{"id":32569,"date":"2022-11-15T22:39:09","date_gmt":"2022-11-15T22:39:09","guid":{"rendered":"https:\/\/www.araozyrueda.com\/?p=32569"},"modified":"2023-06-16T11:53:05","modified_gmt":"2023-06-16T11:53:05","slug":"tax-treatment-of-carried-interest-in-spain-for-personal-income-tax-purposes","status":"publish","type":"post","link":"https:\/\/www.araozyrueda.com\/en\/tax-treatment-of-carried-interest-in-spain-for-personal-income-tax-purposes\/","title":{"rendered":"Tax treatment of Carried interest in Spain for Personal Income Tax purposes"},"content":{"rendered":"

The Spanish Parliament has approved on 1 December 2022 the Law to foster the start-up ecosystem in Spain, also known as the \u201cStart-up Law\u201d. The main goal of the Start-up Law is to establish a specific regulatory framework to support the creation and growth of start-ups. This Law will probably be published in the Spanish Official State Gazette in the\u00a0first months of 2023<\/strong>\u00a0and will enter into force the day after its publication.<\/p>\n

Although they are not linked to the investment in start-up companies,\u00a0special rules regarding the taxation of\u00a0\u00a0carried interest<\/u><\/strong>\u00a0for Spanish Personal Income Tax (\u201cPIT<\/strong>\u201d) purposes are introduced for the first time at a country level by this Law.<\/p>\n

As a general definition,\u00a0carried interest is a performance fee<\/strong>\u00a0(i.e. share of profits) earned by general partners\/managers of private equity, venture capital, and hedge funds. It is generally due based on a role rather than on an initial investment in the fund and its purpose is to align the general partner\u2019s\/managers\u2019 compensation with the fund\u2019s return.<\/p>\n

This\u00a0carried interest\u00a0<\/strong>will be\u00a0regarded as labor income\u00a0<\/strong>(and not as capital gains) for PIT purposes and will benefit from a\u00a050% exemption without limitation<\/u>\u00a0<\/strong>if the following requirements are met:<\/p>\n