Residents and Fiscal Residency

Moving to Tenerife : Fiscal Residence and Keeping things straight

Having a residencia certificate (a green wallet sized piece of paper) or a TIE plastic card with your NIE printed on it is often confused with being fiscally resident.

Theoretically you could be staying for longer that 90 days in a Spanish tax year – and so required to comply with immigration regulations and get a residencia certificate – but then you could revoke the certificate or TIE after 170 days and go to another country outside of Spain. In that example you would not be fiscally resident in Spain. However to then reapply for residency under 3rd country national rules once you wanted to return might prove more difficult post Brexit.

Realistically if you have cut ties with the UK and only return infrequently (see UK statutory residence test rules) http://www.hmrc.gov.uk/international/personal.htm then you will most likely be both resident for immigration purposes and also fiscally resident.

The following is a new arrival check list – this is VERY simplified basic aid and you should check on your own individual circumstances.

• Purchase or rental of permanent home in Spain – in order to do this you will need an NIE number, initially you obtain this on a NON Residents A4 white certificate (see NIE info) you will most likely also have a non residents bank account in Spain at this stage.
• Register on the local authority (Ayuntamiento) census list “Padron”.
• Obtain your green Residencia certificate, Uk Nationals will have a TIE complying with health care and income regulations.
• Advise the Spanish Tax office that you will be liable to pay income tax in Spain (modelo 30) – The Spanish tax year is from January to December, so you may not necessarily do this in the first year you arrive:

eg Mr Smith arrives in Tenerife and purchases a property on the 1st November, as he intends to stay for longer than 90 days he applies for a residencia certificate but as there are only 61 days left in the tax year of his arrival, he does not advise the Spanish Tax office of his obligation until the 2nd Jan of the next year.

• Advise all pension and income providers including the UK tax authorities of your new fiscal status and address.
• Advise your Spanish bank and obtain a Residents Bank Account.
• You may well still be paying tax in the UK at this point until you can provide them with a certificate of fiscal residence in Spain which is obtained from the Spanish Tax office once you have completed your first tax return in Spain.
• If you are employed or self employed you will be making Spanish tax contributions and can obtain your certificate of fiscal residence in Spain straight away.
• If your income is derived from Pensions or private means you will have to make a “Declaración de la Renta” – a Spanish individual’s tax return before the Spanish authorities will confirm you fiscal status. This is done between the end of April and the end of June of the year following the tax year in question.

Eg: In our example above let’s say Mr Smith arrived in November 2019, his first full tax year in Spain is Jan to Dec 2020 his first Declaración de la Renta will be in 2021.

• Once you have your certificate of fiscal residence in Spain you can use form “Spain individual” together with a copy of your Spanish Fiscal Residents certificate to reclaim tax paid to the UK under the double impositions agreement. You should also forward a copy of the certificate to your UK Bank or banks to confirm your fiscal status with them.
• Exceptions to this are some “functionary’s pensions (teachers, civil servants etc.)-( this part of your income is taxed in the country of origin although the amount received contributes to calculating your taxable base) and income from rents of property located in the UK – you can apply for inclusion in the Non Resident Landlords (NRL) Scheme – http://www.hmrc.gov.uk/international/nr-landlords.htm
• In simplified terms from the moment you are classified as fiscally resident in Spain your world wide income is taxable in Spain.

New UK/Spain Double Taxation Agreement from 2015

A new version of the double tax agreement between Spain and the UK came into full force on 1 January 2015.

One of the changes closes the loophole whereby persons resident in Spain and receiving a UK government pension may obtain the benefit of personal allowances in both countries.

Spanish tax returns from 2015 will account for UK government pensions (Crown pensions) as using up the Spanish personal tax-free band. The pension income itself will continue to be taxed only in the UK, but other income such as a UK state pension may now be pushed into a higher tax rate band.

If you’re already living or planning on moving abroad, it’s essential to get specialist tax advice so that you pay the right tax we can recommend qualified tax assessors and if necessary interpret for you.