A Spanish employee who works in India meets two tax systems and two pension systems. In India the salary for work done there is taxed, and the Indian employer deducts tax under Section 392 of the Income-tax Act, 2025. Spain taxes residents on worldwide income, but its personal income tax law has an exemption for qualifying work performed abroad, up to EUR 60,100 a year, which can neutralise much of the double tax if the conditions are met. On social security, the 2022 list of India's operating agreements published by the provident fund organisation does not include Spain, so no certificate of coverage is available and the Indian provident fund rules for international workers are generally applied from the first day. The result for most secondees is a possible double contribution that should be budgeted before the assignment starts.
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Key facts
| Indian salary tax | Salary for work done in India is taxable in India; the employer deducts under Section 392; treaty relief only if the day-count and employer conditions are met |
|---|---|
| Spanish exemption | Spanish personal income tax law exempts income from work performed abroad for a non-resident entity, up to EUR 60,100 a year, if conditions on destination tax and the beneficiary entity are met; confirm with a Spanish adviser |
| Social security agreement | None listed between India and Spain in the 2022 list of operating agreements |
| Indian provident fund | International workers from countries without an agreement are generally covered from day one on full wages; confirm the current position |
| Spanish social security | Posted workers outside agreements may remain covered or need a special arrangement; confirm with a Spanish adviser |
| Equalisation | Plan a tax equalisation or net-pay policy before the assignment |
| Visa and registration | Employment visa and registration within 14 days for stays over 180 days; see the relocation guide |
| Cost | Budget for contributions in both systems |
Two tax systems, one salary
India taxes salary for work performed in India, whoever the employer is and wherever the pay lands, unless the treaty's dependent personal services article protects a short visit. That article generally requires that the employee stays below a day-count threshold, that the employer is not a resident of India and that the cost is not borne by an Indian entity or permanent establishment. Those conditions are rarely met by a secondee who works under the direction of the Indian subsidiary and whose cost is recharged to it, so the safe assumption is that the salary is taxable in India from the first day of the assignment.
Spain taxes its resident employees on worldwide income. To prevent the same salary being taxed twice, Spanish law offers an exemption for work done abroad for a non-resident entity, capped at EUR 60,100 a year. The conditions include that the work is effectively performed abroad, that the entity abroad benefits from it and that the country taxes the income under a similar tax and is not a tax haven. The cap and conditions have been amended over time and are applied case by case, so a Spanish adviser must confirm that the exemption works for a given employee. Where the exemption is only partial, Spain gives a credit for Indian tax, up to the Spanish tax on the same income.
Indian tax mechanics for a secondee
- The Indian employer deducts tax on salary under Section 392 of the Income-tax Act, 2025, and deposits it by the 7th of the following month, with a quarterly return and an annual salary certificate.
- Housing, school fees, home leave and relocation allowances are taxed as perquisites unless a specific exemption applies, so a package negotiated on a net basis may cost the employer more in India than in Spain.
- A stay of 182 days or more in a year, or 60 days plus 365 in the previous four years, can make the employee a resident of India, and Indian residents are taxed on worldwide income, subject to the 'not ordinarily resident' status that limits this in the first years.
- Equity-based pay granted by the Spanish parent and vesting during the assignment is taxable in India for the period worked there, and the Indian employer must collect the tax, so tell the payroll team about share awards before they vest.
- Spanish staff leaving India should obtain a tax position statement and settle the final return before departure.
Provident fund and Spanish social security
India has signed social security agreements with many countries, and for those countries a certificate of coverage lets a posted employee stay in the home scheme for a fixed period. The provident fund organisation's list of operating agreements dated August 2022 names nineteen operating agreements, and Spain is not among them. For an employee of a country without an agreement, the rules for international workers are generally applied so that contributions are due on full wages from the first day, without the usual wage ceiling, and the benefit is payable on retirement or on leaving India only in limited cases. The rule has been litigated, and positions can change, so confirm it with an adviser at the start of each assignment.
On the Spanish side, social security for an employee sent outside the European Union, and outside any agreement, depends on the terms of the posting and on special arrangements for workers abroad. Some employers keep the employee in the Spanish system voluntarily or by special agreement, which leads to contributions in both countries. Others let Spanish cover end and rely on the Indian scheme and private insurance. Neither choice is free, and an employment contract should state which applies.
Comparison of the two systems for a secondee
| Topic | India | Spain |
|---|---|---|
| Income tax on salary | On work done in India; employer deducts under Section 392 | Worldwide income; exemption up to EUR 60,100 for qualifying work abroad; credit for Indian tax |
| Pension and social security | Provident fund for international workers on full wages, as generally applied | Depends on the posting terms; may continue or need a special arrangement |
| Health cover | Private insurance needed for the assignment | Public cover for residents may lapse on long postings; private cover advised |
| Reporting | Quarterly salary tax return; annual certificate | Annual personal income tax return; foreign asset declaration where thresholds are met |
| Cost to the employer | Employer share of provident fund; payroll administration | Possible continuing employer contributions; adviser fees |
Secondment, local contract or business trip
| Model | Who is the employer for tax | What to watch |
|---|---|---|
| Short business trip | Spanish employer | Visa category; stay below the treaty day count; keep a travel log; no contract negotiation in India |
| Secondment to the Indian subsidiary | Indian subsidiary directs the work and bears the cost | Salary taxed in India; provident fund; recharge priced as a service fee with Withholding Tax and transfer pricing |
| Local Indian contract | Indian subsidiary | Cleaner for Indian law; Spanish employment status, leave of absence and return rights need planning |
| Dual contract | Both | High scrutiny; only if each contract reflects real duties |
What the secondment letter should say
- Who the employer of record is during the assignment, who gives instructions and who pays the salary.
- The term, the extension rules and the return arrangements to Spain.
- How tax is handled: net pay, gross-up or hypothetical Spanish tax, and who bears Indian tax and provident fund.
- Confidentiality, intellectual property assignment and non-solicitation terms that work under Indian and Spanish law.
- Conduct, anti-bribery and data protection rules for the Indian role.
Directors and senior managers
A Spanish executive who sits on the board of the Indian company and travels to India for board meetings does not by that alone create tax in India, but fees paid for board service can be taxable in India, and prolonged presence can raise the permanent establishment and residence questions above. Keep a calendar of days spent in India for each senior person, and discuss it with the Spanish adviser at least once a year. See the resident director guide for the director who must live in India.
Official sources
Check the rules at the primary sources: Income Tax Department (India), Reserve Bank of India, Ministry of Corporate Affairs, Agencia Tributaria (Spain), Spanish Ministry of Economy, Trade and Business and the Ministry of External Affairs (India).
Frequently asked questions
Is there a social security agreement between India and Spain?
Not in the 2022 list of operating Indian agreements, so a certificate of coverage is not available. Spanish staff in India are generally covered by the Indian provident fund rules for international workers from the first day.
Is a Spanish employee's salary for work in India taxable in India?
Yes, unless the treaty's employment article conditions are met, which a secondee whose cost is borne by the Indian subsidiary normally does not meet.
What is the Spanish exemption for work abroad?
Spanish personal income tax law exempts income from work effectively performed abroad for a non-resident entity, up to EUR 60,100 a year, if the conditions are met. A Spanish adviser must confirm eligibility for each person.
Does a secondee pay Spanish social security as well as Indian provident fund?
Possibly. Without an agreement both systems can apply, depending on the posting terms and Spanish rules. Decide and write it into the contract.
Who deducts Indian tax on the salary?
The Indian employer, under Section 392 of the Income-tax Act, 2025, by the 7th of the following month.
Do share awards from the Spanish parent create Indian tax?
Yes for the portion earned while working in India. The Indian employer should be told about the awards so that it can withhold tax.
Can a short business trip avoid Indian tax?
Only if the employee stays below the treaty day count, the employer is Spanish and bears the cost, and no productive work is done for the Indian company. Keep a travel record.
How do I avoid paying twice?
Not through an agreement. Use the Spanish exemption where it applies, structure the posting carefully and budget for both systems where they overlap.
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Last updated 2 November 2026. General information only, not legal or tax advice. Indian and Spanish rules change often; confirm current requirements before acting.