Spain Explained

Are you a resident or non-resident in Spain?

Do you ever get thrown by this question? Having lived in Spain for a few years now I find it increasingly difficult to decide how to respond. Of course, the context is all important. If I am in a bar talking to someone new then I would probably reply, ‘Coventry,England’ as the place where I last lived. If I am in another part of Spain I would probably say ‘Torrevieja’ as where I live now. If I was in England I would probably say ‘Bradford’ as the place where I grew up.

It can be complicated, but at least I am clear that wherever I may have been in the past, I am a resident in Spain now. I have the fiscal and civil paper work to prove it. It is perhaps easier for me because I only visit the UK on odd occasions. For some people, defining whether they are a resident or non-resident in Spain is a little more complicated.

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Or at least they think it is. However, the actual law for deciding which category you fall into is really quite straight forward. If you live in Spain for more than 183 days in one calendar year then this is where you are resident. The 183 days need not be consecutive, so crossing the border for a day does not exclude you from resident status. In any other country you visit or spend time in, you are a non-resident or tourist.

Non-resident or resident – it’s important!

Whether you are defined as resident or non-resident in Spain does make a big difference in Spanish tax and law. You have an extra tax to pay on your property as a non-resident and the cost of Spanish inheritance tax changes dramatically. It also makes a difference to your bank account and it is very important that you make sure your account reflects your status.

Some of the differences might work in your favour and some against. If you are a resident, inheritance tax can be less and you don’t have imputed income tax to pay unless you have a second property. If you are a non-resident then you won’t be chased for other forms of taxation linked to earnings. Both residents and non-residents have to make Spanish tax declarations but they are at different times of the year. The resident declaration, as you would expect, is far more complicated and residents are required to present the notorious 720 form for world-wide assets.

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Not paying your taxes as either a resident or a non-resident incurs penalties and interest. If you haven’t made your status clear and checked what you must pay then you can find that you have fallen foul of the tax man without even realising. By all means, ‘um’ and ‘ah’ about where you come from but make sure you are clear about where you live now.

To help navigate the bureaucracy of the Spanish tax system, our dedicated advisers are on hand to help at every step of the way. Contact us and we will offer you a free consultation without obligation.

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12 comments

Steph smith

13 July, 2020 2:44 pm

If i sell my uk house between August and September this year and once all uk tax etc paid. I move to my house in Spain to apply for pardon & residency in Spain before 31 December brexit deadline. Do I owe any money from that sale to Spain ? . Steph

Oscar Paoli

14 July, 2020 8:25 am

Hi Steph,

If you sell the house before coming to Spain and you are non-residents in Spain, there is no capital gains tax, but you cannot be in Spain more than 183 days this year and the residence must be at the end of the year or much better next year.

With kind regards,

Ábaco Advisers

Billy Rodgers

14 October, 2020 1:03 pm

Hello

In accordance with the Spanish requirements for residency, I have applied and received residency card (green) as I am planning to be here for more than 3 months (I am an English Citizen). However due to covid and work I am going to be out of Spain for more than 184 days this year and also next year 2021.

Am I a non-residence for tax purposes although I have a green Resident Card?

Thanks
Billy

Oscar Paoli

14 October, 2020 2:05 pm

Hi Billy,

As you are not in Spain and will not be in Spain for the required time if you already have the green document it should be cancelled and if you have not applied then you should not apply until you are actually going to be a Tax Resident in Spain and will be here for more than 183 days per year.

With kind regards,

Ábaco Advisers

Linda Howard

15 October, 2020 11:15 am

I am a UK citizen. I moved from the UK and purchased my home in Spain in 2015 but have worked more than 183 days out of the country since 2016. Due to Covid I have not worked and have resided back in my home since mid April 2020. This will mean I am in Spain for over 183 days in 2020. I have held the NIE since 2015 and have an Empadronamiento with my local Ayuntamiento. When am I able to apply for permanent residency?

Oscar Paoli

5 November, 2020 9:23 am

Hi Linda,
It is easy to confuse the NIE with the residency permit. If you only have a NIE, they will not give you permanent residence without going through the temporary one. If you have a residency permit in Spain, it will depend on the data and information that the auhtorities have in Spain regarding the time you have been abroad.
With kind regards,
Ábaco Advisers

Vera Jordan

14 November, 2020 2:23 pm

I am a retired UK resident with a holiday property in Spain on which I pay non-resident tax. This year owing to coronavirus I have been in Spain for more than 3 months and was informed I needed to apply for residency which I did. My Spanish accountant now tells me that I will be liable to pay resident tax in Spain on my assets in the UK even though I will not be in Spain for more than 183 days. I assumed that having a Spanish residency card was merely a legal requirement to cover me living in Spain for more than 3 months, but did not mean that I would be regarded as tax-resident in Spain. Can you please clarify the situation?

Oscar Paoli

16 November, 2020 12:34 pm

Hi Vera,

The Spain Resident card is only applied for if your intentions are to be a Tax Resident here in Spain and live here, once applied for, the Police will advise the Spanish Tax Office that you are now a resident and in being a Resident you will be liable to pay Tax here in Spain on your Worldwide income.

With kind regards,

Ábaco Advisers

ron walker

17 November, 2020 10:51 am

Is it correct that there is a tax-free allowance of €700,000 on worlwide assets for tax residents in Spain?

Oscar Paoli

17 November, 2020 9:27 pm

Hi Ron,
This is an allowance for the Wealth Tax Declaration and this depends on your Region as to the amount allowed this is the maximum but in others it is considerably lower.
With kind regards,
Ábaco Advisers

charles harvey

20 November, 2020 6:51 pm

I am a UK national and have just become resident for tax purposes in Spain where I own a property. I also own a property in the UK which I use when I go back there. It is not rented out. Will I have to pay any taxes in Spain on my UK property?

Oscar Paoli

23 November, 2020 3:28 pm

Hi Charles,

Yes you will have to pay Tax on your second property in the United Kingdom which will be based on half the oritginal purchase prices x at 1,1% of this, then this sum is added to yoru personal income.

Please do not hesitate to contact us should you require any assistance. You can contact us at info@abacoadvisers.com or by phone 0034 966 703 750.

With kind regards,

Ábaco Advisers