Moving your company out of Spain: seat transfer and exit tax

It is not a change of address like moving from one province to another. When the destination is outside Spain, the operation is called a cross-border transformation: the company is neither dissolved nor liquidated, it retains its legal personality and its contracts, and it becomes a company of the destination country, subject to its law and its registry.

The tax consequence, on the other hand, does not depend on the label, but on residence. A company is resident in Spain if it was incorporated under Spanish law, if it has its registered office here or if it has its place of effective management here, which is the place where the management and control of all its activities are located. Meeting just 1 of the 3 is enough. Therefore, moving the registered office without truly moving the effective management does not take the company out of the Spanish Corporate Income Tax: it leaves it with one foot inside and an obvious risk of inspection.

The day the company ceases to be resident in Spain, its tax period ends, even if it is the middle of the financial year. This early closure is what requires an extraordinary tax return and what opens the bill for the exit tax.

A limit that should be checked at the beginning: a company in bankruptcy liquidation cannot carry out a cross-border transformation. In insolvency proceedings, with a restructuring plan or with a continuation plan, it can, by adjusting the formation of the corporate will and the protection of creditors to the insolvency regulations.

It is the exit tax, the corporate exit tax of article 19 of the Ley del Impuesto sobre Sociedades (the Spanish Corporate Income Tax Act). Spain taxes the capital gain that was generated here while the company was resident, even if it has not yet been realised. When the company leaves, the difference between the market value and the tax value of its assets is integrated into the taxable base.

All elements are included: real estate, facilities, machinery, trademarks, patents, shares. There is no minimum threshold or exempt amount, unlike what happens with the exit tax for individual partners.

The exception that moves the most money is the elements that remain allocated to a permanent establishment that the company maintains in Spain: those are not taxed upon exit, because they remain within Spanish tax jurisdiction. If you leave a factory, an office or a property allocated to the activity here, that part of the capital gain is not integrated.

There is a 2nd exception, much narrower and strictly defined: transferred elements that are related to financing or the provision of guarantees, to prudential capital requirements or to liquidity management, provided they are expected to return to Spanish territory within a maximum period of 1 year to be allocated to a permanent establishment located here.

The Court of Justice of the European Union has accepted that the State of origin assesses the tax at the time of the transfer, because that is when its tax jurisdiction is extinguished. What it does not allow is demanding immediate payment without an alternative, and that is where the split payment explained below comes from.

Yes, when the destination is in the European Union or the European Economic Area. The exact condition, in the current wording, is that this State has concluded an agreement with Spain or the European Union on mutual assistance for the recovery of tax claims equivalent to that provided for in Directive 2010/24. Pay close attention to this, because it is the most common trap: until 2021 it was enough to have an effective exchange of tax information, and texts, draft minutes and fact sheets with the old requirement are still circulating.

The payment is split into 5 equal annual fifths. The 1st is paid within the voluntary declaration period of the period that closes with the transfer. The remaining 4 fall due successively, 1 per year, and each is demanded together with the late payment interest accrued by it.

The option is exercised exclusively in the tax return itself, by ticking the box provided for the split payment of article 19 of the Ley del Impuesto sobre Sociedades in form 200 and detailing it in the section that the ministerial order of each campaign allocates to this split payment. In recent campaigns this box has been 00037 on page 1, with the details on page 14 bis, but the numbering of boxes and pages is approved every year by ministerial order and you should check it in the form for the period you are going to submit. What does not change is that it is not requested through the general procedure for deferrals and split payments of debts: if this return is not submitted correctly and on time, the option remains unexercised.

Guarantees are not required upfront. They are only required when it is justified that there are reasonable grounds to believe that the recovery of the debt could be frustrated or seriously hindered. If the collection body appreciates them within the 6 months following the end of the voluntary payment period for the 1st fraction, it will require guarantees to be provided, and they must be provided within the period set for this purpose in that requirement. If they are not provided, the split payment is lost.

The split payment is not unconditional: it loses its validity in 5 cases, and only in 2 of them, the transfer of the elements to third parties and their subsequent transfer to a third State, can the loss be proportional when the operation affects only a part of the elements and this is proven.

That last tax return is the last opportunity to use them, and usually the best: as the unrealised capital gain is integrated into it, it is usually a period with a high positive base.

The general limit remains 70% of the previous taxable base, with the rule that in any case negative bases can be offset up to €1.000.000. Here is a detail that is often missed: if the last period lasts less than 1 year, that million is prorated in proportion to the days it lasts. A transfer effective on 30 June leaves approximately half of that allowance.

The exception provided for the tax period in which the entity is extinguished does not apply either, because in a cross-border transformation the company is not extinguished: it retains its legal personality and its assets pass entirely to the transformed company.

What is not used in that return does not travel with the company to the destination country. The right to offset negative tax bases and apply pending deductions arises from being a taxpayer of the Spanish Corporate Income Tax, and that is lost with residence, except to the extent that they remain linked to a permanent establishment that continues to pay taxes here. This is the reason why the effective date of the transfer is planned, not improvised.

No, and confusing them is the most common mistake seen. They are 2 different taxes, with different taxable events, and they can occur at the same time, separately or neither of the 2.

The company's tax has no threshold: it applies whenever a resident company ceases to be one. The individual partner's tax, article 95 bis of the IRPF (Personal Income Tax), only applies if they have been resident in Spain for at least 10 of the previous 15 tax periods and, in addition, the joint market value of their shares or participations exceeds €4.000.000, or exceeds €1.000.000 in an entity in which their participation is greater than 25%.

What triggers the partner's tax is the person moving, not the company. If the company moves its seat to Portugal and the partners continue living in Madrid, the IRPF exit tax does not come into play. And vice versa: a partner who leaves leaves the company's residence intact.

When the partner moves to another State of the European Union, or of the European Economic Area with which there is an effective exchange of tax information, they can choose not to self-assess for the moment: they will only pay tax if within the following 10 financial years they transfer the shares inter vivos, lose their resident status in the Union or the European Economic Area, or fail to comply with the reporting obligation that accompanies this option.

The order matters, because the commercial registrar does not issue the prior certificate if a step is missing or if it has been done prematurely.

The directors draft the transformation project, which must include the proposed legal form, company name and registered office in the destination State, the deed of incorporation and the articles of association of the transformed company, and any incentive or subsidy the company has received in Spain in the last 5 years. At least 1 month before the general meeting, the project and an announcement addressed to partners, creditors and workers' representatives are inserted on the company's website, and this fact is published free of charge in the Boletín Oficial del Registro Mercantil (Official Gazette of the Commercial Registry). If the company does not have a website, the documents are deposited in the Commercial Registry.

Partners who vote against, and holders of non-voting shares, have the right to dispose of their shares in exchange for adequate cash compensation, because they will be subject to foreign law. They have 20 days from the date of the general meeting to communicate this to the company, which must have an electronic address enabled to receive this decision, and the compensation is paid within the 2 months following the operation taking effect.

Creditors whose claims predate the publication of the project, if they are not satisfied with the guarantees offered and have notified their disagreement, have 3 months from that publication to claim adequate guarantees before the commercial registrar or before the commercial court. The old right of opposition no longer exists: neither the partner nor the creditor paralyses the operation or prevents its registration in the Commercial Registry.

The prior certificate is issued by the commercial registrar of the registered office after the legality check, within a period of 3 months, extendable for 3 more months if they appreciate well-founded suspicions that the operation seeks to circumvent Union Law or Spanish Law. Among the documentation, it is necessary to provide certificates of being up to date with tax obligations and with the Seguridad Social (the Spanish social security system): an open debt blocks the exit before anything else. If the registrar detects defects, they grant a period not exceeding 30 days to correct them.

With the certificate in hand, the company is registered in the registry of the destination country and, as soon as that registry communicates that the transformation has taken effect, the Spanish registry entries are cancelled.

The corporate path exists all the same. These are extra-European cross-border structural modifications and the same rules apply to them as to intra-European ones, with 2 specialities: the prior certificate can be adapted to meet specific requirements of the Law of the destination State, and the transmission of the certificate between registries does not go through the European interconnection system, but through international registry cooperation practices.

What really changes is the payment. Outside the European Union, and outside the European Economic Area with a mutual assistance agreement for recovery, there is no split payment over 5 years: the exit tax quota is paid in full within the voluntary period of that tax return. And if the company moves first to a Union State and then to a third State, any split payment it had been granted loses its validity.

There is a point that should be resolved before signing anything: that the destination country recognises as the entry tax value the market value for which Spain has made it pay tax. Within the European Union this correspondence is provided for, and Spain expressly applies it in the reverse case, when it receives elements that have already borne an exit tax in another Member State. Outside the Union it depends on the internal law of that country and the treaty it has with Spain. Without this correspondence you end up paying twice for the same capital gain.

Managora prepares and submits it for you, with the 3 pieces joined together: the resolution and documentation of the transfer of the registered office, the calculation of the exit tax and form 200 of the period that closes with the split payment option ticked, and the analysis of the partner's exit tax if an individual also moves. In the service file you will see the scope and timeframe of our work. Keep in mind that an operation like this also requires a public deed and a prior certificate from the Commercial Registry: the notario (notary) and registry aranceles (official fees) are calculated on a case-by-case basis according to the share capital, the length of the document and the number of entries, so they are budgeted separately and requested as a provision of funds, just like the registry expenses of the destination country.