Am I a resident or a non-resident in Spain? What is the difference between both and how do they affect you?
This is a question that comes up often, and with good reason. Because no matter if you are a resident or non-resident, your liabilities in the country will change, and being aware of those differences is crucial. However, it’s not always clear exactly what constitutes being either, especially with the common misconceptions generated by the topics of tax residency and immigration residency.
In this article you will fully understand what makes a foreigner a resident (or non-resident) in the country, and everything that means.
The first thing to bear in mind is the huge difference between the tax residency in Spain and the general Spanish residency. What does it mean to get Spanish residency? Getting the Spanish residency simply means getting your residence permit in the country. If you are planning to move to Spain and live there for the long run, maybe even with the possibility to work, you need to get this residency.
On the other hand, having tax residency is the status of a foreigner living in Spain wherein paying resident taxes is mandatory.
There is a common misconception that arises here as many have heard that during the first 3 months in Spain you are a non-resident, and once that time comes to an end, you automatically become a resident.
This is inaccurate, and the confusion stems from a misunderstanding of these terms.
Generally, when one says resident or non-resident in Spain, what is really being referred to is tax residency, the status you obtain after spending more than 183 days per year in the country, something that does not imply being the holder of a residence permit.
So for example, you can have Spanish residency, but be a non-tax resident.
In the following sections, we will further clarify the definitions of these terms, and explain the corresponding process.
Getting Spanish residency
Let’s say that you are a non-European Union citizen. If you would like to visit Spain, maybe to initiate the visa or residence permit application process from within the country, or perhaps to find a property you will acquire later on, you will need a tourist visa.
The tourist visa will allow you to stay in the country for just 3 months. 90 days is the maximum amount of time you can legally live in Spain without getting residency.
Once that period ends, and you have not obtained any of the visas that can be applied for in Spain (e.g. the student visa or the entrepreneur visa), you will need to go back to your country.
However, if you have obtained another visa during those 3 months, you can get your residence permit, meaning you would have obtained the Spanish residency.
Of course, you can also start the process for Spanish residency from your country of origin. If you are not applying for a tourist visa, you will usually receive a one-year visa that will allow you to travel to Spain.
Once you are in Spain, you will have to apply for the actual residency card that allows you to stay longer, and makes your Spanish residency official.
What does the Spanish residency allow you to do?
The Spanish residency is, for most of the permits and visas, an authorization to live and work in Spain. It’s the certification that allows you to be in the country without being in an illegal situation. However, as we mentioned, simply having Spanish residency does not automatically mean you are a tax resident.
Who is considered a resident in Spain?
Here is where you will start understanding what it really means to be a resident in Spain or a non-resident – and it all goes back to taxes. You are considered a tax resident in Spain, if you spend more than 183 days (6 months) per year in the country.
On the other hand, if you spend less than 183 days in Spain, you’re consider a non tax resident. In most cases, when you see the term “non-resident” referring to someone, it more specifically means “non-tax resident”.
This can happen with the golden visa. By investing half a million euros in real estate in Spain, you can obtain a residence permit. However, you are not required to be in the country for more than 6 months to be able to renew this visa, as long as you visit Spain once a year and still own the property.
In other words, you do not need to become a tax resident to keep the golden visa. Thus, you can continue to pay non-resident taxes with it.
How long can you live in Spain as a non resident?
Generally, you can live in Spain for 183 days as a non-fiscal resident. If you spend more than 183 days in Spain, you will have to start paying resident taxes. However, like we have just discussed, there are situations wherein you can apply to pay non-resident tax even if you will be in Spain for more than 183 days. For instance, under the Beckham Law.
And, just to differentiate and remind you, you can stay in Spain without a residence permit for up to 90 days. Any time spent after this will require Spanish residency; and any time spent after this without Spanish residency would place you in an illegal situation.
If I am on the student visa, am I a resident?
If you are on the student visa, you are a fiscal resident (again, as long as you stay more than 183 days per year in the country).
However, unless you are employed or own property, you won’t have to pay taxes. In this sense, if you were in Spain on a student visa, and then got a job, you would not be able to apply for Beckham Law because you were a resident of Spain in the last year(s).
In the Spanish residency sense, though, the student visa is not your typical residence permit. This is because it is not an authorization to live and work in the country, but rather, an authorization to live in the country while you study. So, in regard to Spanish nationality, years on the student visa only count for half.
What is the difference between a resident and a non-resident?
Let’s cover the most important part now. How does a tax resident differ from a non-tax resident? If you are a resident in Spain, you will need to pay resident taxes, and at the resident percentages.
For example, as a resident, you need to pay income tax for all the income you obtain worldwide, no matter the country they came from.
Now, what about non-resident tax? If you were a non-resident, this wouldn’t be the case. Non-residents in Spain just need to pay income tax for the income they receive in Spain. They will be charged a flat rate of 24%, with no possible deductions.
Take note that, the exact percentages for each tax to be paid are different, and situations may differ.
For instance, in the case of inheritance tax, which is for inheritance received in the form of property, money, or other assets, residents and non-residents are taxed the same.
Moreover, there are also situations wherein you can be in Spain for more than 183 days, while simultaneously still being a non-resident. One way this can be achieved is by applying for the Beckham Law.
You can apply for it if you haven’t lived in Spain in the last five years, and are moving to work. With the Beckham Law, you can pay income tax as a non-resident for six years, meaning you are taxed a flat rate of 24% instead of a progressive rate of up to 46%.
It is also possible to pay non-resident tax in Spain with the digital nomad visa, as long as you are an employee for a company outside of Spain, and not a self-employed individual.
Do residents and non-fiscal residents have to do their tax declarations in Spain?
Yes, both residents and non-residents have to declare taxes in Spain. The only difference is that the tax declaration for residents is much more complicated. This is not only because residents need to consider their worldwide income/assets, but also because income tax includes salaries, pensions, capital gains from dividends, passive income from renting out property, and income from selling assets.
Both residents and non-residents have to register at the Spanish Tax Agency to start complying with their legal obligations. Failing to do so can result in a severe monetary penalty.
The times of the year when taxes must be filed also vary depending on whether you are a fiscal resident or not. Plus, residents must include Form 720 wherein they declare all the assets they possess worldwide.
Get in touch with our lawyers and let us guide you step by step:
I have double nationality nationality..USA and Spanish. Legal USA Fiscal Resident2020)The stay in Spain is: by the calendar or natural year.? If by the calender year: could stay in Spain from July 2021 to December 31 2021 and from the 1st January 2022 to June 30 2022?
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