Keeping non resident status
 

From September my two young children will be going to a Spanish private school. My wife will look after them and she will rent a home in the area (Marbella). I intend to continue work overseas and spend less than 183 days in Spain. I do not want to file a Spanish tax return and wish to remain a non resident till at least 2020 when I retire.

Questions are:

1, Am I 100% safe in non being a resident of Spain for 2018 as my kids won't even be in school till September of this year? Likewise my assumption is the wife is also non resident due to 183 day rule.

2, How can I ensure I am not classed as a Spanish resident for taxes for 2019.? I will be less than 183 days in Spain and clearly my work, home and financés are still overseas but can Spain still have any legitimate claim on taxing me as the wife and kids are in Spain? Are there pro-active steps I can take to ensure I am ok or am I worrying too much about nothing in reality?

Many thanks in advance for any guidance as it seems to be hard to get any definitive answers on residency with kids and I want to plan to avoid getting into a mess over taxes.

Re: Keeping non resident status
 

I think you have to seek competent professional advice in Spain.

Re: Keeping non resident status
 

You seem confused about residency (I think);

There are two 'types' of residency.

1. If you are here for more than a 90 day 'chunk' then you are expected to sign on the list of foreigners and get a green 'residency' card
   
2. If you are here for more than 183 days (in total) in a calendar year, or have your 'centre of vital interests' here, then you are considered a tax/fiscal resident.

Due to 2 above, I think you are considered tax resident straight away as is your wife. You say your home is clearly elsewhere but in the eyes of the law, your home is where your family is.

Re: Keeping non resident status
 

Yes its the "vital interests" that is confusing and whether it trumps the 183 day rule. I can't see it makes any sense that a family can move in say September to Spain and suddenly is classed resident for that year and needs to file all their global income etc. There must be thousands of families who move with their kids for a year or two etc in this position. What if you move December for example.

Anyway I will get a meeting with a Spanish accountant to see if any more light can be shed.

As much as we want to move this year and really like the school if we are in fact faced with being classed as residents from day one we will have to change plans.

Re: Keeping non resident status
 

As I understand it, when your wife becomes tax resident, then you would also, under the "interests" rule.

However your wife would be subject to the 183 day rule so if you moved in July, she would not become tax resident until July the following year, assuming she did not leave Spain before the end of June. If she does become tax resident then irrespective of the date you exceed the 183 days, you become tax resident for the whole of that year.

Re: Keeping non resident status
 

Thanks Fred, yes that makes more sense to me. I am making an appointment right now with an accountant to clarify.

Re: Keeping non resident status
 

I have never been able to get my head around this rule whereby if one part of a married couple is fiscal resident then due to centre of financial interests so does the other even though only visiting for a few weeks per year. Surely if by choice (surely a human right) a married couple choose to retain property in UK and Spain with say one of the couple retired living full time in Spain and other one living in the UK home and working and paying tax in the UK they both have separate centres of financial interest? I say this because with brexit this is a consideration for my wife and me. Wife's pension age has been increased 6 years so she must work on in the UK but I am retired. There is no way she is going to work in the UK but pay her income tax in Spain, while yes I would pay tax on pensions to Spain. She would also pay non resident tax on our Spanish property and obviously council tax etc on our UK property. It just doesn't make sense to me given we pay separate tax not married couples tax of old

Re: Keeping non resident status
 

It's all detailed in the Tax Treaty.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
a) he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a permanent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

b) if the State in which he has his centre of vital interests cannot be determined, or if he does not have a permanent home available to him in either State, he shall be deemed to be a resident only of the State in which he has an habitual abode;

c) if he has an habitual abode in both States or in neither of them, he shall be deemed to be a resident only of the State of which he is a national;

d) if he is a national of both States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement.

Paragraph a) seems the relevant one. You may be tax resident in both states but having your family in Spain would seem to tip the balance in favour of Spain.

Don't forget the basic rule that income arising in the UK is taxable in the UK irrespective of tax residency (some exceptions regarding pension income), but if tax resident in Spain UK tax can be offset against any Spanish tax due on the same income.

Re: Keeping non resident status
 

I get that part in sect a, Fred for the person in Spain. Problem is the other part of the marriage who by choice (we live in a world of choice these days), the other party lives works and pays tax in the UK in my proposed case because of UK government changes i.e. women's pension age and Brexit. Only possible way for me and my wife to hope to get S1 health care rights on me reaching state retirement age is for me to be Spanish resident before March 29 2019 (as it currently stands). Obviously flitting between UK and Spain but keeping Spanish residency rules in mind. My wife will do exactly as she does now spend her allocated leave dates in Spain probably 35/40 days per year. Surely as she works full time in UK jointly with me owns property there banks independently to me there with some shared savings reality is UK are going to claim her centre of economic interest is there mine would be Spain. There is not a hope of her becoming embroiled in the Spanish tax system other than as non resident untill she can afford to finish work and come here full time. I would totally agree with her on that.

Re: Keeping non resident status
 

OK here is an update: After speaking to a lawyer this morning in my case at least I can avoid becoming a Spanish tax residence by keeping my area of "vital interest" out of Spain even with kids and wife living in Spain. This is not cheap and may not be worthwhile to a lot of people depending on income etc. It is also a lot easier to do if your area of vital interest is not considered a tax haven by Spain. Once I get detail on the specifics on demonstrating this I will update but at a minimum it means keeping your home out of Spain with registered utilities and for your own personal use and also keeping your car and finances located out of Spain.

Re: Keeping non resident status
 

Looks like you'll have to divorce and then remarry when she retires! :huh:

Re: Keeping non resident status
 

and when/if Brexit happens then it is likely o open up a totally new can of worms.

Re: Keeping non resident status
 

Or maybe not per what I have been told by an advisor.