Tax residence in Spain

In this article we explain everything you need to know to know if you are a tax resident in Spain or not, as well as the tax implications for each case. for each case.

 

This aspect is what we must clarify is the concept of tax residence, a concept that is related to residence in Spain for the purposes of foreigners or residence permits but which has a different scope.

The fiscal residence is the condition in the eyes of the Tax Agency that a foreigner acquires by living for a prolonged period of time during the year in Spain and/or with economic interests in the country, a fact that will create the obligation to pay a series of taxes and to pay taxes at certain percentages.

Being classified as a tax resident in Spain has important tax consequences, in many cases you will pay less tax and lower percentages if you are a tax resident than if you are a non-resident, so it can be an interesting alternative for many impatriate foreigners.

According to article 9 of law 35/2006, the Tax Agency considers that a person is a tax resident if he/she fulfills any of the following 3 conditions:

This is the most commonly applied and most important rule. If at the end of the year (counting the calendar year, from January to December), you add up all the days you have been in Spain and they are more than 183, you are a resident for tax purposes.

This point is key, as you may spend less than 183 days during the year in Spain but still be considered a resident for tax purposes.

Here is an example: an employee of a Spanish company with Spanish headquarters and offices in Spain who makes frequent trips outside the country for work purposes and ends up spending more than 183 days per year, even if he spends more time outside the country, he is still a tax resident in Spain since his core of interests is in Spanish territory.

In the event that your spouse and/or dependent children live habitually in Spain , you are considered to be a tax resident .

How does this situation arise?

Here is an example: a European couple decides to move to Spain, the mother is a housewife and the child is only 2 years old but the father has a permanent job in the country of origin. The mother and child move to Spain and the father remains in his home country although he visits his family from time to time. In this case the father would be a tax resident in Spain because his wife and dependent child live in Spain. Evidence to the contrary is admissible, it will be very difficult to prove that this situation does not really exist.

However, there is one exception that will make it much easier to prove that you are not a tax resident in Spain, which we explain below: the tax residence certificate.

There is a test that allows you to justify before the Tax Agency and avoid being considered as a resident for tax purposes, thus avoiding the payment of many taxes in the Spanish territory.

A proof issued by the country of origin or in which you have your main economic interest to justify that you are really resident there, and therefore you will not be taxed as resident in Spain.

In the event that a person can obtain the so-called tax residence certificate in his country, the Tax Agency will not consider that person as a tax resident, even if he is in Spain 183 days a year. This certificate works according to the regulations of the agreement between Spain and that country, generated through a double taxation agreement, so it does not have the same interpretation in all countries.

In addition, it is valid for one year only. This means that it is valid for the year in which you apply for it, and you must apply year after year to continue participating in this exception, if you so desire and your situation applies.

Now that you understand in which cases you will be considered a tax resident in Spain and in which cases you will not, let’s see what the implications are depending on your situation. Basically, these implications have to do with the taxes you will end up paying in the country, and the exact applicable percentages.

The foreigners and non-foreigners considered as non-residents in Spain must pay mainly 2 taxes:

The first fact that determines whether the taxpayer is subject to IRNR focuses on the non-residence of the taxpayer in Spain.

This tax must be borne by non-residents who have income obtained in Spanish territory, being a non-resident in Spain.

Thanks to double taxation treaties, it is most common that thenon-resident in Spain has to pay income tax as a non-resident only on real estate properties (without taking into account shares, money in the bank, etc.).

So, if you have a property in Spain, you will have to pay this tax. And we find 2 different situations:

In both cases you must file your taxes using form 210. which is declared from April 1 to 20, July, October and January. For the presentation of this model you can do it yourself or through your trusted advisor.