Pregunta: When is an individual considered to be resident in Spain, and when non-resident?

 

Respuesta:

An individual is resident in Spanish territory when any one of the following circumstances apply:

 

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      They have stayed longer than 183 days in Spanish territory over the calendar year. In order to determine the permanence in Spanish territory, occasional absences are included, except if the taxpayer accredits their residency in another country. In the case of countries or territories labelled as tax havens, the Tax Administration can demand proof of stay in that tax haven over a period of 183 days within the calendar year.

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      They situate the main base or centre of their activities or economic activities, directly or indirectly, in Spain.

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      They have dependent not legally separated spouse and/or underage children who are usually resident in Spain. This latter situation accepts evidence to the contrary.

 

Individuals of Spanish nationality who accredit their new fiscal residence in a country or territory labelled as a tax haven will not lose their status as taxpayers for Individual Income Tax. This rule is of application during the tax period in which the change of residence occurs and for the next four tax periods.

 

Otherwise, where none of the previous situations applies, an individual is considered as non-resident in Spain

 

Pregunta: Which legal persons are considered residents in Spain and which are non-resident?

Respuesta:

An Organisation is considered to be resident in Spain when one of the following requirements are satisfied:

That it was constituted according to Spanish law.

That its registered address is in Spanish territory.

Or that its effective headquarters are based in Spanish territory.

Otherwise, those organisations that do not satisfy any of the three foregoing requirements are considered to be non-resident.

The Taxation Office considers an organisation based in a tax-free country or territory as resident in Spain when its main assets, directly or indirectly, consist of assets located or rights that are fulfilled or exercised in Spain, or when its main activity is carried out therein, unless it accredits that its direction and effective management take place in that country or territory, and that its incorporation and operations have a valid economic motivation and substantive business reasons other than the simple management of securities or other assets.

Pregunta: How should Spanish grants to be implemented out abroad be taxed?

 

Respuesta:

 

As a general rule, grant holders residents in Spain who travel abroad on account of a grant, given that their absence will be sporadic or temporary, will continue to be considered tax residents in Spain and, therefore, unless they accredit their residence in the other country, they maintain their residence in Spain and will be subject to Personal Income Tax regulations.

 

When grant holders acquire tax residence in the country to which they have travelled and they accredit such status by means of a residency certificate issued by the competent tax authority in that country, they will, in principle, be considered non-resident and be subject to Non-resident Income Tax regulations.

 

Internal legislation: Grants are be classified as earnings from employment. Agreement: the article relative to earnings from dependent employment is applied, even when said earnings are paid by Public Administrations. In the receiving country, the grant may be exempt under the terms of the article of the Agreement relating to students.

 

Resident grant holder: is taxable in Spain according to Personal Income Tax regulations. Article 7.j) of the Personal Income Tax Law establishes certain exemptions applicable to grants.

 

Non-resident grant holder: according to Non-resident Income Tax regulations, the grant may not be subject to taxation in Spain as is does not correspond to an activity carried out on Spanish territory, and it may be subject to taxation if the payer is the Spanish Administration. Additionally, the exemptions established in articles 14.1.b) of the Non-resident Income Tax Law and 7.j) of the Personal Income Tax Law may be applicable. When an Agreement exists, and in application of said Agreement, the grant would be exempt in Spain as the activity is carried out in another country.

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Resident or non resident in Spain?