Anyone living in Spain will sooner or later come across terms such as stay, residence, N.I.E., Residencia, etc. Understanding the differences between these concepts is particularly important in order to complete the various administrative procedures, registrations and formalities in due time and avoid missing any applicable deadlines.

Especially in tax matters, it is important to complete certain administrative procedures depending on your residence status and, where applicable, to file the corresponding tax returns within the statutory deadlines.

N.I.E.:

The Foreigner Identification Number (N.I.E.) also serves as a personal tax identification number in Spain and is required for almost all administrative procedures. Although possession of an N.I.E. is often incorrectly regarded as an indication of residence, the N.I.E. itself has no effect on your residence status, which is generally determined after spending more than six months per year in Spain or upon applying for “Residencia”. In certain cases, it is even necessary to apply for an N.I.E. although you do not live or do not yet live in Spain (e.g. when purchasing property, for tax purposes, etc.). Further information on the N.I.E. can be found in our article: N.I.E. - Foreigner Identification Number.

Residence (Residencia):

The term residence is generally equivalent to the Spanish term "Residencia", although it is often incorrectly used solely to refer to registration in the Central Register of Foreign Nationals (Registro Central de Extranjeros) maintained by the Policía Nacional. Further information on applying for "Residencia" can be found in our article: Applying for Spanish "Residencia".

If you are resident in Spain, you may in many cases already be considered resident for both administrative and tax purposes, even if you are not registered as a “residente" in the Central Register of Foreign Nationals. It should be noted that, with a few exceptions, administrative residence corresponds to tax residence, since in both cases you are generally considered resident if you spend more than 183 days per year in Spain. For administrative purposes, however, you are generally formally considered a resident once you have registered both with the municipal population register (Padrón de habitantes) and as a “residente" in the Central Register of Foreign Nationals. Further information on registration with the municipal population register can be found in our article: Municipal Registration (Empadronamiento).

Unlike registration with the municipal population register, registration in the Central Register of Foreign Nationals is only possible if certain requirements are met. Further information on the relevant registration can be found in our article: Obtaining Spanish "Residencia".

If you have a permanent residence in both Spain and Germany and spend approximately half of the year in Spain, the determination of your residence will in practice depend on the amount of time spent in each country, as the country in which you spend more than half the year may be decisive (183 days).

Irrespective of administrative residence, tax residence (residencia fiscal) has considerably more far-reaching consequences. Once you are considered a "Residente" for tax purposes, you are generally required to declare your worldwide income in Spain and comply with the corresponding tax obligations (e.g. tax returns, Modelo 720). In this respect, as an individual and in accordance with Spanish tax law and the Double Taxation Agreement between Germany and Spain, tax residence does not depend solely on spending 183 days per year in Spain. Other circumstances may also be relevant, such as having a permanent home available in Spain (owned or rented) and having the centre of your vital interests in Spain.

It should be noted that the Spanish tax authorities devote considerable resources to determining who should be regarded as a resident in Spain and who is actually in Spain solely for holiday purposes. The tax authorities may, for example, check whether your children attend school in Spain, whether you regularly carry out financial transactions in Spain (cash withdrawals, card payments when shopping, etc.) or whether you regularly pay electricity, water or telephone bills.

If the authorities conclude that you are resident in Spain, in many cases this presumption can only be rebutted by presenting a tax residence certificate issued by the German tax authorities if your actual tax residence is in Germany. Further information can be found in our article: Tax Risks of a Second Residence in Spain.

Apart from a simple short-term holiday stay, tax obligations may arise in Spain for both "Residents" and "Non-Residents". Information on which taxes apply in each case can be found in the following articles: Basic Tax Rules for Non-Residents

Exceptions regarding tax residence:

1. Students
2. Cross-border workers in certain cases
3. Diplomats and embassy employees

Technical distinction between the terms:

1. Voluntary N.I.E. = Assigned by the Ministry of the Interior (Policía Nacional), the Spanish tax authorities (Hacienda) or Spanish diplomatic and consular missions abroad, as it serves as a tax identification number and is required for various administrative procedures.
2. N.I.E. + Residencia (registration) mandatory after 3 months of residence: Registration as a “Residente" is carried out by the Ministry of the Interior (Policía Nacional). Certain requirements must be met (pensioners, students, employees with an employment contract, self-employed persons, family members of residents, etc.).
3. Registration with the municipal population register (Empadronamiento) = Express administrative residence "residencia administrativa".
4. 183 days of presence per year = Presumed administrative residence "residencia administrativa presunta".
5. 183 days of presence per year and/or various indicators of residence = Presumed tax residence "residencia fiscal".

Our law firm will be pleased to assist you in analysing your individual situation and can also assist you with filing the corresponding tax returns. If you are interested in our services or have any specific questions regarding this subject, please feel free to contact us by email or telephone.

Author:

Nicole Gottschling
Management & Non-Resident
info@sspartners.es
Tel: (+34) 951 12 13 06
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