Leaving Spain for Cyprus: What Founders Need to Know About Exit Tax and Wealth Tax

The Short Answer

Spain has an exit tax on shares. It applies only if you were tax resident in Spain for at least 10 of the last 15 tax years and your shares are worth more than EUR 4,000,000 in total, or you hold more than 25% of a company and that holding is worth more than EUR 1,000,000. Many owner-managed companies meet the second test.

Because Cyprus is in the European Union, you can elect for the tax not to be collected when you leave. It then becomes payable only if, within 10 tax years, you transfer the shares, stop living in the EU or European Economic Area, or fail to make the required notifications. The election is not automatic.

Your Spanish company does not move with you and continues to pay Spanish corporate tax. What changes is the tax on what you receive personally, and which of your assets remain within Spanish wealth taxes. The starting point is therefore not how much tax Cyprus charges. It is which Spanish obligations end when you move, and which ones follow you.

The Spanish Departure Comes First

Most founders start with the Cyprus rules. The first question is whether Spain will accept that you have left. Spanish law applies three tests, and meeting any one of them is enough to remain resident.

1. Time in Spain. You spend more than 183 days in Spain in the calendar year. Temporary absences count as days in Spain unless you prove tax residence in another country.
2. Centre of economic interests. The main base of your business or economic interests is in Spain, directly or indirectly. This matters where the main business continues to operate there.
3. Family. Your spouse, if you are not legally separated, and your dependent minor children habitually live in Spain. Spain then presumes you are resident unless you prove otherwise.

Spain generally has no split tax year for individuals. You are resident or non-resident for the whole calendar year. A founder who leaves in September, having already spent more than 183 days in Spain, generally remains Spanish tax resident for that year, including on income earned after arriving in Cyprus.

Where both countries treat you as resident, Article 4 of the treaty decides. It looks first at where you have a permanent home, then at your centre of vital interests, then at where you habitually live, then at nationality.

Does the Spanish Exit Tax Apply to You?

The Spanish exit tax for individuals is found in Article 95 bis of the Personal Income Tax Law. It depends on the value of your shares and your Spanish tax history, not on your annual income. Both conditions below must be met.

Condition 1: length of residence. You were Spanish tax resident for at least 10 of the 15 tax periods before your last period of Spanish residence.

Condition 2: value of your shares. One of the following is true.

• The market value of all your relevant shares and fund holdings is more than EUR 4,000,000.
• Where that threshold is not met, you hold more than 25% of a company and that holding is worth more than EUR 1,000,000.

An example of the second test. A founder owns 80% of a company valued at EUR 3,000,000. The holding is worth EUR 2,400,000. The company is worth less than EUR 4,000,000, but the founder holds more than 25% and the holding is above EUR 1,000,000, so the condition is met.

A founder who has lived in Spain for only five years is generally outside the rule. Founders who were previously taxed under Spain’s special rules for inbound workers should have their residence history reviewed separately.

What the Spanish Exit Tax Does

Where both conditions are met, Spain calculates a gain as if the shares had been sold: market value less acquisition value. The shares do not need to have been sold. The gain is taxed on the savings scale, which in 2026 runs from 19% to 30%, with 30% applying above EUR 300,000.

The illustration assumes the full gain is taxed at the 2026 savings rates with no other adjustments. Calculating this gain is not the same as having to pay it when you move to Cyprus.

Why Moving to Cyprus Changes the Timing

Article 95 bis(6) contains special rules for a move to another EU country, or to an EEA country that exchanges tax information with Spain. Under them, the gain is brought into Spanish tax only if one of three events happens during the 10 tax years after your last year of Spanish residence.

1. You transfer the shares during your lifetime.
2. You stop being resident in the EU or a qualifying EEA country.
3. You fail to make the required notifications to the Spanish Tax Agency.

You must elect for this treatment. The notification is made on Modelo 113 and covers the gain, the shares, the country you are moving to and later changes of address. If an event occurs, a supplementary Spanish return is filed for the departure year. Where the rules have been followed, the law provides for this without penalties, late-payment interest or surcharges. If no event occurs in the 10 tax years, the gain does not become taxable under this provision.

If you sell during those 10 years, the tax is based on the gain at departure, not on the sale price. Where the shares are sold for less than their value at departure, the law allows the gain to be reduced, subject to rules on distributions received after leaving. Growth after you leave is a separate question, covered below.

What Happens if You Sell Your Company After Moving?

Two questions have to be kept apart.

First: does Spain have an exit tax claim from your years of Spanish residence? If Article 95 bis applies to you, a sale within the 10 tax years brings the departure gain into Spanish tax. The treaty does not remove that claim.

Second: can Spain tax the sale itself once you are resident in Cyprus? Under Article 13 of the treaty, gains on shares are generally taxable only in the country where the seller is resident. The main exception is unlisted shares that derive more than 50% of their value from immovable property in the other country.

On the Cyprus side, gains on the sale of shares are generally not taxed. The exception is shares in companies that own immovable property in Cyprus. From 2026 that exception applies where at least 20% of the value of the shares comes from Cyprus property, reduced from 50%.

The Annual Cost of Staying: Wealth Tax and Solidarity Tax

Spain also taxes net personal wealth every year, measured on 31 December. For a founder with a valuable business, an investment portfolio or several properties, this can matter as much as income tax.

The Solidarity Tax was introduced so that living in a region with large Wealth Tax reductions no longer removes the charge on large fortunes. Shares in a family business can be exempt from both taxes under strict conditions on ownership, activity, management and salary. Not every founder’s holding qualifies, and cash, portfolios and personal property usually do not.

What changes after you move. Spanish domestic law taxes non-residents on assets located in Spain or rights that can be exercised there. Read alone, that could include shares in a Spanish company. The treaty changes the result.

The treaty between Spain and Cyprus covers taxes on wealth as well as income. Under Article 21, Spain may tax immovable property in Spain and business assets of a permanent establishment in Spain. All other assets are taxable only in the country where the owner is resident. Cyprus has no wealth tax.

For a founder who is genuinely treaty resident in Cyprus, shares in a Spanish operating company are therefore generally outside Spanish Wealth Tax. Spain’s Solidarity Tax law also recognises tax treaties. Spanish property stays taxable in Spain, and shares in companies that mainly hold Spanish property should be checked individually.

What Cyprus Changes, and What It Does Not

What Cyprus does not change

• A Spanish company does not become a Cyprus company because its shareholder moves. It continues to pay Spanish corporate tax. The general rate is 25%, with reduced rates for qualifying smaller companies.
• Dividends from a Spanish company to an individual in Cyprus can carry Spanish withholding tax. Article 10 of the treaty limits it to 5%. The 0% rate is for a company holding at least 10%, not for a person.
• Spanish property, and gains on it, remain taxable in Spain.
• An exit tax position under Article 95 bis continues for 10 tax years.
• Moving a business, assets, intellectual property or functions out of Spain can create separate Spanish tax.

What Cyprus does change

• Corporate tax of 15%. This is the general rate from 1 January 2026. It applies to a company that is genuinely managed from Cyprus, with real functions and substance there.
• Non-Dom status. Cyprus tax residents who are not domiciled in Cyprus are exempt from Special Defence Contribution on dividends and passive interest. The exemption lasts until you have been resident for 17 of the previous 20 tax years. From 2026 it can be extended for up to two further periods of five years, on payment of a fixed amount for each period.
• General Healthcare System. Dividends remain subject to a 2.65% contribution, on total annual income capped at EUR 180,000. The maximum is EUR 4,770 a year across all income, not per dividend.
• Gains on shares. Generally not taxed, subject to the Cyprus property exception described above.
• Wealth and inheritance. Cyprus has no annual wealth tax and no inheritance tax.

Read: Cyprus Non-Dom: 17 Years of Tax Advantages for Founders and Investors

Spain and Cyprus Side by Side

General position as at November 2026. The treatment of any person or company depends on the facts.

A Worked Example: EUR 1,000,000 of Company Profit

A founder owns 100% of a business with EUR 1,000,000 of taxable profit and takes all profit after tax as a dividend. The three columns show why moving personally and moving the business are two separate decisions.

These figures are an illustration, not a forecast for any founder. They assume the 25% Spanish general rate, a Cyprus company genuinely subject to Cyprus tax at 15%, Non-Dom status, the 5% treaty rate on Spanish dividends, and the full annual healthcare contribution. They ignore other income, salary, exit tax, Spanish wealth taxes, the tax cost of moving a business, and the cost of running a new structure.

The third column applies only where the business is really managed and operated from Cyprus. Renaming a Spanish business as a Cyprus one does not achieve it, and a Cyprus company run from Spain can be treated as Spanish tax resident.

Read: Setting Up a Cyprus Company as a Relocating Founder: How It Works

Who This Is For

A move from Spain to Cyprus tends to work for:

• Owners who will make their real home in Cyprus, with their family.
• Owners whose business can be managed from Cyprus.
• Owners planning several years ahead of a sale.
• Owners with significant personal investments or wealth exposed to Spanish wealth taxes.

It tends not to work for:

• Owners whose spouse and dependent children will stay in Spain.
• Owners who will continue to manage the business mainly from Spain.
• Owners who expect Cyprus residence alone to remove a Spanish exit tax position.
• Owners with a sale or restructuring planned that has not been reviewed before the move.
• Anyone looking for a Cyprus company without real activity, management or substance. Royal Pine does not set up paper structures.

What to Confirm Before You Leave

Take these questions to a Spanish tax adviser before any date or transaction is fixed.

1. Have I been Spanish tax resident for 10 of the previous 15 tax periods?
2. Do my shareholdings meet the thresholds in Article 95 bis?
3. What is the defensible market value of my business today?
4. Can I elect for the special EU treatment, and what must I file and when?
5. Which calendar year will be my last year of Spanish tax residence?
6. Which assets remain taxable in Spain after I move, including under the treaty?
7. How will Spanish dividends, directors’ fees, salary and a future share sale be treated?
8. Could any planned transfer, restructuring or move of assets create Spanish tax?

Then, the Cyprus Side

Once the Spanish position is clear, Cyprus tax residence can be established in one of two ways.

• The 183-day rule. You spend more than 183 days in Cyprus in the calendar year.
• The 60-day rule. You spend at least 60 days in Cyprus, do not spend more than 183 days in any other single country, keep a permanent home in Cyprus that you own or rent, and carry on a business, are employed, or hold an office with a Cyprus tax resident company.

From 2026 the 60-day rule no longer requires that you are not tax resident in another country. That does not mean Cyprus residence ends residence elsewhere. Spain applies its own tests, and where both countries claim you, the treaty decides. A founder who has moved home, family and centre of life to Cyprus is in a stronger position than one who relies on the minimum number of days.

Read: The Cyprus 60-Day Rule, and for founders leaving other countries, Leaving Germany for Cyprus and Leaving the Netherlands for Cyprus

Common Mistakes

• Leaving too late in the year. Moving in September does not make you non-resident in Spain for that year.
• Relying on the Cyprus certificate alone. It supports the Cyprus position. It does not settle Spanish residence or treaty residence.
• Missing the exit tax election. The special EU treatment has to be elected and notified.
• Selling without reviewing the departure gain. A sale within the 10 tax years has Spanish consequences even after you are resident in Cyprus.
• Assuming Spanish wealth tax always follows Spanish shares. The treaty can give a different result from domestic law.
• Treating a Cyprus company as managed from Cyprus because it is registered there. Incorporation and tax residence are different things.
• Assuming dividends arrive with no Spanish withholding. For an individual shareholder, 5% generally applies.
• Planning after the move. By then the residence year, the valuation date and many of the options are already fixed.

The Better Question to Ask

The usual question is “How much tax will I save by moving to Cyprus?” The better question is “Which Spanish obligations end when I move, which continue for the next 10 years, and how should my business and personal wealth be arranged afterwards?”

For a founder with a large shareholding, the answer to the second question is usually worth more than the difference between two tax rates. The Spanish position should be dealt with first. The Cyprus structure can then be designed around what you actually need.

Frequently Asked Questions

Leaving Spain, Answered.