International trusts and inbound workers: the regime of article 93 of the Personal Income Tax Act does not neutralise the resident beneficiary's inheritance tax exposure under personal obligation

The Spanish Directorate-General for Taxation (DGT), in its binding ruling V0986-25 of 10 June 2025 (Sub-Directorate-General for Wealth Taxes, Fees and Public Prices), analyses the position of a Spanish resident, taxed under the special regime of article 93 of Law 35/2006 of 28 November on Personal Income Tax (LIRPF) —the so-called Beckham regime—, who will be a beneficiary of several trusts set up by her father, resident in Panama.

The DGT concludes that, while her father is alive, the daughter need not report the trust assets for wealth tax or for the temporary solidarity tax on large fortunes. When he dies, the acquisition will be subject to inheritance and gift tax (ISD) under personal obligation, on all the assets she receives, whether in Spain or abroad. The Beckham regime does not change that conclusion.

The trust in the Spanish tax system

The trust is an institution of common law countries whereby one person (the settlor) transfers assets to another (the trustee) to manage them for the benefit of third parties (the beneficiaries). Spain does not regulate it and has not ratified the Hague Convention of 1 July 1985 on the law applicable to trusts and on their recognition.

For that reason, under a consistent line of rulings that the DGT itself lists —from V1991-08 of 30 October 2008 to V0817-18 of 26 March 2018, including, among others, V1016-10 and V1495-16—, the DGT considers that, for the purposes of Spanish law, relations between those contributing assets to a trust and its beneficiaries “are deemed to take place directly between them, as if the ’trust’ did not exist (fiscal transparency of the ’trust’)” (our translation).

From this the DGT infers that, “since the existence of a ’trust’ is not recognised, the ‘settlor’ or ‘grantor’ retains ownership of the assets contributed to it” (our translation). When the transfer to the beneficiaries takes place depends on the features of each trust —revocable or irrevocable, discretionary or not— and on the arrangements governing it.

The article 93 LIRPF regime

Article 93 LIRPF allows individuals who become tax resident in Spain as a result of moving here to be taxed, in the year of the change of residence and the following five years, under the rules of non-resident income tax. But a person who elects the regime remains tax resident in Spain and a personal income taxpayer: the regime changes how the tax is calculated, not residence.

The facts

The applicant’s father, tax resident in Panama, has set up several trusts in which he is at once settlor, trustee and sole beneficiary for his lifetime. On his death, the beneficiaries will be, among others, the applicant and her descendants. The trusts hold no assets in Spain.

The applicant is resident in Spain, with her home in the Madrid region, and will apply the article 93 LIRPF regime from 2024 to 2029. She asks, first, whether while her father is alive she must include the trust assets in her wealth tax (IP) and solidarity tax on large fortunes (ITSGF) returns. Second, whether on her father’s death she would have to report any trust assets for inheritance tax and, if so, which regional rules and which kinship reliefs would apply.

The DGT’s answer

During the father’s lifetime, the answer is no. Since the trust is not recognised, the contributions in principle have no effect: the settlor retains ownership of the assets, so the applicant need not include them in her IP and ITSGF returns.

On the father’s death, the DGT considers that there will in principle be a direct mortis causa transfer from the settlor to the applicant, insofar as the transfer was not deemed to have taken place when the assets were contributed to the trust. That transfer will be subject to inheritance tax under personal obligation, because the applicant is habitually resident in Spain. Under article 6 of Law 29/1987 of 18 December on Inheritance and Gift Tax, personal obligation covers all the assets she acquires, wherever located.

The Beckham regime does not change this result. The DGT reasons that those who elect the regime “are individuals who actually move to Spain to reside there, as a result of which they become tax resident in Spain, and they remain personal income taxpayers” (our translation); only for the purposes of their taxation do they compute the tax under the non-resident income tax rules, and “at no point is it suggested that such persons may not be regarded as resident in Spain”.

Applicable rules and competent authority

As to regional rules, the DGT applies paragraph One.1.a) of the second additional provision of the Inheritance and Gift Tax Act. The applicant may apply the rules of the region where the greatest value of the assets situated in Spain is located and, if there are none, those of the region where she resides, in this case Madrid.

Since the deceased was not resident in any Spanish region, the tax is collected by the Spanish Tax Agency, specifically the National Tax Management Office, under article 32 of Law 22/2009 of 18 December. On regional reliefs, reductions and multipliers, the DGT declines to rule, as it has no competence over regional legislation (article 55.2.a of Law 22/2009).

All these conclusions, the DGT warns, are subject to the assessment of the facts by the tax management and audit bodies, given the variety of laws and arrangements that may govern each trust.

Our assessment

In our view, the ruling is consistent with the nature of the article 93 LIRPF regime. It is a special personal income tax regime, which does not make the taxpayer non-resident for other taxes. Extending its effect to inheritance tax would have no basis in the law.

The conclusion on wealth tax and the solidarity tax depends on a fact: that the father is, during his lifetime, settlor, trustee and sole beneficiary. For trusts structured differently, the DGT has warned that the timing of the transfer may differ. In V0817-18, on an irrevocable discretionary Florida trust in which the grantor could take back the assets by substituting others of similar value, it kept the same starting point but noted that, where trustee and beneficiary coincide, it must be assessed whether the beneficiary’s powers of disposal amount to ownership, in which case the transfer would be deemed to take place on the contribution.

The ruling does not deal with reporting obligations for assets held abroad. In our view, the logic of transparency suggests that, while the settlor retains ownership, the beneficiary does not own those assets, but the question requires its own analysis under the rules governing those obligations.

Practical consequences

For a Spanish resident who is a beneficiary of a foreign trust, it is advisable to know in advance the composition of the trust assets and its constitutive documents. They will determine when the transfer is deemed to take place and what the inheritance tax base will be.

It should also be borne in mind that a distribution to the beneficiary during the settlor’s lifetime would, under the same doctrine, be treated as a direct gratuitous transfer from the settlor to the beneficiary, subject to gift tax. Choosing between lifetime distributions and transfer on death may have different costs.

Finally, if the settlor’s State of residence also taxes the succession, the mechanisms available to avoid double taxation will need to be analysed in each case.