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Do you reside in Spain or abroad?

Tax Agency (Hacienda)

reside In Spain

Many Spanish and foreign freelancers doubt if they reside in Spain or abroad as to where they have to pay taxes. The status of taxpayer for IRPF (personal income tax) is influenced by the concept of habitual residence.

Do you reside in Spain or abroad?

Either of the following two circumstances will lead us to recognize that the taxpayer has his habitual residence in Spain:

1) That they remain over 183 days, during a calendar year, in Spanish territory

You don’t need to calculate these days consecutively, so they can be alternate. What’s important is to count them independently for each calendar year.

For the calculation of those 183 days, sporadic absences are not counted. If the person leaves Spain for a few days, these are not subtracted from the calculation of the period of stay in Spain. The exception is to prove the tax residence in another country.

If you move your Spanish residence to a territory or country classified as a tax haven, the Tax Administration may require proof of permanence in it for 183 days in the calendar year.

And even if a Spanish national prove their new fiscal residence in a country or territory considered as a tax haven, they will not lose their status as a taxpayer by the Spanish personal income tax or in the tax period in which the change is made of residence or in the following four.

It is what we call “Fiscal quarantine”, a measure that seeks to avoid tax evasion.

2) That the main nucleus or the base of their economic activities or interests is in Spain, directly or indirectly.

In addition, it is presumed, unless proven otherwise, that the taxpayer has his habitual residence in Spanish territory, when the spouse who is not legally separated and the minor children who depend on him live regularly in Spain.

In a trial of the TSJ of Murcia dated 09/24/2018, they relate what indications we should not consider when determining the tax residence in Spain. These are established based on where the taxpayer’s centre of vital interests lies:

1. The fact of owning real estate in Spain, especially if they were acquired before moving abroad.

2. The contribution to the self-employment social security scheme and medical insurance payments. Only residual payments with no economic activity and for sanitary purposes are accepted.

3. The acquisition of vehicles does not justify the fact that Spain is the centre of vital interest of a taxpayer who has moved to another country but uses temporary trips for his own purpose.

4. The ownership of bank accounts, investment funds, perception of dividends and sale of shares is also not relevant to determine fiscal residence if most of your financial assets are outside of Spain.

5. The electricity consumption of what was the habitual residence in Spain is also not relevant for determining residence, provided that the dwelling was inhabited exclusively during temporary visits.

Taxpayers need to declare their entire global income in Spain based on their residency status. That’s why is essential to know whether you reside in Spain or abroad.

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