International Tax Lawyer — Canarias

Jacob Salama is a registered Spanish lawyer (Colegiado nº 11.294, Ilustre Colegio de Abogados de Málaga) dedicated to international and cross-border taxation, with a substantial client base among US, UK, German and other European nationals who have established residence throughout Canarias. The firm handles only complex matters that require deep knowledge of Spanish tax law combined with international treaty law — from Beckham Law applications and stock option planning to trust attribution rules, permanent establishment risk and AEAT inspection defence.

Tax Residency for Expatriates in Canarias

Spain's autonomous community system means that the regional administration of Canarias shares jurisdiction with the central AEAT on personal income tax matters. For international residents, this dual layer of authority creates important planning considerations: the regional scale of IRPF rates and the availability of regional allowances, deductions and wealth tax exemptions vary significantly across the 17 autonomous communities and two autonomous cities.

An expatriate who establishes fiscal domicile in Canarias will file their IRPF return reflecting both central and regional components. The applicable regional rates, the availability of inheritance and gift tax exemptions and the minimum wealth tax threshold all depend on the specific region. Jacob Salama advises clients on choosing the most tax-efficient place of fiscal domicile within Spain — a decision that interacts with employment location, family situation and the structure of the client's assets.

For US nationals, establishing residency in Canarias triggers the worldwide income reporting obligations under the US-Spain Double Taxation Agreement (1990) as well as continued FBAR and FATCA duties. Jacob coordinates Spanish residency planning with the client's US obligations, ensuring that the Spanish filing position is consistent with the global tax posture. He also advises on exit from Canarias residency, including the Spanish exit tax on unrealised capital gains under Article 95 bis LIRPF and the strategy for evidencing a clean break to the AEAT.

Beckham Law for New Residents in Canarias

The special non-resident tax regime under Article 93 LIRPF — commonly called the Beckham Law — is a national-level regime, but its interaction with Canarias's regional tax provisions is an important planning consideration. Under the Beckham Law, the taxpayer is assessed on Spanish-source income at a flat 24% rate (or 47% above €600,000), bypassing the regional IRPF scale entirely. This means that the specific tax advantages or disadvantages of the Canarias region on the IRPF scale are irrelevant for Beckham Law claimants — the comparison must be made against the full combined rate that would apply without the regime.

Jacob Salama advises clients throughout Canarias on whether the Beckham Law is the right choice given their income structure, nationality, existing assets and business activities. For entrepreneurs and investors who relocated to Canarias under the Startup Law expansion, the analysis includes the treatment of foreign dividends, capital gains and rental income under the regime versus standard IRPF, as well as the impact of ceasing the regime prematurely — for example due to a secondment or a change in business structure.

The Modelo 149 application process requires gathering and translating a number of supporting documents, including the employment contract or business registration, proof of social security affiliation and evidence that the ten preceding years were spent outside Spain. Jacob prepares and reviews all Beckham Law applications for clients in Canarias, liaising with the AEAT delegación in the region where necessary and advising on how to handle the transitional year in which residency is acquired and the regime is elected simultaneously.

Modelo 720 Overseas Asset Reporting In Canarias

Any Spanish tax resident in Canarias who holds foreign financial accounts, real estate situated outside Spain or rights in overseas collective investment schemes, pension plans or life assurance policies above €50,000 per category must file Modelo 720 — Spain's overseas asset declaration — by 31 March of the following year. The obligation applies regardless of whether the assets produce income, and even a single overseas current account with a balance above €50,000 on 31 December triggers the filing requirement for the first year of residency.

Modelo 720 was introduced in 2012 as an anti-avoidance measure, and for many years it carried some of the most punitive penalty provisions in the OECD — including the imputation of unjustified capital gains at up to 150% with no statute of limitations. Following a 2022 ECJ ruling that the original penalty regime was incompatible with EU law, Spain amended the sanctions to align with standard LIRPF penalties. However, the underlying reporting obligation remains in force and the AEAT continues to use Modelo 720 data as a starting point for investigation of overseas assets.

Jacob Salama advises international residents in Canarias on the full scope of Modelo 720 compliance: which assets must be declared, how to value accounts and investment portfolios to the 31 December closing balance, how to report jointly held assets and trust interests, and when an updated filing is required in subsequent years (only when asset values increase by more than €20,000 per category or when a previously declared asset is disposed of). He also assists clients who have failed to file in prior years to regularise their position with the AEAT on a voluntary basis before any investigation is opened, taking advantage of the reduced penalty regime that applies to voluntary corrections.

Double Tax Treaties for Residents In Canarias

Spain has an extensive network of double tax treaties — over 90 in force — covering virtually every country from which international residents in Canarias are likely to originate. The most relevant for Jacob Salama's client base are the US-Spain Double Taxation Convention (1990, as amended), the UK-Spain Double Taxation Agreement (2013), and the Germany-Spain Double Taxation Agreement (DBA Deutschland-Spanien, 2011). Each treaty contains tie-breaker rules for residence, provisions for the elimination of double taxation (primarily by credit method for the US and Germany, and by exemption with progression for some categories under the UK treaty), and specific articles dealing with employment income, dividends, interest, royalties, capital gains and pensions.

For US citizens, the interaction between the treaty and the US Saving Clause is the central issue: Article 1(5) of the US-Spain treaty allows the United States to tax its citizens as if the treaty did not exist, meaning that a US national resident in Canarias cannot rely on the treaty to reduce their US tax burden below what domestic US law would impose. US nationals must therefore continue to file US federal returns, report foreign bank accounts on FinCEN 114 (FBAR) and comply with FATCA regardless of how long they have been resident in Canarias. Jacob coordinates the Spanish and US filing positions to minimise double taxation through the foreign tax credit mechanism.

UK nationals in Canarias face a post-Brexit environment in which the UK-Spain DTA remains in force but freedom of movement has ended, affecting the employment status of cross-border workers and the social security position of those with historic UK NI contributions. German nationals must consider the DBA provisions on the Abgeltungsteuer interaction with Spanish dividend withholding and the treatment of German pension income. Jacob advises clients from all three jurisdictions — and from Switzerland, the Netherlands, France and elsewhere — on the treaty analysis relevant to their specific situation, including applying for treaty-reduced withholding on Spanish-source dividends and interest.