Spanish Holiday Home - Tax residency Risk wrt "sporadic absences"

[EssentialQ]

Hello,

I have a few questions related to unwanted tax residency risk in Spain for‌ people that have a second or third property in the country for vacation purposes only:‍ I'm talking about a couple of weeks or up to 2-3 months stay per year⁠ maximum.

General Context/Situation:
I'm a national from a Western EU country, not Spain. I have⁤ formally left my country of citizenship almost 10 years ago and have no assets or⁣ connections there.
I have my primary base and residence permit in a low-tax Eastern European⁢ country A in the EU that has a DTA with Spain (but it seems that︀ the DTA is not even applicable to me personally because I'm not a national of︁ A).
I have income streams and business setups in country A and I spend anywhere︂ from 4 to 6 months per year of my time in country A.
I have︃ the right to request tax residency in country A based on center of vital interests︄ (but not obligation when < 183 days). Country A is not "aggressive", you literally have︅ to ask/request and get approval to be deemed a tax resident here.
I have a︆ second base/home in a latin American territorial tax country B where I spend 2-5 months︇ per year. Country B also has a DTA with Spain but unfortunately I do not︈ have personal tax residency rights in country B (183 days required and I don't want︉ to be there 6 months).
If I declare myself tax resident in country A then︊ I would need to pay tax on income generated in country B (and others worldwide)︋ which is not optimal.
My initial plan was to remain a nowhere tax resident by spending 4-5 months in country A, 4-5 months in country B and then traveling the︌ rest of the time.

Spanish Context/Situation:
However, I made the (probably bad) decision to add︍ a vacation property in Spain to spend the remaining 1-3 months of my time instead︎ of traveling around (was sick of airbnb's/hotels, wanted to stay in my own place).
I checked tax residency requirements on the web and I didn't notice any issues spending minimal️ time in a Spanish holiday home without having additional income streams or connections to the‌ country.
I have a NIE and bankaccount in Spain now but I do not generate‍ any income in Spain.
Unfortunately, it was only after buying the property that I started⁠ reading some of the horror stories about Spanish Hacienda on this forum 🙂
Potential problem: "sporadic absences" adding up to 183 days (in an absurd manner) AND not having a tax⁤ residence in another country could technically imply Spanish tax residency.

My Questions:
Consider this situation:⁣ I spend April in Spain. May to September in Country A (< 183 days). October⁢ and November in Spain again. The rest of the time in country B. So, 5︀ months in country A, 3 months in holiday property Spain and the remaining 4 months︁ in country B for the year.
- Question 1: Can Spain lawfully claim that the︂ period from May to September was a "sporadic absence" from Spain because I'm going back︃ a second time to my available property in the same tax year? So, they can︄ claim 3 months effective + 5 months sporadic absence = 8 months in Spain? (This︅ would be absurd!)
- Question 2: If yes to question 1, can I block the︆ sporadic absence 183+ days claim if I am a tax resident of country A but︇ I do not spend more than 183 days in country A (and the DTA is︈ also not applicable to me personally because I'm not a national of A)?
- Question︉ 3: If yes to question 1, can I block the sporadic absence 183+ days claim︊ if I am NOT a tax resident in country A but I spend more of︋ my time in country A versus Spain and have a real vital economic base with︌ substance there?

Can I protect myself against these sporadic absence 183 days tax claims somehow?︍ What's the exact definition/rules on these sporadic absence daycounts?
For example, can I do short-term︎ vacation renting with commercial license of the property when I'm not in Spain to block️ this risk? imo,"Sporadic absences" from Spain can logically only apply when someone has a permanent‌ home available to return to and this is not the case when it is rented.‍ Anyone up to date on Spanish tax law on the forum?

 

[shimo]

Hola!

Q1.
Yes, they may try, unless you can prove that you are a tax‌ resident in another country. (The key point is whether you can prove that you were‍ a tax resident of another country during the year. )

Q2.
Yes. Treaties apply to⁠ residents, not citizens.
If domestic law makes you a tax resident (centre of vital interests⁤ status) and issues an annual tax residence certificate, Spain should not count your absences as⁣ Spanish days within the 183-day limit.

Question 3.
Without a tax residence certificate from another⁢ country, you are in an unstable position with regard to the 183 days: Spain may︀ consider your absences as Spanish days.

In practice, official residence in another country is a︁ reliable protection.

 

[JessJones]

You have to prove that your vital interests aren’t in Spain if they do indeed‌ check.

Millions of people have second holiday homes in Spain along with the mandatory NIE‍ and bank accounts to pay house bills.

This Eastern European tax country would probably be⁠ the best place where you can cheaply prove that it’s your home with things like⁤ low cost flat rentals and gym memberships, phone contracts etc….

If you want to be⁣ solid you can build paper work like visit the doctor, dentist checkup, teeth cleaning, go⁢ to the physio. All these cheap things can prove your base isn’t in Spain

100% you need to:

1) Spend less than 183 days in spain

2) rental contract for︀ 12 months and some electricity bill for example (in guessing it’s Bulgaria so you can︁ rent a flat for €150/200 a month)

 

[EssentialQ]

Spain is crazy, it is absurd that they could try to set me up as‌ a tax resident when I have two bases with more substance in other countries where‍ I spend more time (in the scenario that I do NOT have a tax certificate⁠ from the other countries). I consider it a complete loss of flexibility that I would⁤ have to keep documentation and go through administrative procedures in other countries every year just⁣ to block a simple holiday location. That's not how I want to live (free of⁢ bulls**t, admin, compliance etc). The scenario in which I have to show up in court︀ to defend myself or hire lawyers or communicate with Spanish IRS just because I stay︁ a couple of weeks/months in my vacation property is also not acceptable to me.

I'm thinking of just selling the property again now, I don't want this risk hanging over︂ my head long term. But, it would suck because I do enjoy visiting the location︃ and prefer to have a property available to myself there. Are there alternatives scenario's in︄ which the sporadic absence count can never apply? For example, I'm thinking:
Option 1: I︅ visit Spain just one time per year for 1-3 months. Can they claim "sporadic absence"︆ if I don't go back to the property the same year? (Loss of flexibility would︇ still suck but it could potentially be manageable long-term).
Option 2: Does renting the property︈ with a property management agency change anything (ie, with commercial short-term rental license registration and︉ contract)? I could just book my own property 2x per year. Can the absence still︊ be considered sporadic when I return to a managed investment property that is rented to︋ other people instead of available to me year round?
Option 3: Transfer/sell the property to︌ someone else (ie, family, trusted friend) and have them airbnb it as an investment. I︍ could book it 2x (or visit for free without booking) so I would basically be︎ a tourist. Can they lawfully claim multi-month "sporadic absences" for tourists that do now own️ a property there? That would be even more insane.

Basically, the conclusion is that people‌ can't visit their own property 2x per year without risk of Spain claiming that they‍ are a tax resident there because the absence would always add up to 183+ days?⁠ Again, that's completely absurd.
In extension, they could in theory absorb any digital nomad without⁤ TRC that passes through the airport in Madrid a couple of times per year in⁣ their tax net.

 

[JessJones]

Yes if you rent the property it’s not available to you which makes the whole‌ thing less risky as that can be used against you if it’s empty

 

[EssentialQ]

Thanks for reply. Are these rules actually formally written down in the⁠ law somewhere? Ie, is there an actual definition of "sporadic absences" and how days should⁤ be counted and/or when these sporadic absences are applicable and when not? For example: only⁣ count absences for people that have an empty property available but not for tourists and/or⁢ people that have VV licenses for their property. Or, is it all just subjective opinion?︀

 

[jeffbean]

If you stay or exceed 183 days in a year in Spain AND have Family,‌ and children or spouse in Spain you ARE a tax resident in Spain.

Also if‍ you have a permanent home in Spain of which you DO and is available to⁠ you then Spain can claim you are a tax resident.

To avoid this you need:⁤

1) tax residency in another country
2) rental contract in another country
3) economic interests⁣ in that country

https://sede.agenciatributaria.gob....uridicas/persona-fisica-residente-espana.html

 

[EssentialQ]

Thanks for the comment. I'll never⁣ stay more than effectively 90 days in Spain and I have no other interests/connections there⁢ besides the small property in Spain. The issue is wrt the multi-month "sporadic absences" adding︀ up to 183+ days which amounts to a big racketeering scam in my opinion (This︁ could have never been the original intention of a "sporadic absence", they just use this︂ as an argument to screw people over). I have multiple properties and interests/corporations in my︃ two other countries of residence and stay there the majority of the time (< 183︄ days in both countries but more than Spain). But more Importantly, I don't have an︅ obligation to become tax resident in those countries and I prefer not to be a︆ be tax resident if I can avoid it (but I do have the right/possibility to︇ become tax resident based on vital interests in one of the countries if I want︈ to do that. It is just a hassle and unnecessary).

The property is indeed available to me.
Do I protect myself when I put the property in rental management︉ with VV license or is this also not completely waterproof? I do not want the︊ possibility to exist that my many months outside of Spain in my countries of residence︋ can be counted as "Spanish days".
If the property is under rental management during the︌ 9-10 months that I am not in Spain, can they still claim that my time︍ outside of Spain is a "sporadic absence" or can the days no longer be counted?︎

How is it even legal that Spain can claim that the 9 months I spend️ in other countries of residence can be considered "sporadic absence Spanish days" when I don't‌ have a tax residence in these countries of residency? That's actually completely insane.
This is‍ quite important to me, if I can't block the sporadic absence days in a black⁠ and white manner then I will have to sell the property right away. I wouldn't⁤ be able to sleep at night if Spain can suddenly decide in the year 2040⁣ that I was actually a tax resident there the last 15 years, that would financially⁢ destroy me and my and my companies.

 

[EssentialQ]

I checked again. The specific DTA between country A and Spain explicitly states that⁤ the treaty only applies to citizens of country A. The treaty does not apply to⁣ foreign citizens that are (tax) resident in country A (probably because it is rather easy⁢ to become a tax resident in country A with minimum stay for non-nationals and Spain︀ does not want dual tax residents to receive any treaty advantages).
I don't think this︁ changes anything to my situation? The point is that the sporadic days can not be︂ counted to make me a tax resident in Spain when I'm already a tax resident︃ in country A (correct me if I'm wrong). DTA is irrelevant because I would never︄ become a tax resident of Spain to begin with.

The bigger issue is that I︅ also don't want to be a tax resident in country A 🙂 But, it seems that︆ I don't have another choice now because the risk and implications of Spanish tax residency︇ are much worse. Only alternative would be to get rid of the Spanish property again︈ and place my third base on a Caribbean island or something, or just travel 1-2︉ months.

 

[shimo]

I know that 183 days in Spain include temporary absences as days spent in Spain‌ if you cannot prove tax residency in another country.
You must understand that you are‍ entering into a deal with thug guys, they will use every opportunity to force you⁠ to pay taxes in Spain. The question is what you can prove to them -⁤ if another country has officially recognised you as a tax resident and issued you with⁣ a certificate, that is the basis.
Next, you need supporting evidence, such as local bills⁢ or proof that you were in another country, that your business (and family) was not︀ in Spain, and so on.

You must be a tax resident in a certain country︁🙂 . Just analyse the forum on tax residency optimisation. Spain is not the most attractive︂ country, but it has many other advantages 🙂 Catch up!

 

[EssentialQ]

Thanks. I already optimized my own situation, both personal and companies. I don't necessarily need to︃ be a tax resident anywhere when I don't stay 183 days in both my countries︄ of residence (I'm a dual resident in a Eastern European country and a territorial latam︅ country). I typically only obtain tax residency during specific years when I pay high dividend︆ amounts to myself and want to declare my global income on personal tax statements in︇ my main country for SOF purposes. I don't want to go through the hassle of︈ obtaining a tax residence status/certificate every single year when I don't need it. I also︉ don't want to maintain bills, contracts and plane tickets for the remainder of my life︊ to protect myself against thugs, that's complete loss of personal freedom and flexibility living a︋ scared life.
I just made a mistake buying this property. Would be crazy to end︌ up tax resident there because of a holiday property that I visit only a few︍ weeks per year. Kind of sucks but I will probably just sell the property again.︎

After reading this forum, I no longer believe there are any advantages in maintaining any️ sort of assets/properties or residency in Western countries, it is the same type of risk‌ everywhere. Fun locations to visit as a tourist or if you're a migrant but you‍ just end up as a controlled sheep when you're a resident or property owner.

 

[JessJones]

Im sure the country where you have most economic interests and the house can give‌ you a tax certificate quietly easily.

But if you ain’t paying taxes anywhere then that‍ won’t work

 

[manukahoney]

Can they? Yes.
Will they? Unlikely, unless you decide to start aggressively selling online courses‌ "how to live in Spain and pay 0 tax".
Stop worrying and get yourself a‍ tax residence somewhere to avoid silly situations like this (good advice in this thread).

 

[JessJones]

When you bought the house where were you tax resident?

 

[EssentialQ]

Correct, I can easily get one in my⁠ main country but then I force tax on my global income instead of only on⁤ my locally sourced income. I only do this during specific years when I want to⁣ intentionally declare my dividend streams from offshore companies (country A has weak CFC rules wrt⁢ management and control and only has 5 percent dividend tax anyway so it doesn't matter︀ much). Most years I'm not a tax resident in country A when I stay less︁ than 183 days and it would be silly to apply for 'vital interests' tax residency︂ every year and also trigger worldwide capital gains tax when it is unnecessary.

Also: In︃ my latam country the lawyers didn't even know what 'fiscal residency' means, the concept is︄ foreign to them because these countries are only taxing locally sourced income anyway. I'm not︅ sure if a tax residence certificate even exists there but 183 days would be mandatory︆ anyway and I'm not staying that long. Country B could otherwise have been optimal but︇ country A is my only real option (based on vital interests < 183 days) but︈ it unfortunately has worldwide taxation rules. It is only 10 percent flat worldwide tax cap︉ gains and 5 dividends, but it is still silly to force this on myself every︊ year when it was not necessary before without Spain.

Yeah, good︍ advice, noted. I know my options now, just need to make a decision: Either become︎ permanent tax resident in country A or sell the property in Spain (because nowhere tax️ residency risk is too great wrt Spain).

Thanks for input everybody!

 

[JessJones]

Tbh I would sell the property if it’s keeping you up at night.

Theres nicer‌ places and you can always park the money and visit for holidays.