When moving to Spain, it’s essential to understand the rules and regulations surrounding fiscal residency status. If you spend more than 183 days (or half of the year) in Spain, you are considered a fiscal resident and must declare all your worldwide income and pay taxes on it in Spain. This includes income from employment, self-employment, investments, rental income, and any other sources of income. You must also pay capital gains tax on any property sales or lump sum withdrawals from your pension plan.
However, there’s a way to avoid paying taxes in your first year of residency. To achieve this, you must ensure that you do not spend more than 183 days in Spain during the calendar year. If you arrive after June 30th, you can’t exceed six months of residency in that year, which means you won’t be considered a fiscal resident until the following year.
It’s essential to note that the Spanish fiscal year coincides with the calendar year, starting on January 1st and ending on December 31st. Therefore, if you delay your arrival until after June 30th, you’ll be considered a non-resident for that tax year. The new tax year starts in January of the following year, and if you plan to stay in Spain, you must become a fiscal resident and pay taxes on your worldwide income.
If you’re unable to delay your arrival until after June 30th, you must keep track of your days in the country and plan accordingly to avoid exceeding the 183-day limit. This way, you can avoid becoming a fiscal resident in your first year of residency and delay paying taxes until the following year.
In conclusion, understanding the fiscal residency rules in Spain is essential when planning to move there. By delaying your arrival until after June 30th or making sure that you do not exceed the 183-day limit, you can avoid paying taxes in your first year of residency. However, be aware that the new tax year starts in January of the following year, and if you plan to stay in Spain, you must become a fiscal resident and pay taxes on your worldwide income.