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Lockdown days count towards tax residence

Lockdown days count towards tax residence

The General Directorate of Taxes (DGT) has decided in a recent resolution that a citizen who was not able to return to their country of origin due to the lockdown decreed in Spain could be considered as a tax resident on Spanish soil in 2020 with legal tax effects.

Usual residence in Spanish territory

First of all, it is important to remember when a taxpayer is generally understood to have their usual residence in Spanish territory. For this, a natural person will be considered a tax resident in Spain when they:

  • stay more than 183 days, during the calendar year, in Spanish territory;
  • use Spain, directly or indirectly, as the main nucleus or base of their activities or economic interests.

Due to the coronavirus crisis, the OECD has recommended that periods spent in a third-party country should not be taken into account due to force majeure for tax treatment and payment of taxes in Spain.

However, the DGT resolution recollects that the taxpayer will be considered to be fiscally resident if they remain more than 183 days on Spanish soil. This was reflected in the case of a Lebanese couple that came to Spain in January for a three-month trip and ended up being here more than six months due to the lockdown. The Tax Office understands that, despite not generating income in Spain, for personal income tax purposes the couple has been fiscally resident in Spain in 2020.

Specifically, the resolution states “the days spent in Spain by the married couple, due to the State of Emergency, would be included, so that if they remained more than 183 days in Spanish territory in 2020, they would be considered as personal income taxpayers. However, they could return to their country of origin once the State of Emergency ends.”

For more information, contact our international mobility experts.

Lockdown days count towards tax residence

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