There are a number of official actions you need to take to achieve full Spanish residency. This doesn’t just include obtaining a civil residency but fiscal residency in Spain too. It is also important to make sure you complete the necessary paper work and inform authorities if you decide to return to your native country.
Which country do I live in? The rule is that if you live in Spain for 183 days or more then you are a resident in Spain. Those days don’t have to be sequential. Many people spend part of their year in one country and part in another or even alternate the months. They find that this way they enjoy the benefits of both countries and avoid some of the disadvantages.
There is no problem with doing this as long as you are clear which is your country of residence and which is not. Your country of residence (the one where you stay for more than 183 days) is the one to which you should pay your taxes. This includes all taxes on pensions except where the tax is removed at source as might be the case with some public sector pensions.
In this article we outline some of the procedures you must go through to make sure that whatever your status, you are complying with the law in Spain.
Changing from non-resident to resident
There are a number of hurdles you have to negotiate in order to become a resident in Spain. To begin with you need your Spanish NIE which is the number that registers you as a foreigner with an interest in Spain. You need your NIE for most financial activities such as buying a house or a car and it is prerequisite to becoming a resident.
Once you have your NIE you need to obtain your civil residency certificate. This is available from your nearest National Police office and you must check the documents you need to take to obtain one. With your civil residency, NIE and proof of where you are living you can register at the town hall on the padron. This is the local register of people who are resident in that area and is sometimes needed for buying a car or always for enrolling a child in school. You will also need it to obtain your health card (SIP).
The next stage is to become a Spanish fiscal resident. This is important as evidence of the length of time you have been living in Spain and enables you to benefit from reductions in capital gains and inheritance tax payments. You will be issued with a fiscal residency certificate when you present an annual tax declaration which you should do before the 30th June every year.
You are obliged to make a resident’s annual tax declaration if you have two or more sources of income (excluding some public sector pensions) or receive more income than the Spanish Tax System’s thresholds and allowances allow. Even if your income is modest or you only have one source of income it is beneficial to make the declaration as a record that you are in Spain and you are known to the Tax Authority.
Changing from resident to non-resident
If you find, for whatever reason, that you must return to your home country then it is just as important to make sure you inform the authorities that you are going as it was when you arrived.
As a minimum you should:
- inform your bank – you will need to change your resident account to non-resident
- inform the town hall where you registered on the padron
- go to the National Police office where the residency certificate was first issued
- if you have a residency card you should return it to the Foreigner’s Delegation Office
When you cancel your residency at the National Police office they will issue you with a stamped document that includes the date of cancellation and the reason for it. This is your proof that you are no longer a resident and that you have informed the necessary people.
You will also have to let your fiscal representative know about your change in circumstances. You will probably still have to complete one more resident tax return the year after you return to your home country as taxes are presented retrospectively. After that you will complete a non-resident tax declaration form before 31st December every year if you haven’t sold your property.
Although you will no longer be required to pay taxes on your income, including pensions, to the Spanish Tax Authority you will still have the Spanish imputed income tax to pay as a non-resident or income tax on rental if you rent out your property in Spain. Imputed income tax is the tax that non-residents pay if they are not renting out their property.
Of course, you must also inform the relevant offices and organisations in your home country of your change in living arrangements. But remember, if anyone tells you that you can be resident in two countries – you can’t. You have the decision about where you spend most of your time. After that you have no choice at all.