COVID-19 and tax residence


7 jul 2020

Spanish tax residence is based on 183-day rule in a natural year. Many non-resident citizens are checking carefully the days spent in our country to avoid being considered resident, planning ahead their holidays and trips to Spain.

However, in 2020 a large number of people has been forced to stay in their holiday or second residence destination longer than expected due to the coronavirus lockdown. Their presence in our country was not voluntary, being a situation beyond anybody’s control. They are all concerned about how this will affect to their tax status in Spain.

Regrettably, unlike in other countries such as the UK, where HMRC has published guidance on when an individual’s presence in the UK by reason of the COVID-19 outbreak will be considered to be the result of ‘exceptional circumstance’ and, therefore, will be disregarded when counting the number of days that an individual has spent in the UK for the purpose of the Statutory Residence Test, Spain has not published any measures on this particular matter for the time being, and the Spanish legislation does not contemplate any special circumstances to avoid counting those days spent in the country for the 183-day rule.

For those who could be affected by a tax residence procedure due to the number of days spent during the lockdown, it will probably enter in conflict with the tax residence status in their own countries so the Double Tax Treaty will apply and solve the problem in most of the cases. Moreover, the OECD has given an assessment of the potential impact of the circumstances caused by the pandemic on the application of double tax treaties, seeking to make clear that the temporary and exceptional dislocation of an individual should not, in general, affect their tax residence.

A tax residence procedure deriving from the days spent in Spain during the lockdown requires expert and individual legal advice that JC&A Abogados can provide.

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