Law 62/2003, of 30 December, of fiscal, administrative and social order measures, introduced with effect from 1 January 2004 a new paragraph 5 in Article 9 of Law 40/1998 of 9 December of the Tax on the Income of Physical Persons and other Tax Rules. In this paragraph, currently referred to in Article 9 (5) of the recast text of the Law on the Income Tax of the Physical Persons, approved by the Royal Legislative Decree 3/2004 of 5 March, the possibility is established that the natural persons who acquire their tax residence in Spain as a result of their movement to Spanish territory may choose to pay tax on the Income Tax of non-residents in the terms and conditions stated in the aforementioned precept. In order to develop the content of this special regime and to specify certain aspects necessary for its application, it is considered appropriate to incorporate into the Regulation of the Income Tax of the Physical Persons, approved by the Royal Decree 1775/2004 of 30 July 2004 and under the general clearance provided for in the second final provision of the recast text of the Law on the Income Tax of the Physical Persons, a new title regulating the special scheme of Tax on the Income Tax of non-residents. The royal decree now approved is structured in an article, an additional provision, a transitional provision and a final provision. In the single article, a new title, the VII, of the Income Tax Regulation of the Physical Persons, which comprises Articles 111 to 118, is approved and which comes to regulate the new special regime. First, the scope of application is dealt with and is specified when some of the necessary requirements are considered to be met in order to be eligible, in particular where the requirement for work to be carried out is considered to be fulfilled. indeed in Spain. Likewise, the content of the special scheme is developed and the corresponding referrals to the non-resident income tax regulations are made for the purposes of determining the tax liability for the income tax. Natural Persons. The procedure for the exercise of the option by the special scheme is also regulated, which must be carried out within six months of the start of the activity in Spain, by means of communication to the tax authorities, as well as to the cases of resignation and exclusion from the scheme. Finally, the terms in which the tax residence will be certified to the taxpayers who opt for the application of this special scheme are set. The single additional provision raises, for the year 2005, to 10% the applicable percentage of net yield for the quantification of the set of deductible provisions and expenses of difficult justification, for the purposes of the determination the net yield of agricultural and livestock activities in the simplified mode of the direct estimation method. The single transitional provision provides for the time limit for the exercise of the option for the application of this special scheme for taxpayers who acquire the tax residence in Spain as a result of an offset by prior to the publication of the ministerial order approving the communication model of the option. Finally, the only final provision regulates the entry into force of this royal decree. In its virtue, on the proposal of the Minister for Economic Affairs and Finance, in agreement with the Council of State and after deliberation by the Council of Ministers at its meeting on 10 June 2005,

D I S P O N G O:

Single item. Amendment of the Regulation of the Income Tax of the Physical Persons, approved by Royal Decree 1775/2004, of July 30.

A new Title VII is added to the Income Tax Regulation of the Physical Persons, approved by Royal Decree 1775/2004, of July 30, with the following wording:

" TITLE VII

Special Tax Regime for Non-Resident Income Tax

Article 111. Scope of application.

The natural persons who acquire their tax residence in Spain as a result of their displacement to Spanish territory may choose to pay for the Income Tax of non-residents, maintaining the condition of Taxpayers for the Income Tax of the Physical Persons, when the following conditions are met: (a) That they have not been resident in Spain during the 10 years prior to their new displacement to Spanish territory. (b) that the movement to Spanish territory be produced as a result of a contract of employment. This condition shall be deemed to be fulfilled when an employment relationship, ordinary or special, or statutory with an employer in Spain is initiated, or when the posting is ordered by the employer and there is a letter of travel from the employer, and the The taxpayer does not obtain income that would be qualified as obtained by a permanent establishment located in Spanish territory. (c) the work is actually carried out in Spain. This condition shall be deemed to be fulfilled even if part of the work is carried out abroad, provided that the sum of the remuneration corresponding to the said works has or not the consideration of income obtained in Spanish territory Article 13.1.c) of the recast text of the Non-Resident Income Tax Act, approved by the Royal Legislative Decree 5/2004, of 5 March, does not exceed 15 percent of all the consideration of the work received in each calendar year. Where, pursuant to the contract of employment, the taxpayer assumes duties in another company of the group, in the terms laid down in Article 42 of the Code of Commerce, outside the Spanish territory, the above limit shall be raised to the 30 percent. Where the amount of the specific remuneration for the work carried out abroad cannot be credited for the calculation of the remuneration corresponding to those work, the days which are to be taken into account shall be taken into consideration. effectively the worker has been displaced abroad. (d) such works are carried out for a company or entity resident in Spain or for a permanent establishment located in Spain of a non-resident entity in Spanish territory. This condition shall be understood when the services are in the interest of a company or entity resident in Spain or of a permanent establishment located in Spain of a non-resident entity in Spain. In the event that the posting took place within a group of undertakings, within the terms laid down in Article 42 of the Trade Code, and only for these purposes, the worker must be recruited by the company of the group resident in Spain or that there is a displacement to Spanish territory ordered by the employer. (e) that the income of the work resulting from that employment relationship is not exempt from taxation of the Income Tax of non-residents.

Article 112. Content of the special tax regime for Non-Resident Income Tax.

1. The application of this special scheme shall entail the determination of the tax liability of the Income Tax of the Physical Persons exclusively for the income obtained in Spanish territory, in accordance with the rules laid down in the text recast of the Non-Resident Income Tax Act, approved by Royal Legislative Decree 5/2004 of 5 March 2004, for income obtained without permanent establishment mediation, except as provided for in Articles 5, 6, 8, 9, 10 and 11 of Chapter I of the recast text. 2. In particular, the following rules shall apply: (a) Taxpayers who opt for this special scheme shall be taxed separately for each full or partial accrual of the income under charge, without any compensation being possible between them. those. (b) The liquidable basis of each income shall be calculated for each of them in accordance with the provisions of Article 24 of the recast of the Non-Resident Income Tax Act. (c) The full quota shall be obtained by applying to the liquidable basis the rates provided for in Article 25.1 of the recast of the Non-Resident Income Tax Act. (d) The differential fee shall be the result of undermining the full share of the tax on deductions in the quota referred to in Article 26 of the recast of the Non-Resident Income Tax Act. For the purposes referred to in paragraph (b) of that Article 26, in addition to the payments under consideration referred to in paragraph 3 below, the fees paid on behalf of the non-resident income tax shall also be deductible. 3. Deductions and income on account of payments on account of this special scheme shall be made in accordance with the provisions of the Non-Resident Income Tax rules. However, where the circumstances provided for in Article 74.2.a are met, they shall be obliged to retain the resident entities or permanent establishments in which the taxpayer provides services in relation to the income which They obtain in Spanish territory. The fulfilment of the formal obligations laid down in Article 106, by the withholding and income referred to in the preceding paragraph, shall be made by means of the models of the declaration provided for in the Income Tax. Residents for income obtained without the mediation of establishment. 4. The taxpayers to whom this special regime applies shall be obliged to submit and subscribe to the declaration for the Income Tax of the Physical Persons, in the special model to be approved by the Minister of Economy and Finance, which shall establish the form, the place and the time limits of its presentation, and the content of which shall be in accordance with the models of declaration provided for the Income Tax of non-residents. At the time of filing their declaration, taxpayers must determine the corresponding tax liability and enter it in the place, form and time limits to be determined by the Minister of Economy and Finance. If a quantity is to be returned, the return of trade shall be carried out in accordance with the provisions of Article 105 of the recast of the Law on the Income Tax of the Physical Persons. 5. The transfers of immovable property located in Spanish territory by the taxpayers of the Income Tax of the Physical Persons who opt for the application of this special scheme will result from the application of the provisions of the Article 25.2 of the recast of the Law on Income Tax of Non-Residents. 6. For the purposes of complying with Article 18.2.a) of Law 21/2001 of 27 December 2001 on the taxation and administrative measures of the new system of financing of the Autonomous Communities of the common system and Cities with a Statute of Autonomy, it is understood that the total autonomous or complementary quota is 33% of the quota provided for in paragraph 2.c) above.

Article 113. Duration.

This special scheme will apply during the tax period in which the taxpayer acquires his tax residence in Spain, and for the following five tax periods, without prejudice to Articles 115 and 116. For these purposes, it shall be considered as a tax period in which the residence is acquired in the first calendar year in which, once the posting has occurred, the stay in Spanish territory is greater than 183 days.

Article 114. Exercise of the option.

1. The exercise of the option to pay for this special scheme shall be carried out by means of a communication addressed to the tax administration within the maximum period of six months from the date of commencement of the activity on the high level of the tax administration. Social security in Spain or in the documentation that allows you, where appropriate, to maintain the legislation of Social Security of origin. 2. The option shall be exercised by the presentation of the communication model referred to in Article 117. 3. Taxpayers who have received the special procedure for determining withholding or income on account of the income from the work provided for in Article 87 may not exercise this option.

Article 115. Renunciation of the regime.

1. Taxpayers who have opted for this special scheme may waive their application during the months of November and December preceding the beginning of the calendar year in which the waiver is due. 2. The waiver shall be carried out in accordance with the following procedure: (a) First, it shall submit to its retainer the data communication provided for in Article 86, which shall return a sealed copy of the data. (b) In the second place, the communication model referred to in Article 117 shall be submitted to the tax administration and shall attach the sealed copy of the communication referred to in the preceding paragraph. 3. Taxpayers who renounce this special scheme shall not be eligible for their application.

Article 116. Exclusion from the scheme.

1. Taxpayers who have opted for the application of this special scheme and who, after the exercise of the option, do not fulfil any of the determining conditions of their application shall be excluded from that scheme. The exclusion shall take effect in the tax period in which the non-compliance occurs. 2. Taxpayers excluded from the scheme shall communicate such circumstances to the tax authorities within one month of the failure to comply with the conditions laid down in their application, by means of the communication model refers to Article 117. 3. Deductions and income on account shall be made in accordance with the rules of the Income Tax of the Physical Persons, from the moment the taxpayer communicates to his retainer that he has failed to fulfil the conditions for the application of the this special scheme, together with a copy of the communication referred to in the previous paragraph. At the same time, it shall submit to its holder the data communication provided for in Article 86. However, where the holder is aware of the failure to comply with the conditions laid down in paragraphs (c), (d) or (e) of Article 111, the withholding tax and revenue shall be applied in accordance with the rules of the Income Tax Natural persons from the moment of their failure to comply. The calculation of the new rate of retention shall be carried out in accordance with Article 85, taking into account the total amount of the annual remuneration. 4. Taxpayers excluded from this special scheme shall not be eligible for their application.

Article 117. Communications to the tax administration and accreditation of the scheme.

1. The option for the application of the system will be exercised through communication to the tax administration, through the model approved by the Minister of Economy and Finance, who will establish the form and the place of his presentation. This communication shall include, inter alia, the identification of the worker, the employer and, where appropriate, the undertaking or entity resident in Spain or the permanent establishment for which the services are provided, the date of the date of entry into Spanish territory and the date of commencement of the activity on the high level of social security in Spain or in the documentation permitting, where appropriate, the maintenance of the legislation of the social security of origin. The following documentation shall also be attached: (a) When an employment relationship, ordinary or special, or statutory with an employer in Spain, is initiated, a supporting document issued by the employer expressing the recognition of the employment or statutory relationship with the taxpayer, the date of commencement of the activity on the high in the Social Security in Spain, the job centre and its management, the duration of the contract of employment and the work will be carried out indeed in Spain. (b) in the case of a posting ordered by his employer to provide services to a company or entity resident in Spain or to a permanent establishment situated on Spanish territory, a supporting document issued by the latter in the recognition of the provision of services for those, to which a copy of the employer's letter of posting is attached, the date of commencement of the activity consisting of the high in the social security in Spain or in the documentation enabling, where appropriate, the maintenance of the legislation of the social security of origin, the 2. The tax administration, in the light of the communication submitted, shall issue to the taxpayer, if appropriate, the tax administration and its management, the duration of the posting order and the fact that the work will be carried out in Spain. 2. the maximum period of 10 working days following the date of the submission of the communication, a supporting document stating that the taxpayer has opted for the application of this special scheme. Such a document will serve to justify, to the persons or entities required to practice withholding or income to account, their condition as a taxpayer for this special regime, for which they will give them a copy of the document.

Article 118. Certificate of residence for tax.

1. The taxpayers of the Income Tax of the Physical Persons who opt for the application of this special regime will be able to apply for the certificate of tax residence in Spain regulated in the additional provision second of the Order HAC/3626/2003 of 23 December, set out in Annex 9 to that order. 2. The Minister for Economic Affairs and Finance may, subject to reciprocity, indicate the cases in which certificates will be issued to prove the status of resident in Spain, for the purposes of the provisions of an agreement to avoid double taxation. (a) to the tax authorities of the Member States of the European Union and of the Member States of the European Union.

Single additional disposition. Determination of net yield in the simplified mode of the direct estimation method for agricultural and livestock activities during the year 2005.

With exclusive effects during the year 2005, for the determination of the net yield of agricultural and livestock activities in the simplified mode of the direct estimation method, and for the purposes set out in Rule 2. Article 28 of the Regulation on the Income Tax of the Physical Persons, approved by Royal Decree 1775/2004 of 30 July 2004, the set of deductible provisions and the costs of difficult justification shall be quantified by applying the 10 per cent on net performance, excluding this concept.

Single transient arrangement. Period for the exercise of the option under the special regime of Article 9.5 of the recast of the Law on the Income Tax of Physical Persons.

1. Taxpayers who acquired the tax residence in Spain in 2004 or acquired it in 2005, as a result of a posting made until the date of publication in the "Official State Gazette" of the ministerial order for which they were approve the communication model of the option for the application of the special regime provided for in Article 9.5 of the recast text of the Law on the Income Tax of the Physical Persons, approved by the Royal Legislative Decree 3/2004, 5 of March, may exercise the option within two months of the date of publication.

By way of derogation from Article 114.3 of the Financial Income Tax Regulation, approved by Royal Decree 1775/2004 of 30 July 2004, the taxpayers who would have received the procedure In order to determine the deductions or income on account of the income from the work provided for in Article 87 of that regulation before the entry into force of this royal decree, the option for the application of the special arrangements provided for in Article 9.5 of the recast text of the Income Tax Act Natural Persons in the terms provided for in the preceding paragraph. 2. Where performance of the work had been satisfied prior to the entry into force of this royal decree, to taxpayers who subsequently opted for the application of the special arrangements provided for in Article 9.5 of the recast of the Income Tax Law of the Physical Persons, the withholding and income to account practiced until the communication to the payer of the exercise of the option according to the provisions of the previous section, either by this tax, or the Income Tax of non-residents, will be considered correctly (a) in so far as they have been carried out in accordance with the rules of one or the other tax, and are deductible in the taxpayer's statement.

Single end disposition. Entry into force.

This royal decree will enter into force on the day following that of its publication in the "Official Gazette of the State" and will result from application to the tax periods initiated from 1 January 2004.

Given in Madrid, June 10, 2005.

JOHN CARLOS R.

The Second Vice President of the Government and Minister of Economy and Finance, PEDRO SOLBES MIRA