Tax description Article
According to the Law 35/2006 on Personal Income Tax and other Spanish tax legislation, an individual becomes a tax resident in Spain if any of the following circumstances apply:
- Spend more than 183 days in Spain, during a calendar year, in Spanish territory.
To determine this period of permanence in Spanish territory, temporary absences are included in the count, except those where the tax residency in another country is proven. In the case of countries or territories labelled as tax havens, the Tax Administration can demand proof of stay in that tax haven over a period of 183 days in the calendar year.
- The main core or base of its activities or economic interests is in Spain, directly or indirectly.
The centre of interests of the taxpayers is defined as the place where most of their investments are concentrated and where the taxpayer’s business is headquartered and administered. In this context, as per the Central Economic Administrative Court (hereinafter, CEAC), to determine that the main core or base of the taxpayer’s economic interests is in Spain, it is not mandatory to demonstrate that the assets located in Spain are more than those in the rest of the world (absolute majority). It suffices to prove that more assets are situated here than in any other State (relative majority).
- It is presumed, unless the contrary is proved, that a taxpayer’s habitual place of residence is Spain when the spouse (not legally separated) and underage dependent children permanently reside in Spain.
Having said that, how are these 183 days calculated? Do the days of arrival and departure from Spain count? Are sporadic absences really considered?
The CEAC addresses these questions by establishing a doctrine, notably through its resolutions dated March 28th, 2023, and April 25th, 2023, which hold binding authority for the entire Tax Administration.
According to the Economic Court, the concept of permanence in Spain should be interpreted in an objective manner, accepting that the day of permanence is counted as any day in which there was physical presence during any part of the day in Spanish territory, and not requiring a minimum number of hours per day or an overnight stay in Spain for it to be counted. Furthermore, the Court specifies that if the taxpayer provides evidence of being abroad on the same day when certified presence in Spain is confirmed, the calculation of that day as a stay in Spain remains uninterrupted. Instead, a 1-1 calculation is applied, considering both the day spent in Spain and the day spent in the other country, resulting in the same day being counted twice.
Likewise, the days on which the taxpayer starts or ends a journey from a Spanish airport, i.e. the days “in transit” through Spanish territory to go to the airport because the country of residence does not have an airport, are days of stay if they involve crossing the customs or immigration barrier.
Example of calculation without considering other circumstances:
David, an American national, lands at Madrid airport at 10 pm on 01/04/2023, on a flight from Miami and remains in Spain until August 31st of the same year, when he catches a flight from Barcelona at 3 am to Amsterdam. Subsequently, David returns to Madrid from Amsterdam on 01/10/2023 at 11:30 pm and remains in Spain until 31/10/2023, when he takes a flight back to Miami.
Computation of days:
From 1 to 30 April: 30 days
From 1 to 31 May: 31 days
From 1 to 30 June: 30 days
From 1 to 31 July: 31 days
From 1 to 31 August: 31 days
From 1 to 31 October: 31 days
Total days on Spanish territory: 184 days
Considering the above points, it is advisable for individuals planning a prolonged stay in Spain within a calendar year to maintain a record of the days spent in the country. Nevertheless, it is advisable to consult with a tax advisor. Because, beyond the days of entry and exit, occasional absences may also be count, and other circumstances may arise that could influence the determination of tax residence.
- The consequences of being a tax resident in Spain: If you are considered a tax resident Spain, you will be subject to a “Personal Obligation”, and, consequently, you will have to pay tax on all the income you generate both in Spain and in the rest of the world, which may increase your tax bill, depending on the case.
- The consequences of being a non-tax resident in Spain: On the other hand, if he were not considered a tax resident in Spain, he would only be subject to “Real Obligation ” on the income and assets he has in Spain, excluding those he has or obtains in the rest of the world.
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