In general terms, you are tax resident in the country that you spend more than 183 days in a year. However, there are circumstances that mean a person can be resident in more than one country in which case each country may apply their own legal criteria. This situation has important tax consequences and can lead to paying the same tax twice but in different countries. To find out how double tax residency in Spain work, read our guide.
What is tax residency?
For most countries, tax residents are those who spend more than half the year (183 days) in the country. As a result, the country may tax its tax residents on their worldwide income including salary and pensions as well as income from property assets and capital gains.
What rules does Spain apply to tax residency?
According to the Spanish authorities, you may be considered tax resident in Spain if you fulfill any of the following conditions:
- If you spend more than 183 in Spain in the same calendar year (i.e. January to December).
- If the main hub of your business activities is in Spain (directly or indirectly).
- If your dependents (spouse and children under18) live in Spain.
Did you know? The Spanish tax authorities include occasional absences from Spain in the 183-days a year unless you can prove that you are tax resident in another country. If that country is classified as a tax haven, you may have to prove you spend more than 183 days a year in the tax haven.
Find out more about tax residency in Spain and when your tax obligations start.
What if I need to prove I’m non-resident in Spain?
You will need to show the Spanish tax authorities a certificate of tax residency issued by the tax authorities in the country where you are tax resident. The certificate is valid for one year.
Does a Spanish residence permit automatically make me tax-resident in Spain?
Usually, but not always. There are circumstances where you can hold a Spanish residence permit but not be tax resident in the country.
Find out about getting a Spanish residence permit.
What about double tax residency in Spain?
In some instances, it’s possible to have tax residencies in two or more countries as well as Spain. This situation can lead to extra taxation as it can be difficult to avoid paying double taxation unless you receive professional tax advice.
Usually, Spain will determine in which country you’re liable for tax as per the following rules:
- The first criteria to name the country you are permanently resident in as your tax residency. If you are resident in both, your tax residency is the country in which you have the strongest personal and/or economic ties.
- If the first criteria is undecided, your tax residency is the country you usually live in.
- If you live in both, then you are deemed tax resident in the country of your nationality.
- If you have dual nationality and none of the above three criteria applies, the appropriate tax authority will rule on your tax residency.
Did you know? If you’re an EU national and spend less than six months a year living in another EU country, you generally remain tax resident in your home country.
What about double taxation?
If you have double tax residency, it’s important to ascertain which country you are tax resident in to avoid paying taxes on the same income twice. Spain has double tax agreements with a number of countries and these agreement set out the tax powers in each state.
Some agreements give exclusive power to your country of residence while others give it to the country of origin of your income. In some instances, the two countries share the power and may apply tax to the same income. However, the country you have residence in must decide on what measures to take to avoid double taxation.
Discover our tax representation services – your key to peace of mind in Spain!
What should I do next?
As we’ve mentioned before at Costaluz Lawyers, regular Spanish tax matters are complicated. Double tax residency in Spain is even more so making the correct professional advice essential. Get in touch with our expert team for help and assistance on ascertaining your tax residency status and avoiding paying the same tax twice.
Maria Luisa Castro
