Tax Residency in Spain: Recent Rulings from TEAC and TS Explained

April 26, 2024

Tax Residency in Spain: Recent Rulings from TEAC and TS Explained

Tax residency in Spain has increasingly become a topic of interest over the past few years, especially with recent rulings from the Spanish Supreme Court (TS) and the Central Economic Administrative Tribunal (TEAC). These pronouncements shed light on how tax residency is determined under the Personal Income Tax Law (LIRPF), offering clarity for both Spanish residents and non-residents alike.

Understanding Tax Residency Criteria in Spain

Spanish tax law outlines two primary criteria for establishing tax residency:

Physical Presence (183-Day Rule): This criteria is perhaps the most straightforward. If an individual spends more than 183 days in Spain during a calendar year (as per Article 9.1.a of LIRPF), they are considered tax residents.

Economic Ties: In addition to a physical presence in the country, residency can also be determined based on an individual's main economic activity or interests being centred in Spain (as per Article 9.1.b of LIRPF). This means that even with fewer than 183 days physically present, an individual could still be considered a tax resident if their economic ties to Spain are substantial.


Decoding Residency Requirements with TEAC and TS

The recent rulings from TEAC and TS offer valuable insights into addressing practical challenges in applying these residency criteria:

Certified Presence Days: Days with clear evidence of physical presence in Spain, such as entry/exit stamps in a passport, carry significant weight in determining residency.

Sporadic Absences: Brief departures from Spain generally count towards the 183-day threshold, provided there is other evidence of residency. However, TS rulings emphasise that temporary absences shouldn't disrupt residency status.

Presumed Days: These are days logically assumed to be spent in Spain, filling the gaps between documented periods of presence. TEAC takes a flexible approach, suggesting that days between documented presence should count as days in Spain unless proven otherwise.

I's important to note that the concept of ‘presumed days’ may lead to potential conflicts between taxpayers and the Spanish Tax Agency (AEAT) due to its indeterminate nature. The definition of ‘reasonable’ can vary based on factors like the duration of stay, specific dates, and distance between Spain and other potentially visited countries.


The Role of Double Taxation Treaties and Residency Certificates

TEAC and TS also underscore the significance of residency certificates when applying double taxation treaties. These treaties aim to prevent individuals from being taxed twice on the same income. Recent rulings emphasise that Spanish authorities must respect residency certificates issued abroad, highlighting their crucial role in determining residency under these treaties.


How IberianTax Can Help Non-Residents in Spain

Navigating the intricacies of tax residency in Spain can be complex, but services like IberianTax can provide invaluable assistance. From understanding non resident tax obligations to ensuring compliance with Spanish tax laws, IberianTax offers tailored solutions to help non-resident property owners fulfil their tax liabilities in Spain easily and affordably.

By leveraging innovative technology and expert guidance, IberianTax simplifies the tax filing process, ensuring peace of mind for non-residents in Spain. To learn more about how IberianTax can assist you with your tax residency concerns and to receive free reminders when your tax is due, create your FREE IberianTax account today.

Whether you're a seasoned investor or a first-time non-resident property owner in Spain, having a trusted partner like IberianTax by your side can make all the difference in navigating the complexities of Spanish taxes.

Modelo 210 Non-resident Spain Tax residency