Relocating to another city for work is one of the biggest expenses an employee can face. The good news is that Spanish legislation provides several mechanisms to ensure this cost does not fall 100% on your own pocket: employer reimbursement, IRPF-exempt allowances and, in some cases, tax deductions. We explain what you are entitled to and how to manage it.
Cases in which your employer must pay for your relocation
1. Compulsory transfer due to geographical mobility (art. 40 ET)
If your employer transfers you to a workplace in a different municipality and this requires you to change your residence, the Workers' Statute grants you:
- Financial compensation covering your own expenses and those of dependent family members (removal, transport, temporary accommodation)
- 30 days to accept or refuse the transfer
- If you refuse, the right to severance pay of 20 days per year worked, up to a maximum of 12 months' salary
Medium-sized and large companies usually cover the full removal cost against invoice. Smaller companies typically offer a fixed lump sum (between €1,500 and €4,000) and you arrange the service yourself.
2. New job with a relocation package
If a company hires you for a position in another city or country, it is standard practice in the technology, financial and healthcare sectors to offer a relocation package that includes:
- Professional door-to-door removal (budget against invoice)
- Temporary accommodation for 1–3 months
- Exploratory flights beforehand
- Legal advice on residency/visa matters for people coming from outside the EU
IRPF-exempt expenses: the relocation allowance
The Spanish Tax Agency considers EXEMPT from IRPF the amounts your employer pays you for:
- Removal of personal effects (limit: the actual cost, justifiable with an invoice)
- Travel expenses for yourself and dependent family members
- Hotel accommodation for up to 9 months after the transfer (reasonable amounts)
This means that those amounts are not subject to tax: if your employer pays €3,000 for your removal against invoice, you receive the full €3,000 with no IRPF withholding. This is a significant tax benefit compared with ordinary salary.
Requirements for the exemption
- The transfer must be outside the municipality of your habitual residence
- It must be documented (transfer order from the employer)
- Expenses must be backed by invoices in the name of the employee or the company
- The employer must declare it correctly in the annual Form 190
Work relocation to the Canary Islands: additional tax incentive
If your transfer takes you to the Canary Islands and you register as a resident there, you add to your IRPF savings:
- AIEM exemption on your personal belongings (no Canarian import duty)
- Canarian regional deductions on IRPF (more favourable than most other regions)
- 75% resident discount on flights and ferries to the mainland
- If you work for a ZEC (Canarian Special Economic Zone) company: IS rate of 4%
We coordinate your removal with the necessary documentation (DUA, certificate of registration, employment contract) so that you can activate all the incentives from the very first month.
Personal tax deductions (if your employer does NOT pay)
If the move is on your own initiative or is not covered by your employer’s package, the deduction is more limited. Removal expenses are NOT deductible on a personal income tax return as a general rule.
Exceptions:
- Self-employed individuals: if the move is required by the business (change of premises), it is 100% deductible as a business expense under IRPF
- Certified remote workers relocating to another region: in some cases, the costs of the workspace (not the full removal) are deductible if declared by the employer
- Economically dependent self-employed workers (TRADE): may deduct if the move is required by their main client
Days off and paid leave
The Workers' Statute grants 1 working day of paid leave for a house move (art. 37.3 ET). Some collective bargaining agreements extend this to 2–3 days. Check your sector agreement: in hospitality, transport or Canarian retail, more days are frequently offered.
More details in our guide: How many days off for a house move are you entitled to.
Documents you must keep
- Letter or email from your employer authorising the transfer and the reimbursable amount
- DETAILED invoice for the removal service (in your name or the company’s name)
- Hotel/transport receipts for the days of the move
- Rental agreement/title deed at the new destination
- Certificate of registration at the new address
If the company pays the provider directly, it is in your interest to have the invoice issued in your name, or to request a copy, as this will make it easier to justify the exemption if the Tax Agency requests information from you.
Comprehensive service for work-related relocations
At Horizont Atlantic we work regularly with HR departments of companies transferring employees to the Canary Islands. We issue detailed invoices with all the necessary line items for the IRPF exemption to be accepted by the Tax Agency, and we coordinate operations with your company’s finance department if required.
Whether your employer has transferred you or you are moving voluntarily, request a quote indicating that it is a work-related move and we will send you a fiscally optimised proposal.
Frequently asked questions about work-related relocations
Is my employer legally obliged to pay for the move if it transfers me?
Not as a general legal rule, but yes if the transfer is a compulsory geographical relocation (change of workplace to more than 100 km away that requires a change of residence). In that case the Workers' Statute provides: compensation for expenses, the right to refuse (contract termination with 20 days per year), and 30 days' prior notice. The exact compensation is usually negotiated or set out in the collective bargaining agreement.
How much can an employer pay for a work-related relocation?
Typical allowances and compensation for a national transfer: full removal (€1,500–€4,000), housing search (10–20% of the first month's rent as a management fee), 1–2 additional months' rent as initial support, double housing costs during the transition (up to 6 months), family travel for reunification. For senior executives, the total compensation can reach €10,000–€30,000 including everything.
Is the move deductible if I am self-employed and change my place of business?
Yes, 100% deductible as a professional expense. Keep the invoice in the name of your business NIF. Applicable to: the physical removal, fit-out costs at the new office, administrative fees for changing your registered fiscal address. Notify the change on form 036/037 with effect in the relevant tax year. More about self-employment relocations: self-employed and small business relocation.
Are relocation allowances subject to IRPF?
If the company pays the removal firm directly (invoice in the company’s name), it does not affect your IRPF. If you receive a cash payment, it is exempt from IRPF within certain limits (up to the amount of expenses evidenced by invoice). Keep invoices and receipts to prove the actual use of the allowance.
What if the move to the Canary Islands is for work? Are there additional benefits?
Yes: regional IRPF deductions for changing residence to the Canary Islands, AIEM exemption on your used household goods (saving 5–7% of the declared value), a 75% resident discount on flights for subsequent family visits, and the possible application of the ZEC regime if your company is covered by it (reduced IS rate of 4%). Consult your tax adviser before accepting the transfer.
