Am I tax resident in 2 countries.. ?


One thing that Im frequently asked relates to tax residency. People living in Spain think that because they are paying their taxes back in their countries of origin, they are in peace with the tax office in Spain, but this is not truth..

You can only be treated as tax resident in one country or another, and due to this you will just pay your income tax just in one country.

You will be considered tax  resident in Spanish territory when any one of the following circumstances apply:

  • You have stayed longer than 183 days in Spanish territory over the calendar year. In order to determine the permanence in Spanish territory, occasional absences are included, except if the taxpayer accredits their residency in another country. 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 within the calendar year.
  • You situate the main base or centre of their activities or economic activities, directly or indirectly, in Spain.
  • You have dependent not legally separated spouse and/or underage children who are usually resident in Spain. This latter situation accepts evidence to the contrary.

If you meet any of the residence criteria, it is your responsibility to  submit an income tax return each year. If you do not, you risk being the subject of a tax investigation.

Sometimes it can get more complicated as  it is possible to fulfil the domestic criteria of two countries, in which case your tax residence status is determined by the double tax treaty.

For example, under the UK system, residence in the UK is determined not only by the number of days, but also what ‘ties’ you have with the UK that tax year. If you are resident in both Spain and UK under each country’s domestic rules, then ‘tie breaker’ rules come into effect. If none determine your residence status, it comes down to nationality.

You can consider yourself a permanent traveller or a fiscal nomad and due to this not paying any taxes elsewhere. In fact, there is no law which states you must be resident somewhere, but  you need to ensure you do not fulfil of any one country’s tax rules. There are many people who legally are not resident in any single country. There are even those people who claim not to be tax resident anywhere, but in fact they are an undisclosed resident of a country either through ignorance or by simply pretending that they are “non resident”. You need not only to understand very carefully the rules, but also to ensure you live by them.

If you are resident in Spain you should declare all your income, no matter in which country it was paid, to the Spanish tax authorities. This is usually done via the ‘Declaracion de la Renta’ in May/June on the form ‘Modelo 100’. The tax year in Spain ends on 31st December. You are either resident or not resident for the whole tax year (subject to any residence elsewhere under treaty rules).

The date from which you become resident will largely depend on the time of year you arrive in Spain. If you arrive in Spain in the first six months of the year with the intention of staying there indefinitely, you are likely to be regarded as tax resident for the full calendar year. However, if you move directly from the UK, then it is likely that, because of the UK/Spain Tax Treaty, you will be regarded as UK resident up to the date you leave the UK and resident in Spain thereafter.

If you need further advice just contact us and we will happily give you our best opinion,

Firma Alex

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