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Brussels, 16 October 2008

Direct taxation: The European Commission requests Spain to change restrictive exit tax provisions for individuals

The European Commission has formally requested Spain to change its tax provisions which impose an exit tax on individuals who cease to be tax resident in Spain. The provisions are incompatible with the free movement of persons provided for in Articles 18, 39, 43 of the Treaty and Articles 28 and 31 of the EEA Agreement. The request takes the form of a reasoned opinion (second step of the infringement procedure provided for in Article 226 of the EC Treaty). If there is no satisfactory reaction to the reasoned opinion within two months, the Commission may decide to refer the matter to the Court of Justice of the European Communities.

Under Spanish law, a taxpayer who transfers his residence abroad has to include any unallocated income in his tax declaration for the last tax year in which he is still considered a resident taxpayer and will be taxed on such income immediately.

Contrary to the general rule which taxes income in the calendar year in which it is received, there are special rules according to which income may be taxed over a number of tax years. Unallocated income refers to that income that is still pending to be taxed.

The Commission considers that such immediate taxation penalises those persons who decide to leave Spain, by introducing less favourable treatment for them in comparison to those who remain in the country. The Spanish rules in question are therefore likely to dissuade individuals from exercising their right of free movement and, as a result, constitute a restriction of Articles 18, 39 and 43 EC and the corresponding provisions of the EEA Agreement.

The Commission's opinion is based on the EC Treaty as interpreted by the Court of Justice of the European Communities in its judgment of 11 March 2004, in Case C-9/02, De Lasteyrie du Saillant, as well as on the Commission's Communication on exit taxation (COM(2006)825 of 19 December 2006).

The Commission's case reference number is 2007/2373.

For the press releases issued on infringement procedures in the taxation or customs area see:

For the latest general information on infringement measures against Member States see:

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