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The Spanish Lawyer Online

Antonio Flores’ Blog

Thoughts about laws and regulations which affect foreigners in Spain

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Posts Tagged ‘Tax Residency Spain’

The 11-month Rental Contract and Other Legal Urban Myths in Spain

September 7th, 2016

shutterstock_433242178Spain is not different when it comes to “legal urban myths”, statements that sound true but are legally wrong. Let’s see some of them:

  1. Administrative residency and tax residency are the same: taking out your “residencia” at the Police Station does not make you a tax resident of Spain. To be one, you need to prima facie file tax returns in this country or you are exempt from doing so, prove continuous residency via electricity bills, “empadronamiento” certificates and so on.
  2. Infidelity is a ground for divorce: as explained in the previous article, the only “ground” for divorce is to have been married for 3 months. End of.
  3. Public nakedness is a criminal offence: unlike many other countries, walking around naked per is not a statutory offense unless it is proven there is a sexual connotation. However, if you expose yourself you will be subject to heavy fines: The Supreme Court ruled in 2015 that nudity cannot be condoned for it affects the peaceful daily coexistence.
  4. 11 months is the limit for short term rentals: Never has a legal urban myth expanded so rapid and damagingly. There is no such thing as an 11-month contract that is different from say one with a 9 or 13-month term. In fact, the law in Spain states that any residential rental contract can be legally extended to 3 years by the tenant. Holiday lets do exist but they are not defined by the term, but by the use of the dwelling: sporadic, non- permanent, accidental, circumstantial are some of the words use by the Courts to differentiate short term from long term or permanent.
  5. Red cars cost more to insure: many people will not know it but the car insurance industry is colour-blind.
  6. Legal letters have to be replied to: it is often the case that parties to a legal dispute feel that one email or letter needs to be matched with a reply, thus causing endless threads of communications. From a tactical point of view too, giving out to much information to a would-be litigant can be counterproductive. To sum up, avoid the temptation of a courtesy reply unless these letters are coming from the Courts or from Government offices.

 

 

 

Legal Practise , , ,

Spain Tax Residency Cases: when the devil is in the detail

December 1st, 2014

shutterstock_Iakov Filimonov

The above proverb often implies that details might cause failure, and failure is what occurred to the three real test-cases (below) who thought that, by having a tax-residence-of-convenience status (Andorra and Switzerland) and spending a short time there, they would be shielded from the action of the AEAT (Spanish Tax Office).

TEST CASE 1: A self-defined Swiss tax resident lost an interesting case brought by the Spanish Tax Office who deemed him a resident of Spain. The tax payer had argued that, according to the DTA (Double Taxation Agreement) Spain-Switzerland, he could be classed as a resident of both country. Indeed, the man had properties in Switzerland and Spain, and had one daughter in each country; according to the Spanish Supreme Court, these facts alone would not conclusively establish where his connections were stronger. The devil in this case was he had signed up to the Spanish Automobile Club as well as Maritime Clubs in Ibiza and Marbella, without analogous memberships in Switzerland (attempts to convince the Taxman that there was no sea in this country were to no avail…).

TEST CASE 2: A Spanish Andorra-based taxpayer could not successfully argue against the evidence that was stacked up against him, notwithstanding his marriage to an Andorra citizen. The AEAT challenged his status by arguing that he had a company in Barcelona, his apartments in Spain were being regularly used (utilities were up and running), yet there was no proof of rental activity, he had a daily subscription to a local paper and had hired domestic employees. In upholding the Tax Office’s case, the Catalonia Supreme Court (1254/2013) deemed a tax residency certificate from the Andorran authorities not relevant.

TEST CASE 3: Similar to the above case, the Spanish Tax Office successfully proved that the Andorra resident was in fact in Barcelona-based because his medical insurance broker was based in the city and, more conclusively, a local hospital had reported frequent visits inconsistent with living in Andorra.

On a next issue, we will discuss those who were able to successfully challenge the AEAT who, we should not forget, has no influence over a Court decision (contrary to popular belief).

Litigation, Tax Law , , , ,