Are you a resident or non-resident in Spain?

Taxes Wed, 16 Oct 2013
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.

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.

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.         

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