Spanish Tax Office to Investigate Gibraltar “residents” living in Spain
A renewed attempt by the Spanish Government to lay claim on the rock has meant that a few thousand Gibraltar tax-domiciled that effectively reside in Spain will now be investigated, according to an official press release.
As it generally happens with the Spanish `Hacienda´, a well-phrased announcement is enough to cause disturbance among the Costa del Sol expat floating community some of whom take advantage -in the words of the Spanish Foreign Minister- of the proximity of Gibraltar to set up there for tax purposes and yet live across the border “enjoying social, community and health services in our country without paying a single euro toward the Treasury,” as stated in the release.
Aside from the blatant message that this announcement encapsulates –Gibraltar should be Spanish-, there is some reason for concern as Spain could immediately tighten up conventional border control processes or implement e-passport gates as in the UK, a measure that would provide an enormous flow of information that could be collated to target Gibraltar not-so-residents who spend more than 183 days per tax year in Spain.
What could Spain do?
Spanish tax laws consider that fiscal residency is made up of 2 elements, one being an objective criteria based on permanency (more than 183 days in Spain) and a second rather more `spiritual´: the desire to reside in a particular place. These 2 elements define the concept of residency for tax purposes and numerous Supreme Court rulings back this definition.
If the Spanish Tax Office deems that a particular person is a fiscal resident, it will send him/her letter demanding full disclosure and payment of taxes in Spain on worldwide income and/or initiate an investigation.
How can they find out?
Conventional border controls would certainly be the main way to find out. But also, presumptions can be invoked to deem someone a tax resident: registration with Town Halls (`empadronamiento’), levels of consumption of water and electricity on a given Spanish property, children’s enrolment in Spanish schools, main business activities (directly or indirectly through straw men) or use of medical facilities in this country and generally, any means of legally proving that a person effectively resides in Spain.
It’s a shame that the Spanish Government are wasting their resources to lay claim of Gibraltar and investigate a few thousand, when clearly they could gain massively by instructing their prosecutors and judges to do their job properly by investigating the thugs and crooks that have scammed the innocent in the Costa del Sol, there must be countless millions in unpaid income tax!
E.G-
MRI are a prime example, and the face of it was Darragh Macanthony.
Macanthony and his directors are sitting on a fortune in off shore accounts at this moment in time.
The Spanish government could set up a team to investigate and recoup the taxes due from companies like MRI that have taken monies from Spain and placed it off shore.