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The "Residencia" and the Double Taxtion Treatment
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Published: January 2010 -
by Karin-Sybille Rosenfeld
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After buying a property here in the Canary Islands some people wonder
should they keep their non-resident status or change to resident.
The advantages of a "Residencia"
are, for example, certain benefits with inter-spanish flights or sea
transport, slightly cheaper water rates and the elimination of the
"Retention" (payment on account to the tax office) when selling a
property.
But to be resident implies not only advantages but also commitments, with special regional and supra-regional definitions.
For a better determination and to simply: Even a non-resident needs a
spanish identification number (N.I.E.), when buying a property, a car
or to keep a bank account. After buying a property and making the
corresponding tax payments, the person will also be registered at the
tax authority. This does not mean in any way that this person is
automatically resident.
A person is resident in spain if they spend more than 183 days per year
in the country and/or have the "centre of vital interests" there. If
you have permanent homes in both countries you are deemed to be
resident in the country in which you have a habitual abode or of which
you are a national.
The Double Taxation Treaty between the UK and Spain was signed on 21th
of October 1975 (between Germany and Spain 1966). It has a clause that
comes into play when you have activities in both countries and to
determine, that you cannot be tax-resident in both countries.
BUT: If you are
resident in Spain, you have to declare here your worldwide income under
Spanish rules, taking into account taxes already paid under UK rules.
This point has been overlooked some times.
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hotline inmobiliaria ksr
(+34) 928 76 66 84
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ksr+ legal/tax questions ·
