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| Introduction Residents' & Non-Residents' Tax |
Before we begin to deal with the different taxes to which resident and non-resident subjects are liable, we need to explain the concept of residency. It's very important to bear in mind that, for tax purposes, a person can't be resident in two countries. |
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When is a physical person considered resident in Spain, and when non-resident? |
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A physical person is resident on Spanish territory when they are in any of the following circumstances: |
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- If he or she stays for over 183 days, during the calendar year, on Spanish territory. To determine this period of staying on Spanish territory, sporadic absences will be counted unless the taxpayer confirms his or her fiscal residence in another country. In the case of countries or territories regarded as tax havens, the Tax Administrative Organ may require the taxpayer to prove that he or she stays in that place for 183 days of the calendar year.
- If the main core or base of his or her business or financial interests is situated in Spain, directly or indirectly.
- If the spouse (unless legally separated) and children under the age of legal majority who are dependent on that physical person normally reside in Spain. In this third case there is room for providing proof to the contrary.
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Physical persons of Spanish nationality who confirm their new fiscal residence in a country or territory regarded as a tax haven will not cease to pay Personal Income Tax in Spain. This rule will be applied in the tax period during which the change of residency takes place and during the following four tax periods. |
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On the other hand, a physical person will be considered as non-resident in Spain when none of the above requirements are met. |
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How can one confirm one's non-resident status? |
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Non-resident status may be confirmed by providing a certificate of residency in another State issued by the tax authorities of that State. The validity period of such certificates is one year. |
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What happens when, applying the internal rules of Spain and another State, it turns out that a person is resident in both States? |
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In these cases, one should check the Agreement made between the States, if there is one. These agreements set out rules to avoid the situation where, for tax purposes, a person may be considered resident in both States. Generally speaking, according to these rules, the person will be resident: |
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In the State where he or she has a permanent dwelling. If he or she has a permanent dwelling in both States, he or she will be resident in whichever State the person has the closest personal and financial ties with.
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If residency cannot be determined thus, he or she will be resident in the State where he or she normally lives.
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If he or she normally lives in both or neither, he or she will be resident in the State whose nationality the person has.
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