The way in which individuals or corporate bodies pay tax in Spain varies depending on whether or not they are resident in Spain. ItÂ’s important to understand what is defined as tax residency in Spain.
RESIDENCE FOR TAX PURPOSES
Individuals shall be deemed to have their principal residence in Spain if they spend more than 183 days per calendar year in Spain. Occasional absences shall be taken into account to calculate the period of residence, except when it can be proven that their tax residence is in another country.
In the case of countries or territories classified as tax havens, the Spanish tax authorities may request proof of residence in the tax haven for 183 days per calendar year. Calculation of the period of residence shall not take into account any temporary stays in Spain as a result of obligations arising from cultural or humanitarian collaboration agreements entered ino with the Spanish public administration with no payment involved.
They also deemed to be resident in Spain when their main or central place of business is directly or indirectly located in Spain.
Unless there is evidence to the contrary, an individual shall also be deemed to be a resident of Spain if his or her legall spouse and dependents have their principal residence in Spain.
Any individual of Spanish nationality who can prove he has changed his country of residence to a tax haven shall continue to be liable for Personal Income Tax (IRPF) in Spain for the tax period in which the change of residence occurs and the following four tax periods.
An individual shall be deemed to be a resident or non-resident for the entire calendar year, given that a change of residence does not give rise to an interruption of the tax period.
Proof of tax residence
Tax residence must be proven by means of a certificate issued by the competent tax authority in the country in question. Such certificate is valid for one year. An individual may have a residence permit or administrative residence in a country and yet not be deemed to have tax residence there.
Residence under Tax Conventions
Bearing in mind that different countries may have different ideas, an individual may occasionally be deemed to be a resident of two countries. In such cases the following points are internationally agreed to overcome the problem of dual residence:
TAXATION OF INCOME OBTAINED BY NON-RESIDENT
1. Income from employment
In general, income earned by non-residents for work carried out in Spain shall be subject to tax on the full amount at the general tax rate of 25%.
2. Income from economic activities
In the case of income from economic activities carried out in Spain by non-residents without a PE, the tax base shall be calculated based on the diff erence between the gross income and the following expenses:
A general rate of 25% shall be applicable to the resulting tax base. Income from economic activities shall be deemed to include income from services rendered, from freelance professional activities and artistic and sports activities.
(Please note that rules and tax rate change frequently, therefore you must always consult a professional expert).