# Tax residency



## Goldeneye (Nov 12, 2011)

xabiachica said:


> in Spain you pay tax on _all your income, worldwide. _This is even if the earnings are 'tax free' where you earn them


That may just nix Spain for us then.......... As ~ 
One of my concerns was one of my private insurance Long Term Disability 'income' and if it would be subject to tax in Spain (In Canada it is not taxable)
*To clarify…*
Being self employed in Canada I set up a private professional insurance long term disability policy for my hubby ~
It was a professional policy that would provide an income in the event that he was no longer able to carry out the duties of his profession. 

The accountant advised me that if I allowed my company _(employer)_ to pay the premiums on this plan with what is deemed* ‘before tax dollars’ *then if a claim was made the payments to him would become taxable…

If the premiums were paid with* ‘after tax dollars’* in other words out of my (after tax) salary, If I then had cause to file a claim, in Canada these private disability payments _(income)_ are then 'non taxable' 
He had to give up my business on Doctors orders and as he paid into this plan with ‘after tax dollars’ the benefits he receive from the insurance company are not subject to any income tax. In other words he receives the full amount. 

My question wass, if we move and become tax residents in Spain would this be classed as 'income' or still be viewed as non taxable income? 
xabiachica you seem to be suggesting that they would be subject to tax..  :confused2: :Cry:
..
..


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## Goldeneye (Nov 12, 2011)

xabiachica said:


> in Spain you pay tax on _all your income, worldwide. _This is even if the earnings are 'tax free' where you earn them


Reading your quote again, I'm hoping there is a difference between 'income' and 'earnings' ....As in my case it's not 'earnings' :fingerscrossed:


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## thrax (Nov 13, 2008)

Goldeneye said:


> Reading your quote again, I'm hoping there is a difference between 'income' and 'earnings' ....As in my case it's not 'earnings' :fingerscrossed:


You need to get advice from a professional. Spain is desperate for money so laws are being changed regularly to find ways of raising more taxes. It is, of course, a very complex area and it won't be a straightforward answer.


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## xabiaxica (Jun 23, 2009)

Goldeneye said:


> Reading your quote again, I'm hoping there is a difference between 'income' and 'earnings' ....As in my case it's not 'earnings' :fingerscrossed:


income - you pay tax on your worldwide income....


although as far as the OP was concerned I was referring to her OH's earnings from his job, any other income would also be taxable


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## xabiaxica (Jun 23, 2009)

Goldeneye said:


> That may just nix Spain for us then.......... As ~
> One of my concerns was one of my private insurance Long Term Disability 'income' and if it would be subject to tax in Spain (In Canada it is not taxable)
> *To clarify…*
> Being self employed in Canada I set up a private professional insurance long term disability policy for my hubby ~
> ...


it depends if there are the same tax allowances in Spain as in Canada - if the income from this kind of policy is taxable in Spain, then yes, you would have to pay tax on it

but I have no idea if that is the case - as thrax suggested you would really need professional advice in your case


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## spanish55 (Apr 17, 2014)

If he is working away for 2 weeks in every 4, he does not need to be resident in spain as long as the total days in spain do not exceed 186. This doesnot include the day he travels out but does include the days he travels into spain. It would be cheaper to remain a resident of the UK


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## xabiaxica (Jun 23, 2009)

spanish55 said:


> If he is working away for 2 weeks in every 4, he does not need to be resident in spain as long as the total days in spain do not exceed 186. This doesnot include the day he travels out but does include the days he travels into spain. It would be cheaper to remain a resident of the UK


183 days.


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## snikpoh (Nov 19, 2007)

xabiachica said:


> 183 days.


Actually, to be pedantic, "Do not exceed *182*". As in "183 or more days in Spain ..."


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## spanish55 (Apr 17, 2014)

snikpoh said:


> Actually, to be pedantic, "Do not exceed *182*". As in "183 or more days in Spain ..."


Yes, looked wrong after I did it. i was thinking six months when I wrote it, and wasnt concentrating!


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## Campbell Clan (Sep 8, 2013)

spanish55 said:


> If he is working away for 2 weeks in every 4, he does not need to be resident in spain as long as the total days in spain do not exceed 186. This doesnot include the day he travels out but does include the days he travels into spain. It would be cheaper to remain a resident of the UK


Actually if his missus & any dependents are living in Spain full time i,e: more than 182 days then he will be classed as a Tax resident regardless on how many days he spends in the country.


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## spanish55 (Apr 17, 2014)

Campbell Clan said:


> Actually if his missus & any dependents are living in Spain full time i,e: more than 182 days then he will be classed as a Tax resident regardless on how many days he spends in the country.


Really? Never heard that before, but have been out of spain for some years. I just checked and it is true.
However, she does say partner in the first post, so may not be married.


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## xabiaxica (Jun 23, 2009)

spanish55 said:


> Really? Never heard that before, but have been out of spain for some years. I just checked and it is true.
> However, she does say partner in the first post, so may not be married.



yes, that _might _change things

she will have to show means of support though, to register as resident 

I recently heard of a case where the extranjería wanted a letter from the husband/partner to say that he would financially support the family before they would allow the woman & her children to register!!


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## angil (Sep 24, 2012)

With regards tax on worldwide income I would strongly advise any of you to seek out a Spanish accountant with a decent command of English (& some experience in this matter) & speak to him directly.
Along with everything else in this country (our experience / opinion!) nothing is what it seems, and certainly not as clear cut as the multitude of tax advice websites would have you believe.
Best of luck!


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## Goldeneye (Nov 12, 2011)

Beckham Law..

From what I understand there is a law that offers a tax break for foreign workers who can benefit from a law which has been dubbed the Beckham Law. It was nicknamed after Beckham the former Real Madrid star because he was able to take advantage of the new law when he transferred from Manchester United to theSpanish footballing giant.
The law – designed to attract foreign workers – stipulated that a new resident could elect to become a non-resident for tax purposes for the first five years, saving themselves around 25pc in tax. Not a bad perk – and although it was aimed at multi-millionaires such as Beckham it applies across the board so workers moving to Spain can take advantage of the tax loophole. I believe it lasts 5 years..

Of course things get changed in Spain all the time.. So worth looking into as I haven't a clue if it still exists...
.
.
.


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## norman port (Feb 20, 2014)

Touche !!


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## Campbell Clan (Sep 8, 2013)

Goldeneye said:


> Beckham Law..
> 
> From what I understand there is a law that offers a tax break for foreign workers who can benefit from a law which has been dubbed the Beckham Law. It was nicknamed after Beckham the former Real Madrid star because he was able to take advantage of the new law when he transferred from Manchester United to theSpanish footballing giant.
> The law – designed to attract foreign workers – stipulated that a new resident could elect to become a non-resident for tax purposes for the first five years, saving themselves around 25pc in tax. Not a bad perk – and although it was aimed at multi-millionaires such as Beckham it applies across the board so workers moving to Spain can take advantage of the tax loophole. I believe it lasts 5 years..
> ...


Your Absolutely correct however the law has now been capped at a measly €600,000 annual earnings  and you can only meet the criteria if your work is physically carried out in Spain. So if like me, you will be a spanish resident but work in the offshore industry you can not take advantage of this loop hole which totally Sucks!


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## angil (Sep 24, 2012)

Goldeneye said:


> Beckham Law..
> 
> From what I understand there is a law that offers a tax break for foreign workers who can benefit from a law which has been dubbed the Beckham Law. It was nicknamed after Beckham the former Real Madrid star because he was able to take advantage of the new law when he transferred from Manchester United to theSpanish footballing giant.
> The law – designed to attract foreign workers – stipulated that a new resident could elect to become a non-resident for tax purposes for the first five years, saving themselves around 25pc in tax. Not a bad perk – and although it was aimed at multi-millionaires such as Beckham it applies across the board so workers moving to Spain can take advantage of the tax loophole. I believe it lasts 5 years..
> ...


I can't be bothered to read the ins and outs of that one again but I think its to do with a foreign national working for a Spanish company. Why would there be a law designed to attract foreign workers to a country with no work for their own!?

I know 'Beckhams Law' doesn't apply to us. Hubby was working rotation 28 / 28 Offshore Angola.

This will change very soon as will his tax status.

A Spanish accountant with very up to date info is required.


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## angil (Sep 24, 2012)

Campbell Clan said:


> Your Absolutely correct however the law has now been capped at a measly €600,000 annual earnings  and you can only meet the criteria if your work is physically carried out in Spain. So if like me, you will be a spanish resident but work in the offshore industry you can not take advantage of this loop hole which totally Sucks!


There is a rule where as you can earn €60,000 tax free worldwide IF the country you are working in has a taxation agreement with Spain, it is not a tax haven & you can prove you were paying tax in the country of employment.

Get an accountant, I am just regurgitating what I have read online (but the above was confirm by our accountant). You need to see someone on the ground here who knows what they are talking about.


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## xabiaxica (Jun 23, 2009)

angil said:


> There is a rule where as you can earn €60,000 tax free worldwide IF the country you are working in has a taxation agreement with Spain, it is not a tax haven & you can prove you were paying tax in the country of employment.
> 
> Get an accountant, I am just regurgitating what I have read online (but the above was confirm by our accountant). You need to see someone on the ground here who knows what they are talking about.


OK - just so I have this clear


are you saying that if you are paying income tax in country with a reciprocal agreement, you don't have to pay income tax in Spain? (which gels with what I've been told)

or that you don't even have to submit a tax return? (which doesn't gel with anything I've been told ) 

however, if you are working in a country where no income tax is paid & you are otherwise tax resident in Spain, then you would be liable to pay income tax here (which also gels with what I've been told previously)


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## angil (Sep 24, 2012)

xabiachica said:


> OK - just so I have this clear
> 
> 
> are you saying that if you are paying income tax in country with a reciprocal agreement, you don't have to pay income tax in Spain? (which gels with what I've been told)
> ...


My husband is liable to pay tax in Spain on income that has ALREADY been taxed elsewhere because; 
1) His only habitual residence is in Spain 
2) we all have spent more than 183 days in Spain tax yr 2013 
3) the country in which he has been paying local tax ie. Angola does not have a tax agreement with Spain.

So in answer to you question even if you have been paying tax elsewhere and you meet the above criteria you will also be taxed in Spain.

It is complicated. 

See an accountant.


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## angil (Sep 24, 2012)

I hope you can understand my reply! Its in red!!!


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## xabiaxica (Jun 23, 2009)

angil said:


> I hope you can understand my reply! Its in red!!!


yes I do - thanks!


it seems that in your case, because he works in a country with no reciprocal agreement with Spain, that he will still end up paying tax here? And also because he has no other 'habitual residence'

sounds expensive - paying income tax twice!

it's the 'habitual residence' bit which interests me - because I've always been told (by more than one source which I've considered to be reliable) that Spain will expect a tax return from anyone who supports a family here - & that as far as Spain is concerned, over-rides any 'habitual residence' test

which doesn't necessarily mean that any tax will actually have to be paid to Spain, of course, and whenever I've posted on the matter, I've always added that caveat


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## angil (Sep 24, 2012)

xabiachica said:


> yes I do - thanks!
> 
> 
> it seems that in your case, because he works in a country with no reciprocal agreement with Spain, that he will still end up paying tax here? And also because he has no other 'habitual residence'
> ...


Yep! This whole Spanish 'adventure' is turning out to be an expensive (stressful & actually rather unpleasant) one!

Anyhoo! The habitual residence thing has got to be confirmed yet with our accountant. That is with regards tax year 2014 as far as we are concerned.

Habitual residence 'test' a side. If the monies being 'sent' to Spain to support a family are from somewhere with a tax agreement with Spain then that should satisfy the Spanish tax man? As that money would have already been taxed at source. Should a tax return be submitted by the wife? Not a clue!!

Hubby will be back to see his Spanish accountant one last time end of May before he leaves these 'sunny' shores for good. So will get more definitive answers then.


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## xabiaxica (Jun 23, 2009)

angil said:


> Yep! This whole Spanish 'adventure' is turning out to be an expensive (stressful & actually rather unpleasant) one!
> 
> Anyhoo! The habitual residence thing has got to be confirmed yet with our accountant. That is with regards tax year 2014 as far as we are concerned.
> 
> ...



I think this is where 'they' get you, regardless

the wife is absolutely & no question a tax resident & has to submit a tax return at least once - even if it's a zero return

it's then possible, if there is no income from within Spain, to get a certificate of tax residency (it's called something like that, anyway) & not submit a return again - although most would recommend that you continue to do so


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## angil (Sep 24, 2012)

xabiachica said:


> I think this is where 'they' get you, regardless
> 
> the wife is absolutely & no question a tax resident & has to submit a tax return at least once - even if it's a zero return
> 
> it's then possible, if there is no income from within Spain, to get a certificate of tax residency (it's called something like that, anyway) & not submit a return again - although most would recommend that you continue to do so


I'll leave the tax 'doings' to hubby & his accountant to sort out! We aren't trying to duck out of paying tax! So 'them' getting us is not the issue! It makes it sound like we are looking for ways to evade! NO! Just not get bloomin hammered in a country where flying under the radar / working in the black (is that the correct expression?!) is the absolute norm.

I am here for one more year until my daughter gets her A levels.


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## extranjero (Nov 16, 2012)

Campbell Clan said:


> Your Absolutely correct however the law has now been capped at a measly €600,000 annual earnings  and you can only meet the criteria if your work is physically carried out in Spain. So if like me, you will be a spanish resident but work in the offshore industry you can not take advantage of this loop hole which totally Sucks!


Some would like as much as a tenth of that "measly income of 600,000 euros!


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## Campbell Clan (Sep 8, 2013)

extranjero said:


> Some would like as much as a tenth of that "measly income of 600,000 euros!


Yeah like me!


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