Double taxation treaty question
Jan 3rd 2012, 10:37 am
#1
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Joined: Aug 2011
Posts: 47
Double taxation treaty question
Ok so I was quoted 240EUR / hour to get some professional advice and I'm a tad reluctant after reading section 3) a. of the Australia-Spain double taxation treaty. http://untreaty.un.org/unts/120001_1...3/00008709.pdf
To summarize my situation: I intend to live for a couple of years in Spain (i.e. more than 183 days per year), but will remain tax resident in Australia because a) I intend to return, b) my permanent home is there, and c) a majority of my economic and personal interests remain in Australia.
This section seems to suggest that, because I could be considered tax resident in both countries, my residency remains in Australia.
Which, from a paperwork perspective, would be really, really helpful.
Your thoughts?
(3) Where by reason of the preceding provisions of this
Article an individual is a resident of both Contracting
States, then the status of the person shall be determined
in accordance with the following rules:
(a) the person shall be deemed to be a resident
solely of the Contracting State in which a
permanent home is available to the person;
(b) if a permanent home is available to the person
in both Contracting States, or if in neither of
them, the person shall be deemed to be a
resident solely of the Contracting State with
which the person's economic and personal
relations are the closer
Article an individual is a resident of both Contracting
States, then the status of the person shall be determined
in accordance with the following rules:
(a) the person shall be deemed to be a resident
solely of the Contracting State in which a
permanent home is available to the person;
(b) if a permanent home is available to the person
in both Contracting States, or if in neither of
them, the person shall be deemed to be a
resident solely of the Contracting State with
which the person's economic and personal
relations are the closer
This section seems to suggest that, because I could be considered tax resident in both countries, my residency remains in Australia.
Which, from a paperwork perspective, would be really, really helpful.
Your thoughts?
Last edited by Fred James; Jan 3rd 2012 at 11:45 am. Reason: Corrected link
Jan 3rd 2012, 11:44 am
#2
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: Double taxation treaty question
It depends on what the basic Australian residency rules are. If theirs is 183 days like Spain then you would be considered tax resident in Spain as you would not meet the 183 day rule in Australia and therefore no longer be tax resident.
The document you linked to does not define what normally constitutes Australian tax residency so it may be that you retain your tax residency in which case you would not have to pay tax in Spain under the "tie-break" rules that you quoted.
The other consideration is your source of income. If it is generated in Spain then tax would be due in Spain irrespective of residency.
Have you tried asking in the Australia forum - the same rules may apply to other countries as well?
The document you linked to does not define what normally constitutes Australian tax residency so it may be that you retain your tax residency in which case you would not have to pay tax in Spain under the "tie-break" rules that you quoted.
The other consideration is your source of income. If it is generated in Spain then tax would be due in Spain irrespective of residency.
Have you tried asking in the Australia forum - the same rules may apply to other countries as well?
Jan 3rd 2012, 8:54 pm
#3
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Posts: 47
Re: Double taxation treaty question
Hi Fred,
Yes the Australian tax laws would, without doubt, still consider me to be resident.
There would be no Spanish-source income. I'm not planning on working; it would really be more of an extended travel adventure.
Yes the Australian tax laws would, without doubt, still consider me to be resident.
There would be no Spanish-source income. I'm not planning on working; it would really be more of an extended travel adventure.
Jan 3rd 2012, 9:32 pm
#4
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: Double taxation treaty question
In which case you should be OK if you don't submit a tax declaration.
Jan 3rd 2012, 9:37 pm
#5
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Joined: Aug 2011
Posts: 47
Re: Double taxation treaty question
Actually that was my next question - I assumed I would still need to file some sort of "non-resident" tax declaration? Surely if you file nothing they don't just assume that you fall into this "tie-breaker" category? Which must be fairly uncommon.
Jan 3rd 2012, 9:46 pm
#6
Joined: Jun 2006
Location: Granada Costa
Posts: 10,902
Re: Double taxation treaty question
You only have to file a NR tax return if you own property in Spain.
