For individuals moving to Spain, one of the first tax questions to consider is whether they may become Spanish tax resident.
This is important because Spanish tax residents are generally taxed in Spain on their worldwide income, not only on income generated in Spain.
Under Spanish tax rules, an individual may be considered tax resident in Spain if any of the following criteria are met:
- More than 183 days in Spain
If a person spends more than 183 days in Spain during a calendar year, they may be considered Spanish tax resident.
Temporary absences may generally count as days spent in Spain, unless tax residence in another country can be properly proven.
- Main economic interests in Spain
A person may also become tax resident in Spain if their main economic activities or interests are located in Spain, either directly or indirectly.
This may include business activities, employment, investments or other relevant economic connections.
- Family ties
Spanish law also presumes tax residence in Spain when the individual’s spouse and dependent minor children habitually live in Spain, unless proven otherwise.
Becoming tax resident in Spain can have important consequences, including personal income tax obligations, reporting requirements for foreign assets and the need to review income received from other countries.
In international situations, Double Tax Treaties may help determine where a person should ultimately be treated as tax resident when more than one country claims residence.
For this reason, it is highly advisable to review the position before relocating, spending significant time in Spain or transferring business or family interests to Spain.
At MDG Advisors, we would be delighted to help you analyse your tax residence position and plan your move to Spain with clarity and confidence.