Residency For British Citizens in Spain and the 3/6 Month Confusion
From time to time we have clients say to us that on many websites it says after 3 months you must get residency, and on others that after 6 months you are legally resident.
This causes a great deal of confusion to those intending to move to Spain (especially prior to Brexit) and wanting to get their paperwork in order.
The first issue is that if you are are planning to reside in Spain more than 3 months then you should apply to be resident, to have the right to reside in Spain. This link explains more:
You will see in this link above that there were changes to the residency regulations in July 2012 and the Spanish government introduced new residency requirements for all EU citizens, including British nationals.
Under the new rules, EU citizens applying for residency in Spain are required to produce evidence of sufficient financial means to support themselves (and dependants). Applicants may also be asked for proof of private healthcare insurance. We can help you with all the information on how to become a Resident (contact Gema for any doubts on this). Then you have the right to reside in Spain, but that is different to being a tax resident of Spain.
So the FIRST STAGE if you are going to live in Spain: you apply for Spanish residency. Then when you start getting benefits as a Resident.
Do you need to pay taxes in Spain, or not? This is the SECOND STAGE.
The 6 months comes in as if you live less than half a year in Spain you usually do not need to pay taxes in Spain, but if you live more than 183 days a year you do, even if your business is in the UK (with some exceptions).
If you follow your way through this link: https://www.gov.uk/guidance/living-in-spain , go down to TAX, then click on “If you leave the UK to live abroad“, there you will see “You must tell the HMRC if you are leaving the UK to live abroad permanently.”
You don’t need to tell HMRC if you’re leaving the UK for holidays or business trips.
Many clients have queries about how they will be taxed as a Spanish Resident, about the double-taxation treaty between Spain and Britain and about if they can avoid having to pay taxes in Spain. You will find many of the answers in this tax section that you need.
In most cases, they cannot.
If someone is living in Spain, then they are deemed a tax resident and have to pay taxes to that country, just the same as in other countries. Everyone knows someone who lives in Spain but still pays their taxes in the UK. There may be a reason for that, for example, UK rental income is taxed in the UK, but the person is still liable for Spanish taxes on this and may have to declare it, which is where the double taxation treaty comes into play.
Tax is a specialist subject and people should ensure that they know the facts before making major life changes. Now more and more information is being shared between countries and you should make sure you understand your tax residency status (sometimes people may spend less than 183 days or half a year living in Spain but because their family are based in Spain, may still be liable for Spanish taxes).
Is it a Choice?
But the main facts you should remember are:
- It is not a choice where you pay taxes: after 3 months living in Spain you need to apply for the right to reside there.
- If you are going to be living in Spain more than 183 days per year (6 months) then you need to talk to someone about tax residency.