Is Spain your next residence destination? We review what you have to take into account

 The permissible investments in Spain include the following:

We have seen that obtaining a residence permit in Spain is relatively simple if the requirements for your application are met and that it does not require you to stay or reside in Spain.

What tax issues should I consider if I want to live in Spain seasonally?

If you are thinking of spending time in Spain or even if you are considering residing permanently, it is very important that you take into account certain tax aspects since if you are considered a tax resident, both your income and your world assets could be subject to tax obligations. 

At what point could I be considered a Spanish tax resident?

From a tax point of view, the tax residence in Spain can be attributed to a natural person for several reasons. Some aspects that contribute:

• Staying in Spain for more than 183 days during the calendar year (January 1 to December 31). Temporary absences, such as vacations, must be taken into account in this calculation.
• That the main nucleus or the base of its activities or economic interests, directly or indirectly, lies in Spain.
• When the taxpayer's spouse and dependent children habitually reside in Spain, as long as the couple is not legally separated.

The circumstance may arise that, in accordance with the legislation of the taxpayer's country of origin, the taxpayer may be considered a tax resident in both countries. In these cases, it will be necessary to analyze whether Spain has signed a Treaty to avoid the so-called “double taxation” with the other country that intends to attract residence and see what tie-breaking criteria the Treaty has established.

Is there any special tax regime in Spain at the moment?

In Spain, there is a tax regime that allows taxation, under strict compliance with certain requirements, only on income obtained in Spanish territory. This tax regime is the special tax regime applicable to workers, professionals, entrepreneurs and investors displaced in Spanish territory, commonly called the “Beckham Regime.”

This special regime may be requested by individuals who transfer their tax residence to Spain and meet the following requirements:

• Not having been a tax resident in Spain in the last 5 years prior to moving to Spain.
• That the displacement is related to any of the following situations:
  

a)       New employment relationship. Transfer to Spain ordered by the employer. The so-called “digital nomads” also fall into this category.

b)      Company administrator. In this case, you can be a shareholder directly or indirectly of the company that is a shareholder without limit to your shareholding percentage unless the company of which you are an administrator does not carry out a business activity, in which case you can only hold up to a maximum of 25% of the share capital.

c)       Carry out an economic activity classified as entrepreneurial activity (innovative nature with economic interest for Spain). In this case, it is necessary to obtain a favorable report from the National Innovation Company SME, SA.

d)      Carry out activity by a highly qualified professional who provides services to emerging companies.

• The special regime includes the spouse and children under 25 years of age.
  

This regime is applicable in the year of arrival in Spain and the following 5 years, which allows tax stability for a reasonable period of time. The advantage that this special regime offers over the general regime for tax residents in Spain is that the taxpayer under this regime only pays Personal Income Tax (IRPF) on income originating in Spain. The Wealth Tax, likewise, applies only to assets located in Spain, and rights that can be exercised in Spain.

It is important to highlight that this special regime does not cover the Inheritance and Donation Tax, so any analysis carried out prior to a change of tax residence to Spain must consider the scenario of a possible inheritance or donation. 

How can J.P. Morgan support me?

J.P. Morgan has a team of global wealth advisors who can help you review the optimal wealth planning for you and your family. We work with your independent attorneys and review what special considerations you should take into account to help you plan ahead for your and your family's future.