Clarification of the tax residence concept in Spain

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Précisions sur la notion de résidence fiscale en Espagne Lexunion
Précisions sur la notion de résidence fiscale en Espagne Lexunion

A recent resolution issued by the tribunal overseeing the Spanish tax authority has established the criteria to be applied by this body in calculating days of presence in Spain for the purpose of determining tax residency.

In Spain, tax residency is defined as:

  1. a) a presence in Spanish territory for more than 183 days during the calendar year, or
    b) the location of the principal centre of economic activities or interests in Spain.

The tribunal stipulates that the calculation of days must be objective, disregarding the taxpayer’s intentions.

To this end, three concepts are distinguished:

  1. I) Certified presence:days substantiated through reliable evidence. Each certified day is counted in its entirety, irrespective of the number of hours spent or whether these days are consecutive.
  2. II) Presumed days:days that can reasonably be deemed as days of presence, situated between two certified days of presence, unless proven otherwise.

III) Sporadic absences: summed with effective days of presence to determine whether the total presence exceeds the threshold of 183 days. However, these are not essential if the effective days already meet the legal minimum.

The tribunal relies on the Commentary on Article 15 of the OECD Model Tax Convention to interpret this provision. The use of objective data in such determinations ensures consistency and fairness, limiting the potential for discretionary or arbitrary interpretations.

This approach underscores the importance of establishing clear, evidence-based guidelines that all parties can rely upon in assessing tax residency.

The resolution also emphasises that establishing tax residency requires the examination of objective data and probative elements from both the tax authority and the taxpayer.

Furthermore, the decision highlights the necessity for both the tax authority and taxpayers to maintain comprehensive records. For the tax authority, such records support enforcement efforts, while for taxpayers, these documents serve as critical evidence in cases of dispute regarding residency status.

This decision represents a significant step in clarifying the concept of “days of presence” and seeks to standardise the criteria for determining tax residency, ensuring objectivity in the application of tax legislation by the Spanish tax authority.

By refining these criteria, the resolution contributes to greater predictability for taxpayers and supports the efficient administration of tax laws, aligning domestic rules with international standards and practices.

 

By Lexunion España, Barcelona (Spain)

Tags: Espagne

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