In this article we will explain how to know if to date a natural person (private individual) not Spanish national is a resident in Spain for tax purposes. This is important as the way in which natural persons must pay income tax in Spain is determined by whether they are resident or not resident in the country.
As the tax office explains, natural persons (private individuals) are considered as resident in Spain for tax purposes when any of the following apply:
- They remain in Spain for more than 183 days during a calendar year. In order to determine the period of stay, the sporadic absences are calculated, except those where the tax residency in another country is proven. In the case of countries or territories labelled as tax heavens, the Tax Administration can demand proof of stay in that tax haven over a period of 183 days in the calendar year. In order to determine the period of stay, temporary stays in Spain that are the consequence of contractual obligations in agreements of cultural or humanitarian collaborations performed free of charge with the Spanish Public Administrations are not included.
- They situate the main base or centre of their activities or economic activities, directly or indirectly, in Spain.
Also, it is presumed, except when proven otherwise, that a taxpayer has their usual place of residence in Spain when, using the above criteria, the not legally separated spouse and the underage dependant children are usually resident in Spain
A natural person will be considered as either resident or not resident during a calendar year, as a change of residence does not imply an interrumption of the taxable period.
AGREEMENTS AND DOUBLE RESIDENCY
In the agreements to avoid double taxation signed by Spain, to define a person as resident of a state, reference is made to the internal legislation of each state. Bearing in mind that each state can establish different criteria, two states may consider a person as a resident.
In these cases, the agreements generally establish the following criteria to avoid a person being considered resident in both states:
- A person will be a resident in the state in which they have their permanent home available to them.
- If they have a permanent home available to them in both states, they will be considered resident in the state with which they have the closest personal and economic relations (centre of vital interests).
- In the above criteria could not be determined, they will be considered resident in the state where they usually live.
- If the person usually lives in both states or does not live in either of them, they will be considered resident of the state of which they are a national.
- Lastly, if they are a national of both states, or of neither, the responsible authorities will resolve the case by mutual agreement.
ACCREDITATION OF TAX RESIDENCY
Tax residency is proven by means of a certificate issued by the responsible Tax Authority of the country concerned. The period of validity of these certificates is one year.
A person can have a residence permit or administrative residence in a state and not be considered a tax resident therein.
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