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NATURAL PERSON: CONCEPT OF FISCAL RESIDENCE IN SPAIN.

Can someone be tax resident in more than one State?

Yes, if the person complies with the conditions of those countries. There may be two scenarios:

 

1. When there is no agreement between those countries to avoid double taxation.

Spain will consider the person a resident in our State, will apply its internal rules and the person must pay tax here for all his global income/heritage. At the same time, the other State shall apply a similar regime.

 

2. When there is an agreement between those countries to avoid double taxation; in this case, the rules will be followed to determine where the person will be deemed resident for tax purposes.

 

What is the definition?

It is in the article 9 of the LIRPF (Income Tax Law) which regulates the concept of fiscal residence in Spain.

Two circumstances determine if an individual is deemed tax resident in Spanish territory,  by fulfilling any one of them :

 

1)   PERMANENCE: When an individual is more than 183 days during the calendar year in Spanish territory.

 

It should be taken into account that:

* Days of sporadic absence shall be considered as days of permanence.

* When it comes to proving the tax residency in a tax haven, the tax administration may require that the permanence for 183 days in that country is proven.

* To prove the fiscal residence in another State a certificate issued by the "Ministry of Finance" for the country which he is said to reside in shall be required. It should be remembered, that a person can have a residency permit or residence in an administrative State without him being considered tax resident there.

* Temporary stays in Spain resulting from obligations undertaken in cultural or humanitarian agreements of collaboration, free of charge, with the Spanish Public Administrations will not be computed.

2) ACTIVITIES AND ECONOMIC INTERESTS: When its base or core lies in Spain, either directly or indirectly.

 

Is there any presumption?

When his underaged children and his non-legally separated spouse reside usually in Spain, unless proven otherwise.

 

How is it proven?

With any means admitted by the Law (Civil Code/CC and Civil Procedural Act/ LEC).

For presumptions to be admissible, it is essential that between the proved fact and the one trying to be deduced there is a precise and direct link, according to the rules of the human criterion.

Data and elements entered in the self-assessment statements and communications presented by the taxable subject are presumed as certain and can only be rectified by them by means of evidence to the contrary.

 

What Parameters are analyzed to determine tax residency?

In this order:

It does not always have to be his property, it is enough to have a right to reside (usufruct, lease...).

It should be ready to be used at any time, in a continuous manner (not one for occasional use for a short period of time, as on a pleasure trip, or business/studies).

Any type of housing is accepted: house, apartment, villa, even a room rented with furniture.

 

The factors that will also be looked into are the profession he exercises, his political and cultural activities, the location of his professional activities, his estate headquarters...

 

That is, wherever he is with more frequency.

 

 

Anna Álvarez Escardó
Lawyer Illeslex

 

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