Spanish Resident - to be or not to be?

Spain’s New Residency Requirements:

Although most people know that as an EU citizen, there are no barriers to living and working in Spain, they’re often not sure whether they should become a resident or not.

The majority of foreigners on the Costa del Sol have kept their tourist status rather than become Spanish residents. And if you’re going to be visiting your Spanish home for several holidays a year, but still spending the majority of your time in the UK, it makes sense to stay as a tourist. But if you’re going to be in Spain for at least six months of the year or moving over permanently, you’re much better off becoming a Spanish resident. What’s more, following changes in the regulations which came into effect on 27th March 2007, you no longer require residence permits and can obtain residence status on the spot. No more long queues and complicated forms, just a quick visit to register at the National Police station and there you have it! This is how it works.

• To make an appointment or get further information in your area call: 952 19 83 69 (Fuengirola) or  952 76 26 47/63 (Marbella).

• On the day of your appointment make sure you take along your passport and a photocopy.

• If you’re registering for the first time or your address has changed since you last renewed your residence card, you will also need to show your Empadronamiento, sometimes call the Padron certificate. You can obtain this from the local Town Hall by taking the original of your sale or rental contract and your passport as identification. It’s as important to have this certificate anyway because it allows your Town Hall to obtain better services for you from the government of Andalucia..

• Once you’ve submitted the required documents, you will be given a pay slip to take to the bank to pay the fee (approx €10). You then bring the pay slip back to the police station where you will be issued with your certificate of residency (Certificado de Registro) and entered into the official register.

Remember...

• If you already have a residence card, you can’t apply for the certificate until your card has expired.

• Your certificate can’t be used as a form of ID as it bears no photograph or fingerprints, but should be used in conjunction with your passport or national identity card to prove that you live in Spain on a permanent basis.

• If you're NOT an EU citizen you should contact the Spanish embassy in your home country BEFORE travelling to Spain to enquire about specific rules that apply to you. Regulations differ depending on the country concerned, so it's important to check. 

What’s best for me?

Whether to become a Spanish resident or not is an important decision and depends very much on your circumstances so you’re always better off getting expert advice. But here are a few things to think about:

Tax

It’s a common misconception that if you don’t become a resident, you won’t have to pay any Spanish income tax. Sadly, that’s not true. Even if you’re only here a couple of months a year, you’ll still have to pay tax on any income you earn in Spain, such as rental income. And don’t forget, if you’re here for more than 183 days you’ll automatically be classed as a tax resident anyway and have to pay tax on all your income in Spain and the UK.

If you’re spending more than 183 days a year in Spain

If you’re in Spain for a total of 183 days or more in any one calendar year, you’ll be classed as a resident for tax purposes – this is called becoming a ‘fiscal resident’. Recently the law was adjusted so that the 183 days includes the days you are travelling to and from Spain. Being a ‘fiscal resident’ means you’ll have to pay Spanish tax on your worldwide income, whether you’ve already paid tax in the UK or not. So if you’re likely to fall into this category, you should either become a resident so you pay tax in Spain and not in the UK, or add up the days carefully and make sure you don’t stay for over 183 days.

There are quite a few tax benefits to becoming a resident – particularly if you’re a property owner. For instance;

• If you’re a resident aged 65 or over and have lived in your home for three years or more, you won’t have to pay Spanish capital gains tax at all when you sell up, however big your profit.

• If you’re a resident and leave your home to a spouse, child or close relative who is also a resident, you can probably avoid Spanish inheritance tax on 95% of the value of the property, subject to certain conditions.

• You’ll also make significant savings on Spanish wealth tax. Wealth tax is payable by both residents and non-residents, but residents are allowed generous deductions before they become liable and non-residents aren’t entitled to any deductions.

• Income tax rates in Spain are lower than in most of northern Europe.

Spanish health system

Non-residents are covered for essential medical treatment only in Spain. If you’re a resident paying Spanish social security contributions or a resident pensioner receiving a UK state pension, you’ll have full access to the state health system and exactly the same entitlements as a Spaniard. One thing to remember though, is that if you become a Spanish resident or spend less than six months a year in the UK, you’ll lose your right to free NHS treatment.

Can I still move freely between the other countries and Spain?

Becoming a resident doesn’t mean you have to stay put in Spain all year, every year. If you want to spend the winter in Spain and the summer in the UK, or anywhere else, that’s fine. As a Spanish resident you can stay in another country for as long as that country allows.