The special tax regime for expatriate employees came into force as of January 1, 2004. Under this special tax regulation, individuals may choose to be taxed in Spain resident taxpayer or as a non-resident taxpayer. As of January 1, 2015 the following changes has been made to this special tax regime:

• the assignment to Spain now may include a director in a Spanish entity provided that the individual does not acquire part of its ownership. If however, there is an ownership, this ownership should not be considered as participation under transfer pricing rules.
• the requirement that the services must be carried only in Spain and for the benefit of a Spanish entity or permanent establishment in Spain has been eliminated.
• Special payments such as severance payments are no longer excluded from this special tax regime.
• the maximum ceiling for compensation up to €600,000 has been eliminated.
• the applicable flat tax rate has been decreased from 24.75% to 24%, for compensation exceeding € 600,000 the flat tax rate is 45%.

The old rules, including the flat tax of  24.75%  may still apply to taxpayers who entered Spain before January 1, 2015. The election to remain under the old rules or to be subject to the new rules must be made when filing the 2015 Spanish individual income tax return and shall apply during the whole period of the special tax regime.