What does becoming a tax resident in Spain mean?
17.11.2022If you live in Spain for a longer period of time or permanently and pay your taxes there, you will receive the status of fiscal resident. This is different from having the “residencia”, the certificado de registro
When are you tax resident in Spain?
In 1992 the current Spanish tax law came into effect. This also regulates when you have to pay tax in Spain. The decisive factor here is whether you have lived in Spain more than not in a calendar year. In other words, if you have lived in Spain for 183 days in a calendar year, or more, you are subject to tax there. Those days do not have to be consecutive.
In addition, you are taxable in Spain if the core of your financial interests is located in the country. This means that if you do not meet the 183 days because you travel a lot, but you work for a Spanish company with only branches in Spain, for example, you still have to pay tax.
You are also liable to pay tax if your partner (with whom you have entered into an official alliance) and/or minor children live permanently in Spain. And finally, a number of other factors are considered, such as where your permanent home is and where you are registered, where are you insured, where do you go to the doctor and where do you participate in social life.
Uncertainty about becoming a tax resident in Spain
It is of course possible that for whatever reason you are regarded as a tax resident in Spain for a certain calendar year, and were still liable to tax in the UK during the same year. The chance of this is, however, very small. The UK apply very strict conditions to designate someone as a tax resident. If you meet the conditions for being a tax resident in Spain, chances are not that you will also meet the conditions that apply there in the UK.
In case this does occur, double tax treaties have been concluded between Spain on the one hand and the UK on the other. These treaties prevent you from paying tax twice for the same thing. First, they look in which country you live permanently or hold a home for the long term. If this is the case in both countries, then one looks at where you have the most economic and personal interests.
Tax residence certificate
Once it is clear where you are ultimately a tax resident, you can request a certificate of tax residency from the tax authorities in the country where you pay tax, and then submit this to the tax authorities of the country where you do not pay tax, but you've been hit.
If you pay tax in Spain, you can prove this with the certificado de residencia fiscal. For more information click here.
Fake migration
A mock emigration is a pretend emigration to evade taxes. If you return to the UK within a year, the tax authorities will assume that you have never left. They will then do everything they can to make you pay all your taxes in the UK for that period. The burden of proof that you have indeed been gone for almost a year is then on you.
What is the difference between fiscal resident and residencia
Being registered as a foreign resident (popularly known as having the residencia) is NOT the same as being a tax resident. The residencia has to do with your residence status, while fiscal residency has to do with the obligation to pay taxes.
That being said, the moment you register as a foreign resident (“apply for the residencia”), you are also known to the tax authorities (the Treasury Department's agencia tributaria, hacienda). From that moment on, the tax authorities will also assume that you are a taxable person.
The burden of proof here is reversed. If it turns out that you are not liable for tax, it is up to you to prove this. You can then, for example, demonstrate that you have been in Spain for less than 183 days. This can be done on the basis of plane tickets, invoices for overnight stays elsewhere, but also, for example, by means of your water or electricity bill for your home in Spain, which shows that there was no consumption and that you therefore did not stay there.
Register with the tax authorities
As mentioned above, the Policía Nacional normally passes your details to the Agencia Tributaria when you apply for the certificado de registro (the “residencia“). In some cases this does not go very well. For example, because you have not applied for the certificado de registro. In that case you still have to register yourself. You do this by means of form modelo 030 from the tax authorities.
What does it mean to be a tax resident in Spain?
Now that it is clear when you are taxable in Spain, it is time to look at what that exactly means. There are of course taxes that everyone has to pay, regardless of their tax residence, for example VAT (IVA) if you buy something on holiday in Spain.
The prime example of taxes that everyone pays regardless of their tax residency are those related to real estate. Consider, for example, IBI (the municipal property tax) and the waste tax that are completely equal for a fiscal resident and for people with a second home in Spain.
Both groups also pay taxes on the purchase and sale of real estate, although there is a difference between the assessment that tax residents receive and that of non-residents. And both groups also pay the impuestos sobre patrimonio, or wealth tax, if the property is worth more than €700,000 in Spain (€500,000 in Catalonia). As with the taxes on purchases and sales, there is a difference between fiscal residents and no residents, which we will discuss in more detail in a next blog.
Fiscal residency initially means that you pay tax in Spain on all your income worldwide. This is the IRPF, impuestos sobre la renta de personas físicas.