We frequently receive inquiries from clients regarding their tax obligations once they have obtained a residence permit.
Contrary to what one might assume, holding a residence permit in Spain does not automatically confer tax residency, nor does it create the obligation to declare all assets and income, including those held or generated abroad.
The residence permit (legal residence) is an administrative status that allows a foreign national to live legally in Spain from the moment it is granted until its expiration. In other words, it is a permission that looks “forward”.
There are different types of residence permits, some linked to family or employment relationships, and others granted for the sole purpose of residing in Spain.
The scope and rights associated with each type of permit vary depending on the specific category applied for
Some examples of residence permit:
- Certificate of registration as an EU citizen
- Residence and work permit (self‑employed and/or employed)
- Non‑lucrative residence permit
- Residence card for a family member of a Spanish or EU citizen
- Residence permit for exceptional circumstances (the most common being Arraigo)
In contrast, tax residency is a tax status that determines where an individual shall declare their assets and income and, ultimately, where he must pay taxes.
A person is considered a tax resident in Spain if he meets any of the following criteria:
- Spending more than 183 days per year in Spain
- Having the principal centre of economic interests in Spain
- Having his immediate family (spouse and children) living in Spain
A tax resident must pay taxes in Spain on worldwide income. This is done through the Spanish Income Tax Return (IRPF) and, in certain cases, the Modelo 720.
In other words, the tax residency is a status that looks “backwards” evaluating whether any of the above conditions have been met during a given tax year.
Therefore, it may happen that a person holds a residence permit without being a tax resident, for example, someone on a non‑lucrative residence permit during the first months of his stay, or someone who spends fewer than 183 days in Spain.
It may also occur that an individual becomes a tax resident without holding legal residence, as the criteria for determining tax residency do not consider a person’s administrative immigration status.
Lastly, effective residence in Spanish territory is, in most cases, an essential requirement for maintaining and/or renewing the residence permit. Interrupting the continuity of actual residence could therefore jeopardize future renewals and, consequently, the right to continue residing in Spain on legal basis.