RESIDENCIA

Old position

Prior to 1 March 2003 - Royal Decree 178/2003 of 14 of February 2003

All EU citizens who reside in Spain for more than 182 days pa were required to apply & register as resident & obtain residencia card - save those exercising EU Treaty Rights i.e. workers paying into Spanish Social Security System or retirees entitled to a Spanish state pension who have lived in Spain for more than 3 years & who worked during the in 12 months pre-retirement.

New Position

Post 28 March 2007 - Royal Decree 240/2007 of 16 February 2007 (transposition EU Directive 2004/38/EC)

All EU citizens intending to live in Spain for more than 3 months need to ‘apply’ for Certificate of Registration within 3 months’ arrival (Article 7(1)) at the Registro Central de Extranjeros or designated Comisaria de Policia. The old-style residencia card i.e. live here for more than 182 days per year is no more.

One need to present valid passport. If passport expired, one need produce copy of passport & application for renewal or national ID card (which does not apply to British citizens (Article 7(2)). However, possibly advisable to present certificate of empadronamiento or escritura or rental agreement with utility bill as otherwise it is difficult to see how authorities can confirm one’s address.

One will be issued with certificate over the counter on the spot. Certificate will confirm name, address, nationality, NIE and date of Registration.

The new certificate will not bear bearer’s photograph or finger prints – therefore will not be officially accepted form of identification.

The Comunidades Autonomas retain degree of autonomy with regard to application measures and interpretation of the new law – how such will develop or be developed over time within Andalucia remains to be seen.

Embassy Advice – sole official ID document is a current passport or national ID card. Therefore, those who do not have valid residencia card will need to revert to carrying passport.

If already resident – there is no need to re-register until existing residencia expires, upon which one presents oneself at the Registro or Comisaria with passport, upon which certificate will be issued

However, if one has lived in Spain continuously and legally for five years, one may apply for permanent residence.

Reference is made to a permanent residence certificate as opposed to card - although such may change over time.

Authorities must process permanent resident application with all due expedition (Article10(2))  - which suggests that such will not be over the counter and delay’s may be inevitable

FISCAL RESIDENCY & TAXATION

If one lives in Spain for more than 182 days per year, one is automatically a Spanish fiscal resident who is obliged to file Spanish tax returns and who may benefit from tax allowances particular to fiscal residents such as CGT allowance and inheritance tax allowances.

PROPERTY TAXES

Capital Gains (incremento de patrimonio–increase of wealth)

Sale of property – resident & non-resident alike now pay 18% on the conveyance value i.e. profit, which is calculated by the following equation:

(purchase price + taxes paid) – (sale price – taxes paid)

Residents benefit from 100% CGT allowances if: 

• Resident over 65 – sale principal residence for 3 years.
• Residents reinvesting all proceeds of 3 year principal residence’ sale to purchase Spanish home as principal residence. If proportion used – then proportionate % relief on invested amount
• Equity release - usufruct holders - Person older than 65 sells principle residence to company with usufruct

• On transfer following dissolution of marriage

Annual Property Taxes

All property owners technically liable to pay 3 separate annual taxes:

·        Imputed Income Tax

·        Impuesto Extraordinario sobre el Patrimonio (Wealth tax)

·        Annual Real Estate Tax

 Property Owners’ Imputed Income Tax

Tax is a ‘virtual’ income attributed to property owner although not payable on principal residence. If own more than 1 property, is payable on second property. If not fiscal resident i.e. not living here for more than 182 days per annum, Spanish home cannot be principal residence.

Calculated by determining 2% of valor catastral and deriving normal income tax rate which can range from 17-48% e.g. valor catastral is 40,000; 2% of which is 800; applicable tax rate % of such is amount due. If non-resident taxed at 25% flat rate - on ‘income’ arising in Spain (being reduced to 24%)

Wealth Tax (Patrimonio)

Extraordinary tax on one’s total capital assets payable between 2 May – 2 July 2007

Fiscal residents are taxed on global assets (property, bank deposits, stocks, shares, bonds, business, metals, vehicles, yachts, objets d’art, jewels etc) and need declare ‘real’ value per contract/escritura.

Residents enjoy individual allowance of €108,182 and further  €150,253 allowance on principal residence. Therefore maximum allowance is €258,500 per person or  €517,000 per couple.

Residents enjoy deductions for repairs & maintenance, security, cleaning costs, mortgage interest, management & letting expenses, local taxes, insurance, debts against business & tax paid of similar nature in UK

Tax thereafter is relatively negligible i.e. first €108,000 after allowances & deductions is taxed at 0.2%.

Non-residents can declare any time during year and are taxed on assets in Spain but unlike residents, no allowances or deductions may be enjoyed

If non-resident owns more than 1 property, one is required appoint representante fiscal who can be anyone so long as they are official resident in Spain. If one fails to so do, may be fined €6,000.

Annual Real Estate Tax (IBI – Impuesto sobre Bienes Inmuebles)

Spanish equivalent of local municipal property tax or local rates which is calculated annually by reference to value of land and building itself and is payable by resident and non-resident home owners alike.

SPANISH INCOME TAX (renta)

Payable between 2 May – 2 July 2007. If one lives in Spain for more that 182 days per calendar year, immaterial of residencia card/certificate, one must file return as is a Spanish fiscal resident liable to be taxed on global income, save civil service pension and few other exceptions

Exceptions:

If one’s worldwide income is less than €8,000, one does not need to file return unless more than €1,500 of said amount is from investments or one is running business or autonomo

One enjoys certain allowances such as personal minimum e.g. if over 65 years, one is entitled to €4,200 (€5,950 in 2008) and younger than 65 years - €3,400 (€5,050 in 2008).

Deductions may be set off i.e. Spanish Social Security contributions – €240pcm and tax one has paid elsewhere (subject to reciprocal agreement)

Double taxation

Spanish tax year runs from 1 January  – 31 December whereas UK tax year runs from 1 April – 31 March

If paid tax in UK more than would be taxed in Spain, no need pay more; if tax paid in UK is less than Spain, then have pay difference

When filing returns, should present 2 forms: 1 for Spain and the other to be stamped for attaching to UK declaration

So one will be taxed at Spanish rates, but will not be taxed double.

Generally need to present for income tax return the following:

• Pension slips – if civil service (exempt)
• End of year bank statement – interest paid & average balance
• Interest = part of income &; average balance or end of year balance, which ever is greater, is counted as part of assets for wealth tax
• Deposit certificates, stocks, shares etc
• Passport/Residence/NIE/NIF
• Receipts/copies of UK tax declarations

EMPADRONAMIENTO

Refers to registration in padron of local Town Hall as local inhabitant

Requirement is that you live and intend to live in municipality for at least 6 months pa

Why empadronarse?

One will be added to the electoral role – so that one may vote and stand for election on local municipal & EU elections

Also, municipal funding allocations are in part dependent upon number of registered people. The more people that live in a borough, the greater the central and regional funding allocations will be which means better health facilities, roads, schools, parks etc

To empadronarse, one need present at Town Hall one’s passport, residency card or registration certificate (with driving licence), escritura or rental agreement (with utility bill). One ought to be handed with certificate on the spot.

DRIVING LICENCE - SUMMARY

Driver’s General Regulations (January 2006)

EU citizens with EU driving licences no longer need apply for or exchange domestic licence for Spanish licence (except professional drivers)

EU citizens on UK (EU) licence i.e. photo-card licence, may drive legally in Spain on domestic licence subject to Spanish requirements as apply to expiry & renewal and passing a medical examination (Article 22)

However, ‘residents’ may voluntarily register licence particulars with Jefatura de Trafico (Article 23) or may exchange UK licence for Spanish licence at any time (Article 26)

However, UK licence is valid from date of issue until one is 70 years of age and one it not, as yet, required to pass medical. In Spain, one licence need be renewed periodically depending upon one’s age i.e. <45 years old – every 10 years, >45 but <70 – every five years, >70 – every 2 years (Article 16.2). In the event that one wears glasses or suffers other cited medical conditions, different scales apply.

In order to renew Spanish licence one need pass medical examination at designated centre wherein the speed of one’s reactions is tested.

UK nationals residing in Spain who chose to retain UK licence are required pass medical within 4 years of living here and thereafter pass medical in accordance with Spanish law

‘Residents’ who fail to comply with Spanish laws will be in breach of Spanish law (Article 24(a)) and technically have their licence rendered invalid

If one registers UK licence with Jefatura – Jefatura will automatically notify you as to when your next medical is due.

Further, if residing in Spain with no UK address, in the event that you lose your UK licence, you may find yourself in difficulty as DVLA may say that you failed to notify them of change of address and will not accept Spanish address for replacement.

Myles Jackson

June 2007

Myles Jackson is a bi-lingual practising barrister who lives in Granada 

Disclaimer

Although we hope this handout will be of interest to readers, the author accepts no liability and offers no warranties in relation to it and its content, to the fullest extent such liability can be excluded by law.

This document is not a substitute for legal advice, and is not intended or offered as such. Every case is different, and the only way to ensure that the advice is appropriate to your particular circumstances is to instruct a lawyer, who can take full instructions on all relevant issues. The author does not therefore accept any duty of care to anyone who makes use of, or seeks to rely on, material in this handout without formally instructing us to.

 Copyright Notice

The copyright in all material on this website belongs to Myles Jackson unless expressly stated otherwise.