眾律國際法律事務所

Tax residence rules in Spain

The way in which individuals and corporates pay taxes in Spain depend on whether they are residents of Spain or not.

• Individuals

Foreign individuals who become Spanish residents are subject to Spanish Personal Income Tax (IRPF) on a worldwide basis. On the other hand, non-residents will be subject to IRPF, but only on income arising and capital gains obtained from Spanish sources.

According to article 9 of the Personal income tax Law individual is considered a Spanish resident for tax purpose if he meets any of the following conditions:

• Spend more than 183 days per calendar year in Spain. These days do not have to be consecutive and is whether or not you take out a formal residence permit. Sporadic absences are considered days of presence in Spain, unless the individual can prove his tax residence status in another country.
• His main central place of business is directly or indirectly located in Spain.
• His central vital interests are in Spain. Therefore, unless there is evidence to the contrary, an individual shall be deemed to be a resident of Spain if his or her legally non-separated spouse and dependent minor children have their principal residence in Spain.

There is no split year treatment in Spain. Therefore, you are either resident or not resident for the whole tax year (January 1 to December 31) and a change of residence does not give rise to an interruption of the tax period.

• Entities

According to article 8.1 of the Corporate Income Law, a company is deemed to be resident in Spain for tax purpose if it meets any of the following conditions:

• It was incorporated under Spanish law.
• Its registered office is located in Spain.
• Its ‘effective’ head is in Spain. Under Spanish law, a company’s effective head is in Spain when its business activities are managed and controlled from Spain.

References:

Spain non-resident Tax Guide: http://www.strongabogados.com/docs/spain-nonresident-tax-guide.pdf

Article 8 of Personal Income Tax Law in Spanish (Ley del Impuestosobre la Renta de las Personas físicas) http://noticias.juridicas.com/base_datos/Fiscal/l35-2006.html

Article 8.1 of the Corporate Income Law in Spanish (Ley de Sociedades) http://noticias.juridicas.com/base_datos/Fiscal/540273-l-27-2014-de-27-nov-impuesto-sobre-socied