The tax domicile is where a person with tax obligations with the Treasury can be located. There are specific rules to specify it.
The registered office and tax address usually coincide and appear on the tax identification card.
In this article, we will detail what a fiscal and social domicile is and what regulations should be applied.
Table of Contents
Tax residence
As we have explained above, the tax domicile is the place where a person can be located. A self-employed worker will have the address of their habitual residence as their tax domicile.
It is the place where the Tax Agency sends notifications and requirements. Moreover, they are understood as notified even if you do not receive the notification, with the sole exception that there is an error in the wording of the address.
The tax domicile is the one that is included in the invoices to the clients and those received from suppliers. It is also at the head of the payroll.
For all that, it is essential to inform the Tax Agency of any changes. If you don’t do that, the following can happen:
- Notifications continue to be received at the previous address.
- If you don’t answer a notification, you will be responsible for not changing the address.
- Only invoices with correct address information can be deducted.
- The correct address does not appear in the public deeds.
Registered office
Unlike natural persons, legal persons do have a registered office. The latter is established in writing when the company is incorporated.
Another important question is that the registered office is public and anyone can know it, something that doesn’t happen with the tax domicile.
The registered office is where the direction and administration of the company are carried out. It is usually the address of the administrator, a commercial establishment or offices.
To change the registered office, you should make that by public deed and record it in the Mercantile Registry since it is required to publish the change.
For this reason, and to avoid unnecessary notary fees, it is advisable to choose a location where the company will remain and where you will manage your company.
Tax domicile of individuals
The tax domicile is determined differently in the case of natural persons who carry out an economic activity or if they do not carry it out.
Individuals who DON’T carry out economic activities
Your tax domicile will be your habitual residence if you are an individual who doesn’t carry out any economic activity. That applies to jobs for others, students or retirees, for example.
The address of the tax domicile and the habitual residence that appears in the register of these people should coincide, but sometimes it doesn’t. That also happens because the fiscal domicile and the “padrón” are not connected, and changes are not communicated automatically. Therefore, even if the address is changed in the municipal register, that change won’t appear in the Tax Agency.
The regulations applicable to some procedures require proof of specific requirements regarding tax domicile, habitual residence and the actual residence in it for a minimum of time. In this case, the register is of great importance since it will be a means of proof. However, there are other ways to prove that a home is habitual providing receipts for electricity, water, internet or the payment of other bills.
In any case, we recommend updating the “padrón” when you move.
People who DO carry out economic activity
The tax domicile is also considered the habitual residence if you carry out an economic activity, whether as a self-employed or professional. However, the main difference with people who don’t carry out economic activity is that it is possible to set the tax domicile in the place where the activity is carried out. That is where you manage your business.
In any case, the Tax Agency knows both addresses since, when you start an economic activity, you must indicate both the residence address and the place where you will manage your activity.
Besides, at the time of registration for Social Security, you must choose the address where you will receive notifications and other contact information, such as telephone or email.
Regulations to apply
Both natural persons who carry out economic activity and those who don’t must correctly determine the tax domicile. Different regional and local regulations may apply depending on where that address is.
Some cases of different regulations occur when in taxes, part of the powers are autonomous and different percentages and conditions are applied in each. That is the case with Inheritance and Donations Tax.
In applying local regulations, the most common example is the Real Estate Tax (IBI), which is the responsibility of the City Council. Therefore, it will depend on the domicile of the individual.
What more changes should you communicate?
In addition to communicating all the changes in the addresses you make, you must communicate changes of your telephone, email or any other form of contact.
It is also essential to notify changes in the premises directly or indirectly related to the activity because this will affect the deductible expenses when filing taxes.
The register “padrón” must always be updated. In this way, you would avoid regulatory conflicts or inconveniences when carrying out a procedure that entails harmful effects, including sanctions.
Finally…
The tax domicile is the place where we can locate a person. In the case of those who don’t carry out economic activities, it will coincide with their tax domicile and with the register.
Instead, the registered office applies only to legal persons and is usually the administrator’s address, the company’s premises or offices.
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