# Living as non-resident for over 183 days



## nanita (May 27, 2013)

Hi

I would like to hear from people who are in this situation. We are buying a property and will do so through our own UK company and remain as non-residents as accountants both in Mallorca and the UK have advised us that this will be the best tax situation for us. This way we will protect our monthly income from taxation and when we come to sell, we will be subject to UK CGT rather than Spanish taxes.

Our main business is in the UK, we will keep our residence in the UK but it is very likely that we will spend more than 183 days in Spain. According to our Spanish accountant the rules are as follows:

CONVENIO Y DOBLE RESIDENCIA

En los convenios para evitar la doble imposición suscritos por España, para definir a una persona como residente de un Estado, se hace remisión a la legislación interna de cada Estado. Teniendo en cuenta que cada Estado puede establecer criterios distintos, dos Estados pueden coincidir en considerar a una persona residente.

En estos casos, los convenios establecen, con carácter general, los siguientes criterios para evitar que una persona sea considerada residente en los dos Estados:

1) Será residente del Estado donde tenga una vivienda permanente a su disposición.

2) Si tuviera una vivienda permanente a su disposición en ambos Estados, se considerará residente del Estado con el que mantenga relaciones personales y económicas más estrechas (centro de intereses vitales).

3) Si así no pudiera determinarse, se considerará residente del Estado donde viva habitualmente.

4) Si viviera habitualmente en ambos Estados o no lo hiciera en ninguno de ellos, se considerará residente del Estado del que sea nacional.

5) Si, por último, fuera nacional de ambos Estados, o de ninguno, las autoridades competentes resolverán el caso de común acuerdo.

ACREDITACIÓN DE LA RESIDENCIA FISCAL

La residencia fiscal se acredita mediante certificado expedido por la Autoridad Fiscal competente del país de que se trate. El plazo de validez de dichos certificados se extiende a un año.

Una persona puede tener permiso de residencia o residencia administrativa en un Estado y no ser considerada residente fiscal en el mismo.

According to this, we should be on the clear, but having got a glimpse of the horrendous drive for taxation in Spain, I wonder if anyone has been in this situation and if they have experienced problems or issues and how they have dealt with them.

Thanks for your help!


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## xabiaxica (Jun 23, 2009)

nanita said:


> Hi
> 
> I would like to hear from people who are in this situation. We are buying a property and will do so through our own UK company and remain as non-residents as accountants both in Mallorca and the UK have advised us that this will be the best tax situation for us. This way we will protect our monthly income from taxation and when we come to sell, we will be subject to UK CGT rather than Spanish taxes.
> 
> ...


the dual tax agreement simply means that you don't pay tax again on something, if you have already done so in a country which has this agreement with Spain

it doesn't mean that if you're in Spain over the specified time in a calendar year, that you don't have to submit tax returns - Spain would certainly consider you to be tax resident in that situation


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## nanita (May 27, 2013)

Hi

Thanks for the quick reply!

I know I have to submit a tax return in the UK & Spain but I will pay taxes in the UK. But if I was a resident, Spain would tax me on top of what the UK would. This is due to the allowances. Between my hubby and I, we will get approx £17K untaxed. As Spain does not give allowances, this amount would be taxed if we were residents which would seriously bite into our income. Thus the need to remain as non-residents.

In a reply you posted to another question you said that the number of days is really irrelevant if there are other factors which I imagine are the ones listed as points 2, 3 & 4.

So I do not understand why I would be considered a resident. Can you explain a bit more?

Thanks


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## xabiaxica (Jun 23, 2009)

nanita said:


> Hi
> 
> Thanks for the quick reply!
> 
> ...



I'm not a tax expert, but yes, you're right that the number of days isn't the only factor

you would need a tax expert in Spain to sort this out for you, but I suspect that if you are spending more time here than in the UK, & you own property in Spain, you'll have a hard time convincing Spain that Spain isn't your centre of fiscal interests


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## CapnBilly (Jun 7, 2011)

I would suggest you need to read the UK Statutory Residence Test which you can find here .http://www.hmrc.gov.uk/international/rdr3.pdf. It seems to me based on the little information you have provided that you will be resident in Spain, whether you want to be or not. If you spend more than 183 days here they will definitely consider you resident. 

However, depending upon the number of days you spend in the UK you may be resident in the UK under the SRT, in which case the DTA will determine where you are resident for tax purposes, and whether your income is taxable in both countries. Note, I would read the new draft DTA which you can find here 
 http://www.hmrc.gov.uk/taxtreaties/signed/spain-uk-protocol.pdf  rather than the old one, as even though its not currently in force, it probably will be some time soon.


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## Stravinsky (Aug 12, 2007)

nanita said:


> Hi
> 
> Thanks for the quick reply!
> 
> ...


Spain DOES give allowances.

As far as I am aware, you cant choose to be a non resident. If you live here over the specified periods then you are a resident here, and you are required to file a tax return. As a resident you will required by Spanish law to declare your worldwide assets. That includes bank accounts, investments and property.

The tax double treaty will mean that you pay tax at the difference between the UK and the Spanish rate of tax, not that you have to pay the full amount twice


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## crookesey (May 22, 2008)

Buying a property through a UK Ltd Co is a good idea for a holiday home as you can leave the shares in the company to your heirs, any tax charge would/might only occur when the property is sold.

You will have to submit audited accounts every six months, this will cost circa £1000 p/a, however you can pay rental income into the company account and offset legitimate expenses against them, you will also be allowed to charge a couple of flights and a limited amount of car hire against tax.


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