On 1 February 2020 the United Kingdom of Great Britain and Northern Ireland leaves the European Union and the Withdrawal Agreement enters into force, which includes a transition period that lasts until 31 December 2020. Article 18.4 of this Agreement states that UK nationals will be entitled to receive a residence document expressly reflecting their status as beneficiary of the Withdrawal Agreement.
During the transition period, UK nationals who wish to stay in Spain for periods of more than 90 days must register as residents (for administrative purposes) in Spain and apply for the above residence card, which in Spain is called TIE (Tarjeta de Identidad de Extranjero).
Since 6 July 2020, UK nationals who apply to register as residents will be issued a TIE, instead of the old “European Union citizen registration certificate” (a green photoless card which is issued to foreign citizens from any EU country who reside in Spain), according to the INSTRUCTION OF THE DIRECTORATE-GENERAL FOR MIGRATION AND THE DIRECTORATEGENERAL OF THE POLICE. UK nationals who already hold the “European Union citizen registration certificate” can swap this document for the new TIE, which, unlike the former, does include biometric data such as a photograph, fingerprint and signature. Although in theory individuals are not obliged to swap the “European Union citizen registration certificate” for the TIE, in practice we have seen that the Oficinas de Extranjería(Immigration Offices)-at least in the Cádiz province- are warning UK nationals to complete the swap before 31 December 2020.
Although this is not mandatory, according to the instruction above which states that “Accordingly, nationals of the United Kingdom, members of their families and any other persons residing in Spain under the conditions laid down in the Agreement shall not be required to apply for a new resident status or to submit to a new documentation process, but shall be entitled, in accordance with the provisions of Directive 2004/38, to receive a residence document expressly reflecting their status as beneficiary of the Withdrawal Agreement”, we recommend applying for it to avoid potential problems with members of the police who are ill-informed about the contents of this instruction. Additionally, this card includes biometric data which means that UK nationals will not need to carry their passport everywhere, as has been the case with the “European Union citizen registration certificate”, it will facilitate administrative procedures and can be used as means as identification to cross European Union external borders.
DOES THE TIE CARD AUTOMATICALLY RESULT IN REGISTRATIONAS A RESIDENT FOR TAX PURPOSES?
No. An individual becomes a tax resident in Spain when they live in Spain for more than 183 days a year or their centre of vital interests is in Spain, even if they do not reside in Spain. In these cases, the individuals will be taxed on their income earned anywhere in the world.
To calculate the number of days an individual spends in Spain, the law states that sporadic absences must be counted towards this time, unless the individual proves they are a resident for tax purposes in another country.
Therefore, for example, if an individual has spent 150 days in Spain due to having travelled to different countries, but cannot prove they are a resident for tax purposes in another country, every day of the year must be counted towards the time physically spent in Spain to determine residence for tax purposes.
Article 15 of the OECD Convention, states that “a day during any part of which, however brief, the taxpayer is present in a State counts as a day of presence in that State for purposes of computing the 183 day period”. Applying to register as a resident and applying for the TIE card does not mean that the individual intends to spend more than 183 days a year in Spain. The website of the Ministry of the Interior explains that it means that “according to legislation in force, authorisation has been granted or the right has been recognised to remain in Spain for a period longer than six months”. So being issued a TIE card does not been that an individual is going to spend more than 183 days in Spain, it means they have the legal right to do so.
Empadronamiento(registering at the town hall) and being issued a TIE card does not mean that the taxpayer becomes a resident in Spain for tax purposes if they do not break the 183-day rule or their centre of vital interests is in Spain, and they remain a UK resident. Under the withdrawal agreement, UK nationals can live in Spain up to 90 days out 183 days, and as long as they do not spend more than days during the year and they remain UK residents for tax purposes they will not be considered residents for tax purposes in Spain.
Having said this, it must be noted thatif the Spanish Tax Agency conducts an investigation into whether an individual is a resident in Spain or not, factors such as being a TIE cardholder, being registered at the town hall (empadronado) in Spain for more than six months and not being able to provide proof of residency in another country for tax purposes will be used asdataindicative of residence.
Although when the Spanish Tax Agency wants to check the residence for tax purposes of a UK national in the UK they usually only ask for the certificate of residence issued by HM Customs and Revenue, it must be noted that technically they can use data such as possession of the TIE card and being registered at the town hall (empadronado) to consider an individual a resident for tax purposes in Spain. In this case, the individual will have to prove that they are not actually a resident for more than 183 days a year, which is sometimes very difficult if in reality they live permanently in Spain.
The Withdrawal Agreement protects the rights of UK nationals who wish to reside permanently in Spain, allowing them access to the residence permit without having to follow the procedure to receive a permanent visa (which involves much more red tape and stricter requirements), which is common for individuals from non-EU countries. However, the “fast-track” procedure that has been put in place for UK nationals to receive permanent residence does not envisage situations that contravene the Double Taxation Treaty signed by the UK and Spain, which states that, with certain exceptions, an individual who is considered a resident in Spain or in the UK for tax purposes must pay taxes on their income earned anywhere in the world in the country in which they live, regardless of the origin of this income (for example, a UK pensioner who lives in Spain will usually have to pay personal income tax in Spain). For that reason TempleCAMBRIA recommend that, to avoid a potential investigation and penalties by the Spanish Tax Agency, anyone who lives permanently in Spain should regularise their situation, register as a resident in Spain for tax purposes and thereby fulfil the tax obligations under the treaty signed between Spain and the UK.
Juan Antonio Rodríguez García, Solicitor, TempleCAMBRIA
Tel.: 0034 617073669