RSUs in Spain. Spanish law has no figure called an RSU. Your tax comes from three places at once: what the plan says, where you were resident while it vested, and what you did with the shares afterwards. Change one of the three and the answer changes, sometimes by a lot of money.
Chen Wei was born in Shanghai and has lived in Madrid since 2022, where he works as an analyst at the Spanish subsidiary of a semiconductor company listed on Nasdaq. He has joined the company's Employee Stock Purchase Plan (ESPP): each month part of his salary is deducted and, every six months, the plan buys shares at a 15 % discount on the lower of two prices, the one at the start of the period and the one on the purchase date. In the last period he contributed 7,500 USD. The share was worth 40 USD at the start and 50 USD on the purchase date. Chen wants to know whether that discount is taxed and whether it is true, as he has been told, that there is a 12,000 € exemption for these plans.
The discount is pay in kind
Article 42.1 of the Spanish Income Tax Act defines income in kind as obtaining goods for private purposes free of charge or for less than the normal market price. Chen buys shares in his employer below their value because he works there: the difference is employment income in kind. What he pays out of his own salary is not income; what he saves compared with market value is.
The moment is the purchase. While the money accumulates during the period, there is no income: they are voluntary deductions from his payslip that he could get back if he withdrew from the plan. The income arises on the day the plan acquires the shares in his name.
The lookback: why the real discount exceeds 15 %
The lookback clause allows purchase at 85 % of the lower of the opening and closing prices. If the share rises during the period, the real discount on the value on the purchase date is much larger than 15 %. Here are Chen's figures:
- Price at the start of the period: 40 USD.
- Price on the purchase date: 50 USD.
- Purchase price: 85 % × 40 = 34 USD.
- Shares bought: 7,500 / 34 = 220 shares, with the remainder returned or carried to the next period.
- Discount per share against the day's market value: 50 − 34 = 16 USD.
- Employment income for the period: 220 × 16 = 3,520 USD.
Without the lookback, the price would have been 85 % of 50, that is, 42.50 USD, and Chen would have bought 176 shares at a discount of 7.50 USD each: 1,320 USD of income.
| Scenario | Purchase price | Shares | Discount per share | Income for the period |
|---|---|---|---|---|
| With lookback | 34 USD | 220 | 16 USD | 3,520 USD |
| Without lookback | 42.50 USD | 176 | 7.50 USD | 1,320 USD |
If there are two periods a year with similar results, Chen would obtain some 7,040 USD of income in kind a year. At an assumed rate of 0.90 € to the dollar, around 6,336 €.
The exemption in article 42.3.f)
The Act exempts the delivery to serving employees of shares in their own company or in other group companies, free or below market price, to the extent that it does not exceed 12,000 € a year for all the shares delivered to each employee. Article 43 of the Income Tax Regulation sets out the requirements:
| Requirement | What it demands | How an ESPP usually stands |
|---|---|---|
| General offer | The same terms for all the company's employees, although a minimum length of service, equal for everyone, or being a Spanish income taxpayer may be required | Normally open to the whole workforce |
| Limited holding | The employee, with spouse and relatives up to the second degree, may not hold more than 5 % | Almost always met |
| Holding period | Keep the shares for at least three years | Depends on what the employee does |
If Chen meets all three, his 6,336 € of annual discount would be exempt, because it does not exceed 12,000 €. Any excess over 12,000 € would be taxed as employment income. The guide on the ESPP and the 12,000 € exemption goes through each requirement.
Many employees sell ESPP shares as soon as they receive them to lock in the discount. If they do so within three years, they breach the holding requirement and must file a supplementary return with late-payment interest, within the period running from the sale to the end of the filing deadline for the year in which they sell. Selling quickly is not a mistake, but it carries that cost. We cannot guarantee that Hacienda, as the Spanish tax office is commonly called, will not also question whether the offer met the equal-terms requirement.
What Chen should check
Whether the plan is open to everyone. An ESPP that excludes certain groups, for instance part-time staff or certain subsidiaries, may not meet the requirement of an offer on the same terms. The only differences the rules allow are a common minimum length of service and being a Spanish income taxpayer.
Which shares he sells first. If he buys shares every six months and sells some, those treated as sold are the oldest. Selling shares bought more than three years ago does not break the exemption for the recent ones, and vice versa.
The payment on account. If the Spanish subsidiary considers the discount exempt, it will not make a payment on account. If Chen sells within three years, the supplementary return is his responsibility. Matters relating to missing payments on account are in nothing has been withheld.
You can send us the plan document and the purchase reports for each period through the equity form so that we can check whether the exemption holds.
If you exceed 12,000 € in a year
The limit is annual and applies to all the shares delivered to each employee. If Chen increased his contributions and his annual discount reached 15,000 €, the first 12,000 € could be exempt and the remaining 3,000 € would be taxed as employment income in kind for the year. If in the same year he also receives shares under another company plan that also seeks to use the exemption, both are added together for the limit.
When the exemption does not apply
If the plan does not meet the requirements, or if Chen sells early, the 6,336 € are taxed as employment income in the general base for the year of purchase. When he later sells, he will calculate a capital gain or loss as the difference between the sale price and the cost of his shares, which includes what he paid and the income on which he was taxed. The cost-and-sale mechanics are the same as we describe in when my stock options are taxed.
The ESPP under the article 93 regime
If Chen were taxed under the special regime for posted workers, article 93.2.a) of the Spanish Income Tax Act exempts the employment income in kind referred to in article 14.1.a) of the Non-Resident Income Tax Act, which in turn refers to the exempt income in article 42.3 of the Income Tax Act. The ESPP exemption can therefore also apply within the regime if the requirements are met. The rest of the regime is covered in the Beckham regime and shares.
Discounted purchase plans have their own section on the Salama Tax page on equity, with the requirements worth checking each year.