What residence is
It is the country that, under its own law, treats you as a resident for tax purposes. As a general rule, a tax resident pays tax on their worldwide income (everything they earn, inside and outside the country), while a non-resident only pays tax on what they generate in that territory.
The concept applies to individuals and companies. For an individual, being a tax resident in a country means declaring income from any source there. For a company, it means paying tax on its global profits, not only those of the country where it was registered.
How Spain determines your residence
In Spain you are a tax resident if you meet at least one of these criteria during the calendar year:
Key points
- Staying more than 183 days in Spanish territory.
- Having in Spain the main centre of your economic activity or your economic interests.
- Having in Spain your non-separated spouse and your minor children who depend on you.
Residence of a company
A company is a tax resident in Spain when it has been incorporated here, has its registered office here, or its place of effective management is in Spanish territory. The place of effective management is where management decisions are actually taken.
This point causes many problems in international structures: you can have a company in another country that, in practice, you manage from Spain. In that case the tax authority may consider it a Spanish tax resident and claim corporate tax here.
The residence certificate
It is the document that officially certifies where you are a tax resident. It is issued by the country's tax administration and serves to apply double taxation treaties and avoid excessive withholding taxes abroad.
If you operate between Spain and another country, you are likely to be asked for it when opening an account, signing a contract or applying a reduced withholding rate. Without it, you may end up paying too much and then having to claim a refund.
Changing residence is not automatic
Moving to another country does not automatically make you a non-resident in Spain. You have to break the ties: stop spending more than 183 days here, move the core of your economic interests and, in many cases, be able to prove it with documentation.
Nor is being resident in another country enough to stop being resident in Spain: if you still meet the Spanish criteria, you can be considered a tax resident in both, and the double taxation treaty will be the tie-breaker.
