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Moving from Spain to a tax heaven and interpreting the 183 days

Questions about entering the Spanish market?

Interpretation of the 183-day rule on Spanish tax residency in a country when seeking to leave Spain


In a recent judgement dated 16-06-2011, the Supreme Court (TS) reiterated the criterion applied in other prior judgements in relation to the concept of tax residency in Spain for people wishing to leave Spain. This judgement examined the case of an elite sportsperson who wished to establish their residence for tax purposes in Andorra, a country regarded as a tax haven by Spanish authorities. The reason was preventing Spain from taxing this person’s income under the worldwide income rule.

The judgement concluded that, in order to accept the abandonment of the Spanish territory, proof is required of a minimum physical stay of 183 days in the other country. Furthermore, the fact that Andorra is a tax haven means that sporadic absences don’t need to be recorded (short stays in other countries), and this means that it is easier to reach the 183-day figure in Spain.

Another highlight of the case is that the taxpayer still had their centre of vital interests near Barcelona (regular training in the city, their family lived there, and the companies managing their image rights were also based in the city). Given the above, the Court did not accept that this person had left the Spanish territory.

The judgement argues that the taxpayer never proved physical residence in Andorra during at least 183 days, in addition to having no properties in ownership or in rental in that country. The certificate issued by the Andorran authorities to prove that the taxpayer effectively lived there lacked any credibility. The judgement said that it is not only necessary to intend to live in a country but to actually physically reside in such country during a 183-day period. That is, the rule is not based on intent but, rather, on the effective materialisation of such intent.

This judgement upheld the criteria reiterated by Spanish jurisprudence in other cases, such as the judgement of the Supreme Court (TS) dated 11-11-2009, and that of another Spanish Court (Audiencia Nacional) dated 15-11-2000. All of these rulings dealt with persons wishing to leave Spain to avoid being taxed for their worldwide income for purely tax-related reasons and wishing to move to tax havens (Andorra) or countries without information exchange clauses in place (Switzerland), a fact which was immediately treated as suspicious by the Spanish tax authorities.

It must be added that the authorities are less strict in cases where the taxpayer supplies a tax residence certificate from another country with a level of taxation similar to that of Spain (e.g. France, Germany, etc.) The discussion on tax residence of persons regularly visiting Spain (such as employees or tourists) is uncommon, unless it is clear that the purpose of this is tax fraud.

In any event, to avoid any risks, it is better to plan a possible residency in Spain in advance (and avoid registering with the population census, owning vehicles with Spanish licence plates, etc. before intending to transfer the place of residence to Spain).

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