RESIDENCIA (CHAPTER 1)

It is essential to understand that Residencia is a tax concept, and its meaning is mainly defined in all Spanish Laws related with taxes.

In our long time experience dealing with citizens who went and applied on their own for Spanish Residence permission through the Inmigration desk, we noticed that most of them considered themselves Spanish residents in all meanings although the IRS was not being communicated.

Most of them assumed that Inmigration Desk would make contact with the IRS, and get the IRS reported, although it was not the case.

As a matter of fact, the requirements demanded by the IRS to get someone registered as Spanish Tax Resident Payer are much more complex than all those required by the National Police from the Inmigration Department. The reason is simple; Tax Office will not easily get anyone registered as resident in Spain for tax purposes without effectively checking that he/she lived the minimum period of time required in Spanish territory during the natural year (183 days). Otherwise, the IRS will be easily opening the door to tax benefits that only resident people should be exclusively entitled to (i.e. capital gain tax deductions, death duties deductions, income tax allowances, no tax at source to be retained, ..).

Spanish tax year in Spain generally goes from January to December every year. The IRS will be checking those citizens willing to become tax resident registered in Spain effectevely lived 183 days in Spanish territory during the natural year. This is highly important to understand. It must be 6 months within the natural year (Jan to Dec.). Consequently, there will be no ways to get newly registered as tax residents until June or December every year, providing that new resident people moved to Spain in January 1st, or sometime during the year, and did not go away at any time during the 6 months in a row counting. IRS will be looking deeply into all kind of evidence that you are allowed to present showing that you effectevely lived in Spain for 6 months during the year. For instance, there will be no way to become Spanish tax resident if you lived in Spain from November of year N, to March of year N+1, and try to get registered for tax purposes in Spain since you lived 6 months in Spain. You probably did, but it was 3 months belonging to two different tax years, and it will not work for tax resident registration.

This is something that sounds very easy to understand, but it causes a lot of problems with it comes speaking about international double taxation, entering into conflict with all that EU Governments stablished to avoid this double taxation.

It will be very obvious to understand someone willing to become Spanish tax resident payer to be worried not to pay double tax on his/her income. He/She will need the Spanish IRS in this case to certify that he/she was admitted as tax resident payer in Spain, and an oficial certification to be officially issued and needed to present to the other country IRS where he/she moved out in order to stop being liable for tax in that country. In some kind of meaning, the Spanish IRS is simply causing itself trouble because those people paying tax on their income at the country where they moved out will continue paying it until the Spanish IRS made out that certification required to stop such tax, and then be able to consider themselves liable for tax in Spain. The longer that it goes, and the more difficulties that they find from the Spanish IRS to provide this certification, the longer that those people will be living in Spain, but paying taxes in a different country for the simple reason not to find themselves liable to pay double tax on the same income. This is something that Spanish IRS did not realize yet by being so much strict with their requirements, and thinking suspeciously that those citizens applying for such certificate are trying to take advantage to benefits that they should not be entitled to. Most people try in reality to pay income tax in Spain, and not to pay it in a different country.

Our Firm will be of course assisting you in this complex process along the way.

It is essential to understand that Residencia is a tax concept, and its meaning is mainly defined in all Spanish Laws related with taxes.

In our long time experience dealing with citizens who went and applied on their own for Spanish Residence permission through the Inmigration desk, we noticed that most of them considered themselves Spanish residents in all meanings although the IRS was not being communicated.

Most of them assumed that Inmigration Desk would make contact with the IRS, and get the IRS reported, although it was not the case.

As a matter of fact, the requirements demanded by the IRS to get someone registered as Spanish Tax Resident Payer are much more complex than all those required by the National Police from the Inmigration Department. The reason is simple; Tax Office will not easily get anyone registered as resident in Spain for tax purposes without effectively checking that he/she lived the minimum period of time required in Spanish territory during the natural year (183 days). Otherwise, the IRS will be easily opening the door to tax benefits that only resident people should be exclusively entitled to (i.e. capital gain tax deductions, death duties deductions, income tax allowances, no tax at source to be retained, ..).

Spanish tax year in Spain generally goes from January to December every year. The IRS will be checking those citizens willing to become tax resident registered in Spain effectevely lived 183 days in Spanish territory during the natural year. This is highly important to understand. It must be 6 months within the natural year (Jan to Dec.). Consequently, there will be no ways to get newly registered as tax residents until June or December every year, providing that new resident people moved to Spain in January 1st, or sometime during the year, and did not go away at any time during the 6 months in a row counting. IRS will be looking deeply into all kind of evidence that you are allowed to present showing that you effectevely lived in Spain for 6 months during the year. For instance, there will be no way to become Spanish tax resident if you lived in Spain from November of year N, to March of year N+1, and try to get registered for tax purposes in Spain since you lived 6 months in Spain. You probably did, but it was 3 months belonging to two different tax years, and it will not work for tax resident registration.

This is something that sounds very easy to understand, but it causes a lot of problems with it comes speaking about international double taxation, entering into conflict with all that EU Governments stablished to avoid this double taxation.

It will be very obvious to understand someone willing to become Spanish tax resident payer to be worried not to pay double tax on his/her income. He/She will need the Spanish IRS in this case to certify that he/she was admitted as tax resident payer in Spain, and an oficial certification to be officially issued and needed to present to the other country IRS where he/she moved out in order to stop being liable for tax in that country. In some kind of meaning, the Spanish IRS is simply causing itself trouble because those people paying tax on their income at the country where they moved out will continue paying it until the Spanish IRS made out that certification required to stop such tax, and then be able to consider themselves liable for tax in Spain. The longer that it goes, and the more difficulties that they find from the Spanish IRS to provide this certification, the longer that those people will be living in Spain, but paying taxes in a different country for the simple reason not to find themselves liable to pay double tax on the same income. This is something that Spanish IRS did not realize yet by being so much strict with their requirements, and thinking suspeciously that those citizens applying for such certificate are trying to take advantage to benefits that they should not be entitled to. Most people try in reality to pay income tax in Spain, and not to pay it in a different country.

Our Firm will be of course assisting you in this complex process along the way.

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