Go Back  British Expats > Living & Moving Abroad > Europe > Spain
Reload this Page >

Difference between statutory residency and fiscal residency

Difference between statutory residency and fiscal residency

Old Nov 3rd 2021, 9:57 pm
  #16  
MODERATOR
 
Fred James's Avatar
 
Joined: Jun 2006
Location: Granada Costa
Posts: 10,664
Fred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

So, you either accept tax residency by staying for over 6 months, or you leave for more than 6 months and lose your residency.

Seems simple to me.
Fred James is offline  
Old Nov 4th 2021, 6:59 am
  #17  
BE Enthusiast
 
Joined: Jan 2020
Posts: 660
Chipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond reputeChipmonk has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

I am aware of people saying that they have TIE, generate their incomes in UK and pay tax there. I have read on forums about someone claiming they have spoken to HMRC and Hacienda and both told him that tax should be paid in UK- however I simply dont believe this is true ( or rather it all comes down to how much you hide). First- if you let HMRC think you live permanently in UK of course they will say you are taxed there- if you use a UK address and UK bank and say your wife and family live there, you are trying to say that is your primary residence. Similarly if you just begin by telling hacienda you spend less than 183 day in Spain and your family live in UK - they think that is your main residence. If you are honest you say have registered for a TIE Spain will immediately require you to make Spanish declarations.
You cant use a TIE as a way of getting around the 90 day rule- which some believe is what they are doing. Once you have registered you are effectively a full tax resident in Spain not UK and you cant escape that by claiming you dont intend to live in Spain for more than 183 days


Last edited by Chipmonk; Nov 4th 2021 at 7:03 am.
Chipmonk is offline  
Old Nov 4th 2021, 8:31 am
  #18  
Retired and loving it!
 
snikpoh's Avatar
 
Joined: Sep 2007
Location: Ontinyent - Valencia region (campo)
Posts: 4,985
snikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond reputesnikpoh has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by agree_to_disagree View Post


If you have a property no but if you have UK based investments like shares like I do, the 720 is a utter pain in the a55!

I don't understand this comment - I too have 'savings' in bonds but don't have any problem with the 720 declaration. I did it once and that was it. As it is a bond, even if I change the underlying shares, there is no need to do a new 720. Also, they aren't increasing so fast that I need to do another 720 either.

Can you please explain why, for you, it's such a pain
snikpoh is offline  
Old Nov 4th 2021, 9:01 am
  #19  
Forum Regular
 
Joined: Nov 2013
Posts: 260
bolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by Fred James View Post
So, you either accept tax residency by staying for over 6 months, or you leave for more than 6 months and lose your residency.

Seems simple to me.
That's exactly how I see it.

I can understand what the O/P is trying/hoping to do but you cannot retain your residency if you leave Spain for longer than 6 months (applies to WA and NLV). If you wish to avoid problems in about 4/5 years, when the hacienda get around to querying your tax status, you might be better signing off the padron and start collecting proof that you spend less than a total of 6 months in Spain (passport stamps, bank account usage etc). This means that you may have problems renewing your TIE card as, I suspect, that you will have to sign a declaration that you've complied with the rules during your temporary residency on renewal, one of which is fiscal residency.

On the upside, it looks like Spain is looking at the possibilities of extending non resident stays, so this may be what you're looking for in the longer term.
https://www.schengenvisainfo.com/new...r-uk-citizens/

bolton wanderer is offline  
Old Nov 4th 2021, 9:10 am
  #20  
BE Forum Addict
 
Joined: Feb 2008
Posts: 4,988
bobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by snikpoh View Post
I don't understand this comment - I too have 'savings' in bonds but don't have any problem with the 720 declaration. I did it once and that was it. As it is a bond, even if I change the underlying shares, there is no need to do a new 720. Also, they aren't increasing so fast that I need to do another 720 either.

Can you please explain why, for you, it's such a pain
My comment was to do with 720 and people with UK properties savings etc. Dealing in shares I don't do however I would guess with dealing in shares rather than investing in savings bonds that are stock market related. If you deal in shares direct then you buy and sell stock, once declared whenever you sell that would need declaring I guess. Not something I do. I can see though that would be a pain and need regular 720 declaration. For most people though it's a 720 declaration and only re submitted if investment increases by 20,000 euros , account closed or property sold etc.
bobd22 is offline  
Old Nov 4th 2021, 9:11 am
  #21  
Forum Regular
 
Joined: Nov 2013
Posts: 260
bolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by Tockers1 View Post
Hi everyone,
my partner and I are British residents in Spain and we both have TIE cards. We know this means we can stay in Spain until our card runs out in 2025, but we plan to spend 6 months each year in U.K. and 6 months in Spain.
Our question is this; having arrived in Spain from the U.K. on 11 Aug 2021, can we stay in Spain in our villa until end of March 2022 without tax implications other than the annual tax we pay for owning a home here? We can’t return to Spain again until October 2022.
From the dates given you must have applied for your card in 2020 (5 years temp card) so I assume that it's under the WA. When did you leave Spain?
It's possible that you've already revoked your residency by staying out of the country for longer than 6 months. If not then you need to register for tax in Spain for this year. Are you still on the padron?

bolton wanderer is offline  
Old Nov 4th 2021, 9:23 am
  #22  
Banned
 
Joined: Mar 2021
Posts: 538
agree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by snikpoh View Post
I don't understand this comment - I too have 'savings' in bonds but don't have any problem with the 720 declaration. I did it once and that was it. As it is a bond, even if I change the underlying shares, there is no need to do a new 720. Also, they aren't increasing so fast that I need to do another 720 either.

Can you please explain why, for you, it's such a pain
Sure, I have a large portfolio of shares. I buy them and sell them and from time to time companies split into two to form two entities. In one case this year one company got rid of a portion of the company that hadn't good green credential. Maybe it was like a 10 to 1 split. Any change like this triggers the need to do a 720. Plus the portfolio value swings all over the place.

I do not hold bonds so have no understanding of what the reporting requirements are in terms of a 720.

As long as you have sought professional advise about your obligations are in terms of reporting and not being guided by hearsay on forums or what some geezer tells you down the boozer, you should be fine.
agree_to_disagree is offline  
Old Nov 4th 2021, 9:27 am
  #23  
BE Forum Addict
 
Joined: Feb 2008
Posts: 4,988
bobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by stevesainty View Post
As the TIE´s were gained this year and not under the terms of the Withdrawal Agreement, you may only be absent from Spain for six months in any one year, but only a maximum of 10 months, in total, in the firsr 5 years until the residency becomes permanent.
I don't think the WA makes any difference to the time limits of temporary or permanent residency? I had green card residency for 2 1/2 years and intended staying with green card until 5 year point before exchanging to TIE so I would then get permanent. However after the confusion last January over green cards not being accepted etc I exchanged to TIE. The TIE I got is marked as under WA but is 5 year Temp residency from date of issue of that card. So I can only leave Spain for 6 months before losing residency rights and WA protection
bobd22 is offline  
Old Nov 4th 2021, 10:08 am
  #24  
BE Forum Addict
 
Joined: Feb 2008
Posts: 4,988
bobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond reputebobd22 has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by Fred James View Post
So, you either accept tax residency by staying for over 6 months, or you leave for more than 6 months and lose your residency.

Seems simple to me.
Totally agree. However the OP is also trying to use the TIE as a way of beating the Schengen 90 day in 180 rule. So apart from the tax residency implication there is also 90 day rule to consider. The Consulate recently posted re bogus information being submitted to obtain TIE surely saying you intend being permanent resident when you don't falls into this category ? I can see this ploy opening a real can of worms so to speak. The link posted by Bolton Wanderer is interesting. It would be good for British holiday home owners in Spain for sure and I can see why the Mayors of many Spanish regions would go for that. My question is if that is granted to Spain what do Italian, Greek ,Cypriot etc authorities then do ? I can't see them allowing Spain to apply one set of Schengen rules apply while they lose holiday home trade? If the EU make the UK a special case then sure that drives a coach and horses through Schengen regulations. I'm sure brexiteers would see and quote that as a brexit bonus that "they" achieved.
bobd22 is offline  
Old Nov 4th 2021, 10:15 am
  #25  
Banned
 
Joined: Mar 2021
Posts: 538
agree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by bobd22 View Post
I'm sure brexiteers would see and quote that as a brexit bonus that "they" achieved.
'Brexit bonus' is an oxymoron!



Last edited by Rosemary; Nov 4th 2021 at 11:10 am.
agree_to_disagree is offline  
Old Nov 4th 2021, 10:47 am
  #26  
Forum Regular
 
Joined: Nov 2013
Posts: 260
bolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond reputebolton wanderer has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by bobd22 View Post
.............................. My question is if that is granted to Spain what do Italian, Greek ,Cypriot etc authorities then do ? I can't see them allowing Spain to apply one set of Schengen rules apply while they lose holiday home trade? If the EU make the UK a special case then sure that drives a coach and horses through Schengen regulations. I'm sure brexiteers would see and quote that as a brexit bonus that "they" achieved.
Spain is allowed to introduce an independent national visa within the EU rules. However, the visa would only be for use in Spain. I think that France has a similar visa and there are also "Golden Visas" available in a number of EU countries, within the Schengen area, that don't seem to break any Schengen rules.


bolton wanderer is offline  
Old Nov 4th 2021, 10:52 am
  #27  
MODERATOR
 
Fred James's Avatar
 
Joined: Jun 2006
Location: Granada Costa
Posts: 10,664
Fred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

Originally Posted by bolton wanderer View Post
On the upside, it looks like Spain is looking at the possibilities of extending non resident stays, so this may be what you're looking for in the longer term.
https://www.schengenvisainfo.com/new...r-uk-citizens/
I don't see how the UK Ambassador can change the Schengen rules just because some relatively unimportand provincial civil servant wants them to! There are 26 signatory countries to the agreeemnt and they would all have to agree to the changes.
Fred James is offline  
Old Nov 4th 2021, 11:05 am
  #28  
Banned
 
Joined: Mar 2021
Posts: 538
agree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond reputeagree_to_disagree has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

I think what this thread really highlights is how much Brexit has made life much more difficult for expats already in Spain or those planning to move here.
The bit that wrecks my head is that there are expats living in Spain who actually voted for Brexit!

Talk about turkeys voting for XMAS...

Last edited by Rosemary; Nov 4th 2021 at 11:09 am.
agree_to_disagree is offline  
Old Nov 4th 2021, 11:22 am
  #29  
Forum Regular
 
Joined: Feb 2019
Posts: 45
offthepiste is an unknown quantity at this point
Default Re: Difference between statutory residency and fiscal residency

You can be dual tax resident, i.e. in UK and Spain, at the same time.

It is quite hard not to be a UK tax resident as this is not just down to a number of days spent in the UK. The UK tax residency is based upon a "number of ties", e.g. you have a home in the UK you "can use", how many days were you in the UK in prior tax tear etc. etc.

Whilst, for Spain its either you have spent 183 days and or that you have a place that is your primary residency.

So you may be liable for tax in both jurisdictions. However, the Double Tax Treaty means you do not pay tax twice.

Therefore, if you are liable for the same type of tax in both countries, e.g. income tax, then both countries tax authorities will ultimately agree how things balance up so you in the end do not pay twice, you will get some money back (days .. weeks , yeas ..eons later).

However, different countries tax different things. So if you have investments say in a UK ISA then probably Spain will not view these as tax free as its not their wrapper and as the UK does not tax you for any ISA dividends or capital gains, then Spain will.

I hate to say it, but these tax difficulties have nothing to do with the little englander brexit and were around pre bozo day.... so should not come as a surprise.

Last edited by offthepiste; Nov 4th 2021 at 11:24 am.
offthepiste is offline  
Old Nov 4th 2021, 11:48 am
  #30  
MODERATOR
 
Fred James's Avatar
 
Joined: Jun 2006
Location: Granada Costa
Posts: 10,664
Fred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond reputeFred James has a reputation beyond repute
Default Re: Difference between statutory residency and fiscal residency

You can "qualify" for tax residency in both UK and Spain as in the UK the trigger point is 90 days (or less). However the tax treaty rules do say which one you are actually tax resident in primarily. The importance of that is that the country you are deemed resident in gets the first bite of the tax cherry. This can be important when you get taxed in both on the same asset/income such as CGT on a house in Spain or UK. If you are primarily tax resident in Spain and you make a gain in the UK, Spain will tax you first and any UK tax will be offset, however the order in which you are taxed can affect the net tax paid.

One point that is often forgotten is that any income arising in the UK is taxed in the UK irrespective of tax residency. Examples are rental income and in theory UK pensions, however there are special rules in the treaty to exempt pensions from UK tax.
Fred James is offline  

Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2021 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.