RSUs in Spain. In Spain an RSU is not a legal category: it is a contractual promise to which rules written for something else are applied. The characterisation comes out of your plan document, not out of the name of the instrument, and that is where two colleagues with the same grant end up with two different returns.
Priya Raman is a data engineer, born in Bangalore, who has lived in Málaga since 2022. She works for a San Francisco start-up that, eight months ago, closed a Series C round at 9.40 USD per preferred share. In July 2026 she exercises 10,000 options with an exercise price of 1.20 USD. The company's latest 409A report, five months old, puts the value of the common share at 3.10 USD. Her question is a direct one: which number do I use to calculate my income in Spain, 3.10 or 9.40? The difference is not small.
What Spanish law asks for
Spanish income tax (IRPF) does not refer to the 409A or to any particular valuation. Article 43.1 of the Act requires income in kind to be valued "at its normal market value". When the share is listed, that value is the day's quoted price. When it is not, it has to be built, and this is where the problem starts: the normal market value of something that has no market is, by definition, an estimate.
The Act contains a specific rule only for start-ups accredited under Law 28/2022: the value taken is that of the shares subscribed by an independent third party in the last capital increase in the year before the delivery. A US start-up like Priya's does not fall within that regime, which is explained in equity in a Spanish start-up. The general rule governs her case.
What a 409A is and why it exists
The 409A is a valuation report on the common share commissioned by the company from an independent third party. It stems from US tax rules, which require the exercise price of options to be set at no less than market value in order to avoid tax consequences there. How those rules work is not for us to explain. What matters for Spain is that the report contains an analysis of the value of the common share carried out with a professional methodology: comparables, discounted cash flows, allocation of value between share classes and, almost always, a discount for lack of liquidity.
How much weight it carries in Spain
The 409A is good evidence, but it does not bind the Agencia Tributaria, the Spanish tax agency. It is a valuation made for another system and at another date, and Hacienda, as the tax office is commonly called, can compare it with other data. In practice, its strength depends on three things:
| Factor | Strengthens the 409A | Weakens it |
|---|---|---|
| Age | Report close to the exercise date | Report from many months earlier with relevant events in between |
| Transactions with third parties | No recent purchases or sales of common shares | There was a buy-back (tender offer) or secondary sales at a much higher price |
| Consistency | The discount against the preferred share is explained by different rights | The discount is not reasoned or is disproportionate |
The guide on the market value of unlisted shares goes through the methods. Here we concentrate on Priya's decision.
Why the common share is worth less than the preferred
The 9.40 USD of the Series C is not the price of Priya's share. The investors bought preferred shares, which usually carry a liquidation preference: if the company is sold, they are paid before the holders of common shares. They may also have enhanced voting rights, conversion rights or anti-dilution protection. A common share without those rights is worth less, and the 409A tries to measure how much less.
On top of that comes the illiquidity discount. Priya cannot sell her shares whenever she wishes: the plan restricts transfer, the company has a right of first refusal and there is no market. An asset you cannot turn into money is worth less than an identical one you can sell. The discount is reasonable in itself; what is open to debate is its size.
The calculation with each value
We assume an exchange rate of 0.91 € to the dollar on the day of exercise:
- With the 409A: (3.10 − 1.20) × 10,000 = 19,000 USD × 0.91 = 17,290 € of employment income.
- With the Series C price: (9.40 − 1.20) × 10,000 = 82,000 USD × 0.91 = 74,620 € of employment income.
- Difference in the base: 57,330 €.
If Priya files using the 409A and Hacienda later maintains that the correct value was higher, the adjustment would include the tax on the difference, late-payment interest and, where applicable, a penalty if a lack of diligence is found. If she files using the Series C price without needing to, she overpays on a value that probably does not reflect her share. Neither option is free of risk, and nobody can guarantee her that hers will not be challenged.
If, in the months around the exercise, the company organised a buy-back from employees or common shares changed hands between third parties, that price is a real market data point on the same class of share. An earlier 409A report showing a much lower value loses a great deal of force against it. Before you file, ask the company whether there were any such transactions.
How to document the value chosen
What protects Priya is not choosing the lowest number, but being able to explain why it is the correct one. It is worth gathering:
- the full 409A report, not only the figure shown on the portal;
- the date of the report and any later update;
- the company's communication about secondary transactions or buy-backs;
- the terms of the preferred round, to justify the difference in rights;
- the shareholders' agreement or the plan, to prove the transfer restrictions.
With that documentation, the value declared stops being a choice and becomes a reasoned conclusion. If you would like us to review whether your 409A stands up to comparison with the other data, you can send it through the equity form.
If the valuation changes after the exercise
Sometimes the company commissions a new 409A a few weeks after Priya's exercise and the value rises sharply. That later report does not in itself alter the income already accrued, because what counts is the value on the date of exercise. But it may be a sign that the earlier one was out of date, above all if nothing relevant happened between the two. If you see that a new valuation is being prepared, ask the company from what date it will take effect before deciding when to exercise.
The same value then serves for the sale
The number you choose does not only fix the employment income: it also sets the acquisition value of the shares for when you sell them. If Priya is taxed at 3.10 USD and years later sells at 25 USD in an acquisition of the company, her capital gain will be larger than if she had been taxed at a higher value. A low valuation shifts income from the general base to the savings base, which has a different scale. That consequence is legitimate if the value is correct, but it is precisely what may lead Hacienda to review it.
If the company is sold later on, what happens to shares already exercised is explained in the company is bought and my shares are paid for. And if you have not yet exercised and are wondering whether to do so with a low 409A, first read exercise now or wait.
The criteria for valuing unlisted shares are part of what we explain on the Salama Tax page on pay in shares, together with the documentation worth keeping for each tax year.