When you are tax resident in Spain
Spanish personal income tax law considers you tax resident in Spain if you meet any of these criteria: staying more than 183 days per year in Spanish territory, having your main economic interests here, or having your non-separated spouse and minor children here, unless proven otherwise.
The 183-day criterion is the best known, but it is not the only one. You can spend 100 days in Spain and still be a tax resident if your economic interests, family, or main activity remain here.
What you need to do to lose residency
The change of residence is demonstrated by facts, not intentions. Hacienda wants to see that your life actually moved: rental contract or purchase in the new country, work or activity there, insurance, children's school, deregistration from the municipal register, and actual relocation of the family.
There are three formal procedures. Submit form 030 to the Tax Agency to notify the change of tax address and record the date of departure. Obtain a tresidence certificate from the new country, which is the documentary proof of the tie. And declare in your personal income tax return the period of the year you were resident, in the correct proportion.
Keep all evidence of the move for several years: if Hacienda challenges the change, you will need to provide it in the proceedings.
Mistakes that keep you tied to Spain
Keeping your family in Spain is the most common mistake: the law presumes residency if your spouse or minor children remain here, and rebutting that presumption is complicated.
Spending long periods in Spain also breaks the change. Below 183 days there is no automatic presumption, but repeated stays, the centre of interests, and economic activity are investigated case by case.
And a detail that is often forgotten: if your Spanish company remains the centre of your economic activity and you manage it from Spain, that tie can sustain residency even if you sleep in another country.
Where to go: how it works in the usual destinations
Portugal requires residing more than 183 days or having your centre of interests there. Its personal income tax, IRS, ranges from 13% to 48%, and dividends are taxed at 28% as a flat rate. The double taxation treaty with Spain prevents you from paying twice on the same income.
Andorra also uses the 183-day criterion, and its personal income tax has a maximum rate of 10%, both for employment income and for dividends and capital gains. It is the destination with the lowest personal taxation in its area.
In Dubai there is no personal income tax: income of individuals is not taxed. To settle there you need a visa, usually the investor visa obtained by setting up a company in a free zone or on the mainland.
Whichever the destination, the change of residence is planned before moving: the date of departure, the time the family moves, and the fate of the Spanish company all affect how the year of change is taxed.
The year of change: how you are taxed
In the year you change residence, you declare in Spain for the period you were resident, and in the new country for the subsequent period. Double taxation treaties allocate the right to tax each income.
Income obtained in Spain after your departure, such as rents or dividends from Spanish companies, continues to be taxed here as a non-resident, often at flat rates. It is worth reviewing such income before moving: sometimes it pays to reorganise it or sell assets before the change.
