Moving to Spain while keeping a job with a company abroad has become an ordinary arrangement rather than an exception. It also raises a question that employees and employers tend to answer by intuition, and usually get wrong: which country is entitled to tax that salary. The Spanish Directorate-General for Taxes has addressed the matter again in binding ruling V1295-26, of 27 May 2026, and the answer is clearer than many payroll departments assume.
The situation examined
The ruling concerns an employee who is tax resident in Ireland and relocates to Spain, where she continues to work entirely from her Spanish home for the same Irish employer. The employment contract remains Irish, the employer remains Irish, and the salary continues to be paid from Ireland. What changes is that all of her work is now physically performed on Spanish soil.
On the premise that she acquires Spanish tax residence, the Directorate-General applies article 15 of the double taxation convention between Spain and Ireland and concludes that the salary may be taxed only in Spain. Ireland retains no taxing right over it.
The decisive factor is where the employee physically is
Article 15 of the convention attributes the taxing right over employment income to the state of residence, unless the employment is exercised in the other state. The Directorate-General reads “exercised” as referring to the place where the employee is physically located while performing the work, following the Commentaries on article 15 of the OECD Model Convention.
Two consequences follow. The employer’s country of establishment is irrelevant for this purpose, and so is the place where the results of the work are used or exploited. An employee sitting at a desk in Valencia is exercising her employment in Spain, whatever the letterhead on her contract says.
Why the employer’s residence does not shift the answer
It is a common assumption that an Irish contract, an Irish payslip and Irish withholding tax together establish that the salary belongs to Ireland. They do not. Where the employee is a Spanish tax resident and performs the work exclusively from Spain, both conditions of article 15.1 point to Spain, and the exception that would allow the other state to tax simply does not come into play.
This matters in practice, because employers frequently keep applying domestic withholding tax as if nothing had changed. Where the convention denies the other state any taxing right, that withholding is not correctly applied, and it does not give the employee a right to relief for international double taxation in Spain. The correct route is to request a refund from the foreign tax authority, not to offset the amount in the Spanish return.
When part of the work is performed abroad
The conclusion changes the moment the employee stops working exclusively from Spain. If she travels to Ireland and works there for part of the year, the income attributable to those days falls to be examined again under article 15.1 and 15.2, which allows the other state to tax where certain conditions on presence, employer and permanent establishment are met.
This makes an accurate record of working days indispensable. In genuinely mixed arrangements the salary must be apportioned between the days worked in each country, and that apportionment has to rest on documentary evidence rather than on an estimate made when the return is filed.
What this means in practice
Any international remote working arrangement requires two separate questions to be answered before anything else: where the employee is tax resident, and where the work is physically performed. The employer’s residence settles neither of them.
It is also worth noting that a foreign company with no permanent establishment and no economic activity in Spain is generally not required to withhold Spanish income tax on these salaries. The employee therefore receives the gross amount and bears the full liability on filing the annual return, which calls for the tax to be provisioned throughout the year rather than discovered in June.