No matter your situation, answering this question will be crucial. The thing is that many expats who move to Spain don’t know how to answer. Am I a resident in Spain or a non-resident? What is the main difference? And the consequences really matter.
In this article we are going to solve the main doubts about this term once for all.
The first thing to bear in mind is the huge difference that exists between the tax residency in Spain and the general residency.
What does it mean to get the Spanish residency?
It simply means getting your residence permit in the country. If you are planning to move to Spain and live for the long-run here, maybe even with the possibility to work, you need to get the residency.
On the other side, the tax residency refers to the status of a foreigner living in Spain in which he or she has to pay all the taxes that residents need to pay, or the ones for non-residents.
Hence the first misconception. 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 become a resident.
But that is not true at all.
FIRST YOU GET A TOURIST VISA, THEN THE RESIDENCY
Let’s say that you are a non-European Union citizen. If you would like to visit Spain, maybe to initiate the procedure to get your visa 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. Once that period ends, you will need to go back to your country.
Then, after those 3 months, if you get your residence permit, you will have obtained the residency in Spain. It will allow you to stay in the country for 1 year, with the possibility to renew every 2 years.
WHAT DOES THE SPANISH RESIDENCY ALLOW YOU TO?
The residency in Spain is, for most of the permits and visas, a residence and work authorization.
It is the certification that will allow you to stay in the country without being in an illegal situation.
But that does not define your condition as a resident or not.
RESIDENT AND NON-RESIDENT ACCORDING TO YOUR TAX SITUATION
Here is where you will start understanding what does it really mean to be a resident in Spain or a non-resident.
And it all has to do with taxes.
If you spend more than 183 days per year in Spain (6 months), you will be regarded as a tax resident.
On the other hand, only living from 1 to 182 days in the country will imply you are a non-resident.
*Bear in mind that the years don’t necessarily have to be consecutive.
So, as you can see, you can have the residency in Spain and still be considered a non-resident. That will depend on the number of days per year you spend in the country out of the 365 you are allowed to due to the permit you have.
WHAT DOES BEING A RESIDENT OR A NON-RESIDENT IMPLY?
Let’s cover the most important part now. Which are the main differences you will encounter in both situations?
If you are a resident in Spain, you will need to pay resident taxes. And at the resident percentages.
This means that, for example, you will have to pay income tax for all the incomes you obtain worldwide, no matter the country in which they originated.
If you were a non-resident, that wouldn’t happen.
Non-residents in Spain just need to pay income tax for the incomes they obtained in Spain. They will be charged a flat and fixed rate, with no possible deductions.
The exact percentages for each tax to be paid are different. For example, the inheritance tax is much higher for them.
Also, new taxes like the non-resident tax will appear.
DO RESIDENTS AND NON-RESIDENTS HAVE TO TO THEIR TAX DECLARATIONS IN SPAIN?
The answer is yes, both have to. The only difference is that the tax declaration for residents is much more complicated.
This means that both residents and non-residents have to register in the Spanish Tax Agency in order to start complying their legal obligations. Failing to do so can imply a severe monetary penalty.
The times of the year in which both must be filed also vary, and residents must include model 720 in which they declare all the assets they possess worldwide.