RSUs in Spain. No Spanish rule defines RSUs. What applies are the general rules on employment income, and the answer turns on details that do not fit on a page: the vesting calendar, the leaver clauses, which country you were in each year, and whether there was a same-day sale.
Andrés Cárdenas is Colombian, has lived in Madrid since 2019 and runs the sales department of an unlisted Spanish pharmaceutical distribution company. In 2022 its board approved a "phantom share" plan for ten executives. Andrés was allocated 2,000 units, each linked to the value of one share in the company, then estimated at 45 €. The plan states that in June 2026 the company will pay him in cash the value of his units according to the valuation at that time, 70 € per unit, provided he is still on the staff. Andrés has never been a shareholder and never will be through this plan. He wants to know how the payment will be taxed, and whether he can take advantage of any of the benefits he has heard about for employee shares.
What a phantom share actually is
A phantom share is not a share. It is the company's commitment to pay you a sum of money calculated by reference to the value of its shares. Whoever receives it does not vote, has no shareholder rights and cannot sell anything to a third party. What they have is a claim against their employer, subject to conditions: continued service, targets or a liquidity event.
This nature changes everything for Spanish income tax (IRPF). As no asset is delivered, there is no income in kind. There is a cash payment that rewards work.
| Feature | Phantom shares | Employee shares |
|---|---|---|
| Are there shares? | No | Yes |
| What do you receive at the end? | Money | Shares, which you can sell later |
| Nature of the income | Cash employment income | Employment income in kind |
| Is the exemption for share awards available? | No | It may be, if the requirements are met |
| Is there a later capital gain? | No | Yes, on sale |
The guide on phantom shares and SARs compares both appreciation instruments.
When the income accrues
Article 14.1.a) of the Spanish Income Tax Act allocates employment income to the period in which the recipient can demand it. As long as Andrés does not meet the plan's conditions, he cannot demand anything: he might leave or the company might be worth less. In June 2026, when the period is completed with Andrés still on the staff, the claim becomes payable. That is the year of allocation, even if the company pays a few weeks later.
The 2022 allocation produced no income, nor do the intervening years in which the valuation rises or falls. If the plan lets Andrés choose between being paid in 2026 or deferring payment, it will be necessary to see whether the right was already payable before he made that choice; it is a point settled by reading the plan.
Andrés's figures
- Units: 2,000.
- Value per unit in June 2026: 70 €.
- Gross amount: 2,000 × 70 = 140,000 €.
- Nature: cash employment income, included in the general base for 2026.
- Withholding: the company must withhold on the payment, as on any cash pay, at the rate that applies to Andrés.
Now, the reduction. The plan was allocated in 2022 and paid in 2026: the generation period exceeds two years. If Andrés has not applied the 30 % reduction to other multi-year income in the five previous periods, and given that the amount does not exceed 300,000 €:
- Reduction: 140,000 × 30 % = 42,000 €.
- Income included: 98,000 €.
The requirements and the five-year rule are explained in the 30 % reduction. No reduction is guaranteed if the plan is renewed every year or if there are other multi-year payments nearby.
Why the share exemption is not available
Article 42.3.f) of the Spanish Income Tax Act exempts the delivery to serving employees of shares or holdings in their own company or group, free or below their value, up to 12,000 € a year and subject to requirements. For accredited emerging companies, the limit is 50,000 €. Both exemptions rest on the same premise: that shares or holdings are delivered. Andrés receives none. He receives money whose amount is calculated by reference to the value of the shares, and that is not the same thing. Article 42.1 confirms it by another route: when the payer hands over amounts in cash, the income is cash, not in kind.
Some companies propose swapping the cash payment for a delivery of shares just before maturity so as to access the exemption. The operation requires checking whether the exemption's requirements are met and whether Hacienda, as the Spanish tax office is commonly called, may take the view that the right was already a cash one. We cannot guarantee that such a change will be accepted, and it may have company law consequences for the shareholders.
If your company has offered you a plan of this kind or you are about to be paid under one, you can send us the plan rules through the equity form.
Phantom dividends and other variants
Many plans add payments equivalent to the dividends a shareholder would have received. They are not dividends: they are cash employment income, allocated when payable. Other plans pay only the appreciation over a starting value, not the full value of the unit: in substance those are appreciation rights and are dealt with in how SARs are taxed.
Had Andrés received 2,000 units paying only the rise from 45 €, he would have received 2,000 × (70 − 45) = 50,000 €, with the same classification as cash employment income.
If the payment comes with your departure
Andrés's plan provides that, if the company lets him go before 2026 without cause, he will receive a proportional part of his units. That payment, even if it coincides in time with the final settlement or a severance payment, is not severance: it rewards the incentive plan and is taxed like any other cash employment income. Mixing it with the severance payment in a single amount makes it harder to apply to each part its own regime, so it is worth asking for the leaving document to separate them. And if the figure depends on a formula in the plan, such as a multiple of operating profit, that formula is what fixes the income, not any valuation someone makes afterwards.
What Andrés does not have to do
After being paid, Andrés has no shares to declare in any inventory and no capital gain to calculate later on. The money received is simply a balance in his account. Nor does he have anything to declare in Modelo 720, the Spanish return on assets held abroad, for the phantom shares while they remain unpaid, because they are not securities. That simplicity is one of the reasons some companies prefer them, as we explain in phantom shares or stock options.
If the payer were a foreign parent company and Andrés worked for a Spanish subsidiary, the rule in article 99.2 on withholding by the entity where he provides his services would apply, which we cover in nothing has been withheld.
Phantom shares, SARs and the other incentive plans linked to the value of the company are explained on the Salama Tax page on pay in shares, with the documents worth reviewing before payment.