Making the move from non-resident to resident in Spain

Taxes Wed, 19 Feb 2014
Making the move from non-resident to resident in Spain

It’s the end of the February, half term holiday for most children from the UK. The aeroplanes in the Spanish airports will be full and the journey will be ‘lively’.  Most will be sad to leave Spain. Hopefully they have had a few pleasant days away from the floods and perhaps even managed to play on the beach.

For many people who come to live in Spain, this is how their Spanish experience begins. One holiday here can lead to more and  from there to the big decision to buy a Spanish holiday home, perhaps with a view to moving out here one day.  

I remember after a particularly long summer holiday complaining to the bike-hire man that I didn’t want to go back to the UK. His answer? ‘Some of us never did’. It started me thinking and perhaps he, inadvertently, is responsible for our move out here and that life-changing step from non-resident to Spanish resident status.

It’s not such a leap for some people. There are those who are retired already, with a home in both countries who find they can split their time comfortably between the UK and Spain. Five months here and four months there. It’s a perfect combination for some, but how you split that fifth month is crucial.

You cannot be resident in two countries. One must be your main country of residence. In theory it’s wherever you spend your 183rd day. That’s your home. It might seem a relatively light decision to make but in fact it has enormous consequences.

If you decide to make your 183rd day in Spain then you will need to secure your Spanish civil residency here, your health care and your Spanish driving licence. You will also, in the vast majority of cases, need to pay tax to the Spanish Tax Authority on your worldwide income here; including on pensions, rental income, income from interest and other investments. This must all be declared by making a resident tax declaration before the 30th June each year. (The only exception is if you receive a crown service employment pension when the tax must be deducted in the UK.)

In some ways, applying for residency is the easy part of making a move to Spain. For many, the more difficult issues are those around leaving and missing family and how they balance the temptations of living in a holiday destination with their own health and sanity.

However you decide to do it, there is no doubt that it can be the most rewarding, if occasionally frustrating, experience. If you are hovering over where you really want to live, perhaps you need the timely words of a bike-hire man too.

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