Who is and who is not a Tax Resident of Spain - How to Determine Your Tax Residence Country

Determining tax residency is a crucial aspect for individuals and entrepreneurs involved in international business. For those owning homes in Spain, correctly identifying the country of tax residence is especially important to avoid double taxation and unwanted tax consequences.

This article examines who is and who is not considered a tax resident of Spain and explains how to determine your tax residence.

Who is a Tax Resident of Spain?

Spanish tax law clearly outlines who can be considered a tax resident in the country. To be deemed a tax resident, at least one of the following conditions must be met:

1. Staying in Spain for 183 days or more in a calendar year – If a person spends more than half the year in Spain, they are considered a tax resident, regardless of property ownership. It is important to note that the 183-day period does not need to be continuous; it’s the total time spent in Spain within the calendar year that counts.

   
   

2. Main place of business or economic activity is in Spain – If a person runs a business in Spain or earns income from this country, they may be considered a tax resident. This can apply to people managing a business, holding shares in Spanish companies, or working as freelancers.

   
   

3. Primary center of life or family is in Spain – If a person's family (spouse, children) lives permanently in Spain, they may be deemed a tax resident even if they spend less than 183 days there. It is the location of their personal and family life that is considered, rather than professional activity alone.

   
   

How to Determine Your Country of Tax Residence?

For Poles who own property in Spain and spend part of the year there, determining tax residence can be a complex process. Consider the following steps:

1. Counting days spent in Spain – Keeping a detailed record of days spent in Spain during the calendar year is essential to establish if the 183-day threshold has been exceeded.

   
   

2. Reviewing tax treaties to avoid double taxation – Spain and some other countries have a double taxation treaty. In cases of uncertainty, it is helpful to check how income will be taxed in both countries and use the treaty provisions to avoid double taxation.

   
   

3. Consulting a tax advisor – Due to the complexity of international tax regulations, it is always beneficial to consult a tax advisor specializing in tax residency issues who can analyze your specific circumstances.

   
   

Examples of Determining Tax Residence

Mr. Jan owns a vacation home on Costa Brava in Spain, purchased a few years ago. Although he owns property in Spain, he resides permanently in Poland, where he runs his business and pays taxes. His wife and children live in Poland, and he only spends part of his holidays in Spain – a total of 2-3 months per year, with the rest of his time spent in Poland.

In this case, Mr. Jan’s tax residence remains in Poland because:

• He spends less than 183 days a year in Spain.

• His main center of personal life (family, work, assets) is in Poland.

• His income is earned in Poland.

Despite owning property in Spain, Mr. Jan does not need to pay tax on his Polish income there, as his tax residence remains in Poland. However, he is still required to pay IRNR Modelo 210 tax on his Spanish property once a year in Spain, which he must report to the Polish tax authorities.

Ms. Smith, a British lady who runs an online business, decided to move to Spain, where she bought an apartment in Alicante. She spends most of the year there – about 9 months – and only returns to the Great Britain for 3 months to visit family. Her children attend school in Spain, and she pays taxes there on her business income.

In this case, Ms. Smith's tax residence is considered to be Spain because:

• She spends more than 183 days per year in Spain.

• Her primary center of life (children, daily life) is in Spain.

• She earns and reports income in Spain.

  
  

Ms. \smith is obligated to pay taxes in Spain on her worldwide income as she meets the conditions for Spanish tax residency.

Mr. Mikko, a Fin, owns an apartment in Málaga, Spain, purchased as an investment. He lives in Helsinki, Finland, where he works full-time. He only spends a few weeks a year in Spain, primarily on vacation. Mr. Mikko rents the apartment to tourists through online platforms, generating regular rental income.

In this case, Mr. Mikko's tax residence remains in Finland because he spends less than 183 days a year in Spain.

• His main center of life and professional activity (job, family, financial activity) is in Finland.

• Even though he owns property in Spain, his life is centered in Finland.

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However, he is still required to pay IRNR tax on his property in Málaga.

Tax Residence Country ≠ Country of Origin

It’s essential to remember that one’s origin does not determine whether they are considered a Spanish tax resident; rather, tax residence depends on where they spend most of the year, have their primary personal life, or close family. Thus, a Pole permanently residing in England who owns a home in Spain would be classified as a non-EU resident in Spain, and this status affects tax rates, as they vary depending on whether the country is within the EU or European Economic Area.

Tax Residency – Exceptions

Spanish tax law and international residence regulations also cover various less common aspects of a taxpayer's situation. Here are a few additional matters and exceptions to consider:

• Board membership or management positions in Spanish companies – If a foreign citizen holds a high-level management role or board membership in a Spanish company, it may affect their tax residence status, even if they stay in Spain for less than 183 days.

  
  

• Economic Center of Interests – In addition to the personal life center, Spain also considers whether a person has an economic center of interests in Spain. This could include:

  • Running a business in Spain.

  • Holding significant investments, such as property, shares, or interests in Spanish companies.

  • Earning most of their income from Spanish sources, such as rental income, investments, or employment.

    
    

• Special tax regime for new residents (known as the "Beckham Law") – Spain offers a special tax regime for individuals relocating to Spain for work. Known as the "Beckham Law," this provision allows new residents who move to Spain for employment to pay income tax only on Spanish-sourced income (not global income) for up to six years, with a flat rate of 24% up to a certain income limit, instead of up to 47% as for other residents.

  
  

• Cross-border workers and mobile professions – Those working cross-border or traveling frequently for work (such as pilots or international drivers) may have a special status regarding tax residence. In such cases, one should consider not only days spent in each country but also where the work is physically performed and the regulations specific to that profession.

  
  

• Retirees and those receiving foreign benefits – Retirees living in Spain but receiving pensions or benefits from abroad may be subject to specific tax rules depending on international agreements and tax treaties, such as whether the pension is private or public (e.g., a government employee pension).

  
  

• Temporary stays for education or medical treatment – Those spending extended periods in Spain for studies (such as students) or medical treatment do not necessarily become tax residents. Spanish law typically views such stays as temporary, as long as the person does not intend to permanently settle in Spain.

  
  

• Diplomatic or International Organization Status – Diplomats, consuls, or those employed in international organizations (such as the EU or UN) may be subject to different tax residency rules.

  
  

Analyze Your Case

If you need help determining your tax residency status or handling taxes related to property in Spain, contact us – we offer comprehensive tax services for foreigners with property in Spain, considering every detail of your situation.