Many people seem to think it is best to avoid paying taxes in Spain or becoming tax resident, but it is so important to get it right. People often do not get into the system because they don´t realise that they have to pay tax in Spain and that it can affect them if they don´t even make a nil return. They don´t know how to register and what tax they should pay, as it is very confusing.
However, if someone spends more than 183 days per year in Spain they should register as a tax resident here and declare their worldwide income and assets. They can also become tax resident if the main base of their professional activities is here and unless proved otherwise, they may be presumed Spanish resident if their spouse lives in Spain and they are not legally separated.
Even if someone arrived two or three years ago and did not register for tax or are behind with their returns, it should be done as soon as possible as the authorities are often more sympathetic with people who bring their situation up to date.
It is not all bad. There are benefits to being a tax resident in Spain.
It is not sufficient to have a residencia card or green certificate or the new TIE. Many people are finding that even though they are resident, capital gains tax is being withheld on their sale proceeds, until they can prove it, as they had not made any tax returns.
The common mistake is the assumption that a tax return is not needed because people understand that they are below the tax threshold in Spain and/or their pensions are taxed in the UK or Ireland. Even so, tax returns should be made, as a nil return, in order to demonstrate being a tax resident in Spain. It does not mean that pensions in the home country will be taxed twice.
If you need any assistance with your tax or wish to discuss this please contact us.