Taxation of CERN Employee Salaries Residing in Spain

Tax Residency in Spain and the Worldwide Income Principle

In general, a person who is a tax resident in Spain must pay IRPF on their total worldwide income, regardless of where it is earned or who pays it. This means that, without special provisions, a salary paid from abroad (e.g., by a company in Switzerland or France) would be subject to Spanish IRPF just like a salary paid by a Spanish company.

Spain has signed treaties to avoid double taxation with countries such as Switzerland and France, which establish rules to avoid taxing the same income twice. However, in the case of CERN, special international agreements override this general rule.

CERN as an International Organization and its Host Agreement

CERN (European Organization for Nuclear Research) is an international organization based in Geneva, created by international convention. As such, it enjoys privileges and immunities to ensure its functioning.

Its special legal status is covered by the Host Agreement and the Protocol on Privileges and Immunities of CERN (signed in Geneva on 18 March 2004), ratified by Spain (BOE No. 194, 14/08/2007). This Protocol extends to all Member States (including Spain) the privileges already granted by the host countries (Switzerland since 1955 and France since 1965). Among these privileges is the tax exemption on salaries paid to CERN personnel. Specifically, the Protocol provides that CERN and its officials are exempt from national direct taxes in the exercise of their official duties.

IRPF Exemption on CERN Salaries

Under the Protocol on Privileges and Immunities, salaries and emoluments paid by CERN to its staff are exempt from national income tax in Member States. That is, Spain does not tax CERN salaries under IRPF. Instead, employees pay an internal tax to CERN itself, based on a system established by the organization's Council.

This tax exemption has explicit legal grounds: staff shall be subject to a tax, for the benefit of the Organization, on salaries and emoluments paid by it. Such salaries and emoluments shall be exempt from national income tax.

In other words, CERN salaries are not taxable in Spain, just as is the case for officials of other international organizations (such as the EU or UN) with similar immunity systems.

This exemption does not depend on the physical time spent in Switzerland or France; it applies because the income originates from a tax-exempt international organization. In fact, in the host countries themselves, CERN personnel are also exempt from local taxes on these salaries. As a CERN Member State, Spain recognizes this exemption on its territory.

The employee does not need to pay tax in Spain on CERN salaries as they would for a Spanish company salary, provided the income is effectively subject to CERN's internal tax (which is certified by an annual CERN internal tax certificate). CERN's official guidance reaffirms that, following the implementation of its internal tax system (approved by all Member States), remunerations paid by CERN should be exempt from national income tax.

In practice, Spanish employees must declare their situation to the Spanish Tax Agency and attach the CERN certificate to justify the exemption under the international agreement, similar to practices in other countries (e.g., in France, CERN salaries are omitted from the salary field and an explanatory note about the treaty exemption is added).

Applicable Spanish Law and Bilateral Agreements

The exemption for CERN salaries in Spain is based on international law incorporated into Spanish domestic law (Art. 96 of the Spanish Constitution). The Spanish Ratification Instrument of the Protocol on Privileges and Immunities of CERN (2004), published in the BOE, is the main reference.

Additionally, the IRPF Law respects these agreements: for instance, Article 2 of Law 35/2006 states that IRPF provisions apply without prejudice to the provisions of international treaties or agreements signed by Spain. Thus, the general obligation to tax worldwide income (Art. 2 LIRPF) gives way to the exemption established in the international agreement.

The bilateral double taxation agreements between Spain and Switzerland (Convention of 26/04/1966, revised by the protocol of 29/06/2006) and between Spain and France (Convention of 10/10/1995) are also part of the legal framework. However, in this specific case, no double taxation occurs because neither Switzerland nor France tax these salaries (due to CERN's immunity), and Spain cannot tax them under the cited Protocol. Therefore, those bilateral agreements are not applicable to CERN salaries, as they are exempt ab initio in all involved countries.

In summary: an employee directly hired by CERN and fiscally resident in Spain does not pay Spanish tax on CERN income in the same way they would on a Spanish company salary. This is due to tax exemptions established in the relevant international agreements. The CERN Host Agreement/Privileges Protocol accepted by Spain exempts CERN salaries from Spanish IRPF (while still subject to CERN's internal tax). Spanish regulations and treaties align with this exemption, giving priority to the international stipulations. Therefore, CERN salaries are exempt from taxation in Spain, while fulfilling the required declaration formalities and CERN's internal tax obligations — thereby ensuring no effective double taxation.