spain for the entire year, failing to apply the tax exemptions to which you are entitled for residing abroad or working outside the country. The result? You have overpaid by thousands of euros.

The Problem of the Departure Year: Why Do You Overpay Taxes?

The year you move from Spain to another country is, fiscally, chaotic for most taxpayers. The Spanish tax system is rigid, and companies, when in doubt, withhold the maximum amount to avoid penalties.

Generally, three situations arise that generate this credit in your favor:

1. Excess IRPF Withholding: Your employer withheld a higher percentage than what was applicable to the salaries generated while you were working in Spain, or even when you were already effectively working abroad.
2. Non-application of Article 7p: The exemption of up to €60,100 for work performed outside of Spain before (or during) the process of fiscal de-registration was not applied.
3. Total exemption on withholdings made: In the case of working for a foreign client, even if you are paid by a Spanish company and you cease to be a tax resident in Spain, it is possible to claim the entirety of the withholdings made in Spain.

Key Fact 2025: The Spanish Tax Agency (AEAT) has intensified its control over simulated changes of residence. Paradoxically, this makes it easier for those who genuinely leave to prove their departure more forcefully and claim their rights.

When Do You Cease to Be a Tax Resident? The Hurdle of Article 9 of the LIRPF

To make a claim, we must first define your status. According to Article 9 of the Personal Income Tax Law (LIRPF), you are a resident if you meet one of these criteria:

• Permanence: You spend more than 183 days of the calendar year in Spain.
• Center of economic interests: The main nucleus of your activities or economic interests is located in Spain.
• Center of vital interests: A more controversial concept used by the AEAT.

The “Split Year” Trap

Unlike countries such as Germany or the United Kingdom, Spain does not generally permit a “split year.” You are either a resident for the whole year, or you are not.

• If you spent more than 183 days in Spain before leaving: You are a tax resident for the entire fiscal year. You must file an IRPF return, but you can claim the exemption for work performed abroad in the final months.
• If you spent less than 183 days in Spain: You could be considered a Non-Resident (IRNR) for the entire year. In this case, the withholdings on your salary as stipulated in the Personal Income Tax Law (LIRPF) (progressive scales up to 47% or more in some Autonomous Communities) would not apply. Instead, you can claim the flat rate of the Non-Resident Income Tax (IRNR) (generally 19% for EU / 24% for non-EU), entitling you to a substantial refund.

The Crown Jewel: Exemption for Work Abroad (Art. 7p)

This is the most powerful way to recover money if, during your year of departure, you maintained tax residency in Spain (by having spent more than half the year here) but worked for a company or project abroad. The Supreme Court has recently recognized the possibility of applying this exemption to military personnel assigned to operations abroad. Article 7.p of the LIRPF allows up to €60,100 annually of income received for work effectively performed abroad to be exempt from taxation.

Requirements to Secure the Exemption in 2025

To ensure the Tax Agency does not reject your claim, at Martínez-Cardós we verify strict compliance with the doctrine of the Supreme Court:

1. Actual Relocation: You must have physically left Spain. Plane tickets and rental contracts are prime evidence.
2. Non-resident beneficiary: The work must benefit an entity or permanent establishment located abroad.
3. Analogous tax: In the destination country, there must be a tax of a nature similar to the IRPF (even if it is not actually paid due to an exemption there), or a Double Taxation Agreement (DTA) with an information exchange clause must exist.

Teleworking from home in Spain for a foreign company does NOT qualify for this exemption. The “effective performance” of duties requires your physical presence outside the country.

Case Study: Recovering €12,000 After a Move to Dubai

To help you visualize the impact, let’s look at a real case from our firm (data has been anonymized):

• Client: Javier, a Civil Engineer.
• Situation: He moves to Dubai on September 1, 2024.
• Problem: His Spanish company continued to pay his salary from the Madrid headquarters until December, withholding 35% in IRPF, as Javier had spent more than 183 days in Spain that year (he was a tax resident in 2024).
• Action by Martínez-Cardós:
  1. We analyzed the contract and proved that from September, his work benefited the subsidiary in the UAE.
  2. We applied Article 7.p to the portion of his salary from September to December (approximately €35,000 in gross income for that period).
  3. We recalculated the 2024 Income Tax return filed in 2025.
• Result: The €35,000 became exempt. The tax base dropped drastically. The Tax Agency refunded €12,450 plus late payment interest.

Procedure for the Refund of Improperly Paid-in Amounts

It is not enough to ask for it; you must prove it. If your company did not apply the exemption on your payroll (which is common as a precaution), you must request a Rectification of Self-Assessment or file your initial tax return applying the exemption directly, while being prepared for an almost certain limited verification procedure (“la paralela”).

Documentation We Prepare for You

The burden of proof falls on the taxpayer. We assemble a solid evidentiary file:

• Detailed company certificates (days and assignments).
• Boarding passes and invoices from daily life abroad.
• International assignment contracts.
• Analysis of the applicable Double Taxation Agreement.

Why Entrust Your Claim to Martínez-Cardós?

The answer is simple: we have more than 50 years of experience in these matters.

• Success rate and specialization: As a specialized family firm, we do not treat your file as just another number. We are familiar with the internal criteria of the Tax Management departments of each administration.
• Litigation experts: If the Tax Agency questions your residency or the application of Article 7p (a frequent occurrence), we do not limit ourselves to administrative appeals. We are lawyers specializing in tax procedures.
• Comprehensive strategy: We don’t just recover money from the past. We design your tax strategy for the coming years: is it better for you to be a Non-Resident? When would it be advisable for you to return to Spain?

Frequently Asked Questions (FAQ)

Can I file a claim if my company refuses to correct the withholding certificate?
Yes. The company’s refusal does not prevent you from applying for the exemption. At Martínez-Cardós, we prove the reality of the work performed abroad through alternative means of proof admitted by the Supreme Court, without needing the active collaboration of your former employer.

1. What is the deadline for claiming an IRPF refund?

You have 4 years from the day after the deadline for filing the tax return for that year. For example, for the 2024 tax return (filed in June 2025), you have until June 2029. However, the sooner you file the claim, the easier it is to gather evidence.

2. If I move in February, am I considered a Non-Resident for the entire year?

Generally, yes, as you will have spent fewer than 183 days in Spain. In this case, if IRPF was withheld, we will claim a full refund of the improperly withheld IRPF, and you will be taxed under the Non-Resident Income Tax (IRNR), which is usually much lower, allowing you to recover the difference.

3. Does the 7p exemption apply if I move to a tax-free country like the UAE or Qatar?

Yes, absolutely. The regulation requires that either an analogous tax exists OR that a Double Taxation Agreement with an information exchange clause is in place. Spain has agreements with Gulf countries that validate this exemption.

4. How long does the Tax Agency take to issue the refund?

A well-founded claim is usually resolved within 6 months. If the Tax Agency takes longer than December 31, it is obligated to pay you late payment interest (currently 4.0625% in 2025) on the amount to be refunded.

Legislative Update (December 2025):
Recent rulings from the TEAC (Central Economic-Administrative Court) have relaxed the requirements for proving travel days for executives and senior management. If you hold a management position, consult us; the chances of success have increased significantly.

Legal Disclaimer: The content of this article is for informational purposes only and reflects the state of regulations as of December 2025. It does not constitute binding legal or tax advice. Each case has unique characteristics. For a secure strategy, please contact our lawyers.