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Your employee has just made the move to work for you in a new country. As an “inpat” — a foreigner who takes up long-term temporary residence in a different country — they’re adjusting to a new time zone, a new culture, and maybe a new language. With so much involved in relocating, it's no wonder most inpats don't have enough time or specialized knowledge to figure out which tax relief programs they are entitled to.
At Remote, our team of international experts is already fluent in the tax relief schemes that apply to foreign workers in a wide range of countries and industries. That translates into expertise in handling the process of filing tax relief applications from start to finish. Our help with this process as it applies in each country is absolutely free to you and your team. All you — or your individual employees — need to do is ask!
A tax relief scheme is a governmental program with the goal of lowering an individual’s tax burden. Numerous countries, including Spain, the Netherlands, and Italy, have opted to grow their economies by incentivizing relocation for talented, high-earning foreigners through targeted tax breaks. These programs typically apply over at least the first few years of an inpat’s residency.
For example, Spanish law permits inpats to register as non-resident taxpayers, allowing them to elect a flat personal income tax rate of 24% on the first €600,000 they earn annually. Residents, on the other hand, are subject to a progressive tax rate that can approach 50%.
Tax relief schemes and associated eligibility requirements vary widely from one country to another, even sometimes from one part of the same country to another. They can change quickly with the shifting winds of politics. Many of these tax relief schemes involve lengthy, tedious application processes requiring attention to fine regulatory details, multiple deadlines, and multiple cycles of document submission and authentication.
At Remote, we have an in-house team of tax specialists from all over the world who stay up-to-date on changing regulations. Their expertise is available to help our customers and their team members optimize their experience when relocating and working in a new country.
Leveraging our in-depth knowledge, employers can provide their inpat employees with support that will save them time, effort — and, most importantly, money — as they take advantage of whichever tax relief schemes are available to them.
See also: Remote Relocation: Help your employees relocate internationally
Here are some examples of country-specific tax relief schemes we can help your employees navigate:
These are the primary benefits foreigners registered as non-resident taxpayers enjoy under Spain’s “Beckham Law:”
A non-resident taxpayer has the option to be taxed at a rate lower than the maximum marginal rate of the normal personal income tax in Spain. The 2022 flat rate under this regime is 24% (19% for European Union citizens) for earnings below €600,000, and 45% for earnings above that figure. The regular progressive tax rate, on the other hand, raises some residents’ obligation all the way to 47%.
Only income earned in Spain is taxable.
While residents are required to pay a separate wealth tax on property located anywhere in the world, the Beckham Law only taxes wealth situated in Spain.
Non-resident taxpayers can begin exercising these rights during the tax period in which they relocate to Spain, and for the five following tax years.
To qualify, an individual must:
Be relocated to Spain through contractual requirements of employment or appointment to a board of directors with minimal participation in share capital.
Since 2015, work for the employer does not actually have to be done in Spain, and the headquarters of the company need not be in Spain.
Register with Spain’s social security system, then wait six months before eligibility to apply for non-resident tax status.
Not have resided in Spain for the 10 tax periods before relocating.
Anyone who resides in Spanish territory for more than half the tax year (January 1 - December 31), 183 days, is considered a tax resident. So is anyone who maintains the central part of their economic activities there.
Spanish tax law is especially complex, with everyone who is considered a tax resident normally required to pay at progressively higher rates. This applies to all income, regardless of where it is generated. The greater the worldwide income, the larger the tax liability.
But in 2005, the Beckham Law changed things for the better for inpats in Spain, allowing them to choose whether to pay under the special non-resident, instead of the resident, regime.
English footballer David Beckham moved to Spain in 2003 to join Real Madrid at a salary of €35 million. In 2005, he became the most famous inpat to take advantage of the new tax law. Ironically, an amendment later made this popularly named “Beckham Law” inapplicable to professional athletes.
Learn more about employing workers in Spain
Under the “30% Ruling,” foreigners who have relocated to the Netherlands can enjoy a refund-based tax relief scheme.
Every year, qualifying employees can claim a tax-free sum equal to as much as 30 percent of their annual salaries.
The benefit continues over the first five years an employee lives and works in the Netherlands.
An employee can claim this relief directly from their employer. Typically, an employer will cut an employee’s taxable salary by 30 percent, then return that 30 percent as a tax-free allowance. The idea is that these non-taxable funds ease the financial burden of relocating to a foreign country.
To be eligible, an individual must:
Be recruited or transferred from outside the Netherlands.
Possess skills and knowledge rare in the Netherlands.
Earn a salary that meets a minimum threshold. (The bar is lower for PhD and master’s degree holders under 30.)
Not have lived closer than 150 kilometers from the Dutch border for six months or more, over the previous two years.
Conclude a written agreement with the employer structuring the employee’s salary under the 30% Ruling.
This policy benefits highly talented professionals recruited into the country by companies registered with the Dutch tax authorities. Through a loophole, it may also apply to entrepreneurs who can claim themselves as employees.
Keep in mind that the 30% Ruling has received some public criticism and legislative scrutiny. In May 2022, legislators opted to cap income eligibility at €216,000. Any part of a salary above that level will be taxed at 49.5%.
Learn more about employing workers in the Netherlands
Foreign workers resident in Italy can take advantage of a partial exemption from regular taxation on monies earned as an employee, through business income, or through self-employment.
Qualified inpats are taxed on only 30% of the income earned in Italy for the first five years they live there.
Those who move to specified areas in the center and south will only be taxed on 10% of their Italian-earned income, provided they have at least one child under 18 years of age or purchase property in Italy in the 12 months prior to relocation or after relocating.
For the second five years of residency, qualified inpats can claim 50% of their Italian earnings as exempt. Those qualifying through having minor children or residential property in Italy still only pay tax on 10% of their Italian income.
Recent changes in Italian tax law have made things easier for foreign workers. They are no longer required to demonstrate any particular skill or to work for an Italian-owned company. But they must:
Have relocated to Italy in connection with work.
Carry out most of the work in Italy.
Pledge to live in Italy for a minimum two years and work there at least half of every year.
Not have lived in Italy over the two tax years prior to relocating.
Claim this tax relief by addressing a written request to their employer. (Self-employed individuals can claim the relief on their tax returns to receive a direct payment or credit from the government.)
Learn more about employing workers in Italy
When you hire top talent from all over the world, they — and you — deserve the best. Connecting your inpat workforce with all available benefits and tax relief assistance can help you stand out in a competitive talent market. It also builds the trust of your team, showing them your investment in their success.
Remote’s concierge-model tax relief application service can assist your employees in taking full advantage of legal, country-specific ways to reduce their tax burdens as they comply with all pertinent regulations.
You and your employees can feel confident that our tax specialists can help save them the maximum amount of time and money possible. Your team will be able to focus on enjoying their earnings and elevating their quality of life, wherever they’re based.
Like our other specially designed services, Remote’s tax relief application assistance is purpose-built to be seamless and easy. Taking advantage of this valuable benefit of your relationship with Remote means you can leave the details to us, while you focus on scaling your business.
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