Wealth tax
Complete guide to the taxation of cryptocurrencies in Spain for 2025
Tax Residency in Spain: Conflicts and Their Resolution
Tax Residence in Spain plays a crucial role in the taxation of people living or working in the country. With increasing globalization and international mobility, numerous tax conflicts have emerged, where two or more countries may consider the same individual to be a tax resident.As a result,this situation often leads to double taxation problems, significantly increasing the taxpayer’s tax burden.
At Resitax, expert tax advisors, we provide a clear explanation of how to determine tax residence in Spain, what criteria the Tax Agency applies and how to avoid double international taxation using current regulations and Double Taxation Agreements (DTAs).
Taxation Models in the World: How Do Countries Determine Tax Residence?
The most common taxation model globally is based on an individual’s tax residence, which means that:
- Tax residents are taxed on their worldwide income.
- Non-residents are only taxed on income generated within the country.
However, there are other less frequent models:
- Some countries do not impose taxes on personal income.
- Others only tax income earned within their territory.
- The United States taxes its citizens regardless of where they reside.
- There are special limited taxation regimes for non-habitual or temporary residents.
Tax Residence in Spain: Key Criteria for Determining It
Spain, like most European countries, follows the tax residence model. However, this can lead to conflicts when another country also considers a person to be a resident.
“To find out the official criteria for tax residence in Spain, you can consult the Tax Agency guide here.”
The main criteria for determining tax residence in Spain include:
- Stay in the country: More than 183 days a year in Spanish territory.
- Center of economic and vital interests: Where economic activities are carried out and the family nucleus is located.
- Nationality: Used as a residual criterion or tiebreaker rule in certain cases.
Tax Residence in Spain according to the LIRNR
According to article 6 of the LIRNR , a person is considered a tax resident in Spain if they meet any of the following criteria:
1. Staying in Spain for more than 183 days
- This includes sporadic absences, unless the individual can prove tax residence in another country.
- For example, if a taxpayer has been in Spain for 150 days without proving residence elsewhere, they will be considered a Spanish tax resident.
Center of Economic Interest
- It is evaluated country by country, not in relation to the rest of the world.
- Not only income, but also assets and expenses are considered.
- The Regional Financing Law uses a similar concept to determine tax residence within Spain.
Family Ties
- If the non-legally separated spouse and minor children reside in Spain, the taxpayer’s tax residence is presumed.
Double Taxation Agreements (DTAs): How to Avoid Taxation in Two Countries
Double Taxation Agreements (DTAs) are bilateral treaties designed to avoid double taxation. Spain has signed agreements with countries such as:
- Germany (July 30, 2012)
- Austria (December 20, 1966)
- Switzerland (March 3, 1967)
Although DTAs do not define residence, they establish tie-breaking rules to resolve conflicts when two countries consider a person to be a tax resident.
Tie-Breaking Rules in DTAs: How to Determine the Correct Tax Residence
When there is a dual residence conflict, DTAs apply these hierarchical criteria:
- Permanent home: The country where the person has a home available.
- Center of vital interests: Where the strongest personal and economic ties are held.
- Usual residence: The country where the taxpayer lives most regularly.
- Nationality: If the conflict persists, nationality is used as the final criterion.
- Amicable agreement: As a last resort, the tax authorities of both countries must negotiate.
To apply a DTA, the taxpayer must obtain a certificate of tax residence issued by the tax administration of the country in question.
Sentencia del Tribunal Judgment of the Supreme Court STS 778/2023: A Key Precedent in Tax Residence
Judgment STS 778/2023 has been fundamental in matters of tax residence and double taxation in Spain. Some key points:
1. Validity of Tax Residence Certificates
- Spain cannot question the validity of a certificate of tax residence issued by another country.
- Example: A certificate issued by the IRS in the USA must be accepted without objection.
2. Center of Vital Interests: Extension of the Concept
- It should not be evaluated only in terms of assets or income obtained in Spain.
- Family, social and professional relationships must also be considered.
3. Burden of Proof of Tax Residence
- The taxpayer must prove his residence in another country, but the Tax Administration must rely on objective evidence.
4. Aplicación de las Reglas de Desempate de los CDI
- Before applying Spanish legislation, the rules of the DTC must be respected.
Other Key Aspects in Spanish Jurisprudence
- Inpatriate regime: Possibility of the Ministry of Finance issuing tax residence certificates.
- Flexibility in proof: Some courts accept bank statements and invoices as proof of residence. However, the General Tax Directorate usually requires a certificate from the competent tax authority.
- Countries considered tax havens: Greater rigour is required in the proof of tax residence, such as staying for more than 183 days.
- No splitting of tax periods: Spanish law does not allow the splitting of the tax year due to changes of residence.
The Importance of Good Tax Advice
Given that the taxation system in Spain is based on tax residence, it is essential to have a clear definition and to avoid extensive interpretations by the Administration.
To avoid problems of double taxation, it is essential to:
- Have good tax advice.
- Know and correctly apply the tie-breaking rules of the DTCs.
- Have the necessary documentation to prove tax residence.
At Resitax, expert Spanish tax advisors, we help our clients resolve dual residency conflicts, present tax residency certificates and correctly apply Double Taxation Agreements.
