Like almost all bureaucratic processes, tax in Spain can be complicated. This is particularly true if you’re new to the Spanish tax system.
When they first move to Spain, many ex-pats are unsure about whether they are liable to pay tax in the country. Will the Spanish government contact you if they categorise you as a tax resident?
And how can you prove either way if you’re eligible to pay tax in Spain? Here’s everything you need to know:
Are you a Tax Resident?
It’s easy to calculate if you are a Spanish tax resident than you might think. According to the law 35/2006, if you meet any one of the three following criteria then the Spanish Tax Agency will consider you to be a tax resident of Spain:
- You live in Spain for more than 183 days each year
- Your main economic interests are based in Spain
- Your spouse and children live in Spain
If You Live in Spain for More Than 183 Days
This one is a fairly simple one to calculate: You can look at the stamps on your passport to get a definitive answer to how many days you spent in Spain in the past tax year. Even if you own property in Spain, that doesn’t necessarily mean that you are a tax resident of the country if you only live in that property for part of the year. You simply need to be able to demonstrate to the Spanish tax authorities that you lived in your Spanish property for less than 183 days per year. If you are an ex-pat that is not an EU citizen (for example if you are a UK or American citizen) then you will need a visa or residency permit in order to stay in Spain for more than 183 days per year, so if you are not in possession of a visa then this is also a sign that you will not be registered as a tax resident in Spain. It’s important to remember that those days don’t have to be consecutive: you can enter and leave the country as many times as you wish, provided you don’t spend more than 90 days out of every 180-day period in Spain. For these purposes, the year runs from January to December. There are various ways the Spanish authorities can find out how long you’ve been in the country. The first is obviously at immigration when you enter and leave the country. If you’re from a non-EU country your passport will be stamped upon both entry and exit, showing how much time you’ve spent here.
Wondering how the Spanish authorities will know how many days you’re spending in the country? If you fly into the country, it will be recorded on your passport. If you enter via road, this is less likely to be recorded. Instead, the authorities can look at if you have registered your passport details with a hotel or Airbnb, whether you have used your card in the country, or ordered and received packages online. It is not uncommon for non-tax residents to try and get away with living in the country for longer than 183 days, but the authorities will try to trace them by other means: looking at your utility bills and energy usage should show whether your property is vacant or not, for example.
If Your Main Economic Interests are Based in Spain
In order to be considered a tax resident in Spain because your main economic interests are in the country are a little more difficult to define. Some examples of this are if you of your real estate assets are in the country (i.e. you own property in Spain but not in other countries), or if your main bank account is in Spain and you don’t have another bank account in your home country.
If you own a business which has branches around the world but your main headquarters are in Spain then this would also make you liable to pay taxes in Spain. Similarly, if your employer is based in Spain then you can also expect to pay taxes in the country, even if you don’t live in the country for more than 183 days of the year.
It is relatively easy for the authorities to find out where your place of work and main assets are located, so if you feel that any of these criteria apply to you then you should register as a Spanish tax resident.
If Your Spouse and Children Live in Spain
It doesn’t matter how many days of the year you spend in Spain if your spouse and children live in the country, and you are not divorced or separated from them, then you will be considered a tax resident of the country. This is particularly relevant if your spouse and children depend on you financially. This commonly applies to off-shore or overseas workers. The Spanish authorities can check this by looking at where your children attend school, who is paying the bills or rent/mortgage for the property your spouse and children are living in, and so on. If you’re not sure if you’re a tax resident or not, the tax authorities will ask questions about your family and for evidence of their everyday living environment to ascertain this on your behalf.
What If I’m Not a Tax Resident?
If you don’t think you should be a tax resident in Spain, because none of the above criteria applies to you, but you’re worried about the Spanish authorities considering you a tax resident anyway, then you do have options. The best way to prove that you’re not eligible to pay tax in Spain is to get a tax residency certificate from your home country stating that you reside and pay tax there. This way, you cannot be taxed in both countries, if they have a double taxation agreement. This is a process you should complete on a yearly basis, as each tax certificate is only valid for one year.
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