Should I Get A "Residencia"?
Two Million Properties Owned By Foreign Families
According to our estimates there are two million properties in Spain owned by foreign families. The great majority of foreigners have bought their properties as non-resident owners, using them for several short vacations during the year, while some are living in Spain permanently.
Those Who Go To Cooler Areas During Summer
There are also some who live here for the winter and go to cooler areas of the continent during the summer. Many of them are asking the question:
"Should I keep my "tourist" status in Spain or should I get a "residencia"?"
The European Citizens
Are You A Citizen Of The European Union (EU) Or Not ?
The first consideration is if you are a citizen of the European Union (EU) or not. Persons coming from the countries of the Union have certain advantages. It is important to note that in some cases it is enough to be a resident in an EU country to have the advantages, even if your nationality is with a country outside the Union.
Rights - Citizens Of The EFTA Countries
From 1 January 1994 the EES (European Economic Space) is in effect and gives all citizens of the EFTA countries (minus Switzerland) the same rights as Union countries when it comes to the free flow of persons, capital, goods and services within the area. In the following, when we write EU, we mean Europe and include Norway, Iceland and Lichtenstein, the other countries outside EU that are members of the EES.
Fiscal Residency
Staying In Spain For More Than 183 Days
Even if you think it is beneficial for you to stay "tourist" for fiscal reasons, you may become a fiscal resident if you stay in Spain for more than 183 days per calendar year. This is spelled out both in the Spanish fiscal laws, as well as in the Tax Treaties signed between Spain and a number of other countries.
The Burden Of Proof Rests With You
How can the public administration know if a foreigner has been in Spain for more than 183 days now that passports are not stamped when one enters and leaves the country? If the administration's suspicion is aroused, or if someone denounce you for any reason, the burden of proof rest with you. If you intend to stay a "tourist", even if spending a great part of the year in Spain, you need to get the stamp of entry and departure in your passport.
The Spanish Fiscal Year
The fiscal year of Spain runs concurrent with the calendar year. The 183 days are computed as a total, so it does not matter if your total stay has been made up of several smaller periods.
What Are The Effects Of Being A Fiscal Resident In Spain?
A fiscal resident must make an income tax return the same as a resident, including his world-wide income, without having any of the advantages the residence permit may grant.
Do You Have A Pension Paid Out By A Government Agency?
Some countries have the agreement with Spain that pensions paid out by a government agency for previous work in local or central administration are free from taxes in Spain. If you have such a pension, it may be worthwhile taking residency in Spain and becoming a fiscal resident here.
The Spanish Rules
Citizens Of The EU
Citizens of the EU, in principle, should be able to move and stay freely, without any limitations within the territory of the EU and EES. As a matter of fact, not only citizens, but anyone with a residence permit in any of these countries. Otherwise, the maximum period a tourist can stay on Spanish territory is 3 months (6 if you come from overseas), within each 6 months period.
This requirement is very much a 'paper tiger', since one can now move within the "Schengen-territory" from Spain and up to Scandinavia without a passport and without anyone asking for it.
Citizens Of Countries Outside The EES
If you are not a citizen from such a country where a visa is needed, the options after having stayed in Spain for the legal time period as a tourist, are the following:
- apply for an extension for another 90/180 days as a tourist, or
- leave Spanish territory (only long enough to get an entry stamp at the border), which permits you coming back for another stay of 90/180 days in the same calendar year.
Citizens Of Countries Requiring A Visa
Citizens of countries requiring a visa must, of course, leave the country before the visa runs out and apply for a new visa to come back.
Longer Tourist Periods
For stays longer than the tourist periods described above you need a residence permit.
The "Tarjeta"
For citizens belonging to the EES, the residence permit is called a "tarjeta" and is easier to obtain than the normal "residencia" for the countries outside this area. A "tarjeta" cannot be denied a EES citizen, while others must apply and may have their application denied, without any reason being given by the authorities.
Types Of "Residencias" And "Tarjetas"
There are several types of "residencias" and "tarjetas", depending on whether you want to work in Spain or not. From "Ciudadanos Europeos" you can get a current list of papers and documents needed. Be aware that this list may be changed at short notice, and that in some local offices they may be more demanding than in others.
The Tax Implications
Spanish Income Tax Return
Whether you become a fiscal resident, take out a "tarjeta", or a "residencia", you have to make an income tax return to Spain for your world-wide income. This may not be a heavy obligation. Most countries in northern Europe have now higher income tax rates than Spain (from 15 to 45% tax). However, the income levels for the higher tax rates start lower in Spain than in other countries.
Selling Property In Spain
Furthermore, when selling a property in Spain, residents may off-set the costs of purchasing a new dwelling against any capital gains from selling their old property, while the non-resident must pay 35% on the net difference between the values in the old escritura and the sales escritura.
Income Tax On The Notional Value Of A Dwelling
In addition, a resident does not have to pay income tax on the notional value of his dwelling. A non-resident must declare the full value of the fictional use of his property, without any deductions, and pay a flat rate of 25%.
Selling A Property In Spain
Also, when a resident sells a property in Spain, he is exempt from the obligation of letting the buyer retain 5% of the declared value which is paid into Hacienda (Ministry of Finance) as a guarantee for the seller's tax payment.
Inheritance Tax
On the Inheritance Tax there is a great difference between non-residents and residents in a case where a resident family-member inherits a permanent dwelling from another resident.
Then a 95% reduction in the taxable amount can be applied, in addition to other deductions applicable (for details see the Fact Sheet of "Ciudadanos Europeos" on inheritance).
Advantages And Disadvantages Of Becoming A Resident
For most people, regardless of their nationality, the advantages of becoming a resident, seen from the tax point of view, outnumber any disadvantages. But we recommend that you sit down with paper and pencil and make your calculations.
Health Services
Use Of Health System In Spain
A person from an EU country, or from any country that has a bilateral agreement with Spain on Social Security coverage, and who is included in the Social Security system of his own country, may use the health system in Spain, both as a tourist and as a resident.
Bring The European Health Insurance Card If You Are A Non-Resident
If you are a non-resident staying in Spain as a tourist you must bring with you from the home country the European Health Insurance Card. With this card, you are entitled to free emergency health service.
Bring Form E-121 If You Want To Become Resident In Spain
If you want to become resident in Spain, you must bring with you from your home country the form E-121. You can then register with the local health centre and will have complete health coverage in Spain (for further details see the Fact Sheet of "Ciudadanos Europeos" on health).
Cars
Use Of Car Registered In Country Of Residence Is Permitted
A person resident in one of the EES countries can use a car registered in his country of residence without any limitations in Spain. This is a great plus for non-resident owners. But there is always a snake in paradise.
But ... Be Careful
The snake, in this case, is that some countries (like UK) do not accept the Spanish ITV (regular technical inspection of the vehicle), and you are expected to drive the car home for each technical inspection. To be without the technical inspection may place you in a situation where your insurance is no longer valid, so be careful.
The Letter Of The Law
According to the letter of the law, a non-resident foreigner may not drive a Spanish registered car. This is not being taken very seriously. Since a non-resident foreigner may buy a Spanish registered vehicle, some experts deduce that they must then also be permitted to drive their own vehicle.
In addition, according to the letter of the law, a foreign tourist driving a Spanish registered car should have a Spanish driving licence (meaning exchanging your national licence for a Spanish one, until the EU has a common driving licence). Now the European Model driving permit as a plastic card is accepted and need not be registered with the Spanish traffic authorities anymore.
Resident Foreigners
A resident foreigner may drive a Spanish registered car, and must have a Spanish driving licence, unless he has got a European Model driving permit.
For a period of time, he may also drive his foreign registered vehicle, and on certain conditions (see the Fact Sheet of "Ciudadanos Europeos" on the foreigner and the car) may even import that vehicle into Spain, without paying any customs duty or VAT, only paying the special registration tax based on the actual value of the car.
Banking
Restrictions Lifted
In compliance with the changes within the European Union, Spain has lifted all its foreign currency restrictions and all restrictions on transactions between residents and European non-residents.
The Accounts Which May Be Opened
Both residents and non-residents may have accounts in Euro. Non-residents may also open a "foreigner's account", both in "Euro ordinarias" and in "Euro convertibles". A resident may have an account in a foreign currency in a Spanish bank, as well as abroad, even if the Bank of Spain wants to have a report on accounts outside the country.
Mortgages
Some banks give residents a better deal when it comes to granting a mortgage.
Work / Business
EU And EES Citizens
From March 2003 any citizens of another EU or EES country may work in Spain without having to take out a residence permit. When he is paying his contribution to the Spanish social security system, or has done so, both he and his family is exempt from the obligation of having a residence permit.
Persons From Outside The European Union
For a person outside the Union area, the matter is more complicated. He has no automatic right to start a business or seek employment, but must apply for it. The Spanish authorities are very restrictive at a time when unemployment is still high. The rule is that a person outside the Space must have 90000 Euro on his account in Spain to be permitted to start his own business.
Working Without A Work Permit Is Dangerous
To work in Spain without a work permit is very dangerous, both for the employee and employer. Heavy fines for the employer can be imposed and the employee may be put on a plane leaving Spain and told not to come back before three years have passed.
Always Ensure Your Papers Are In Order
The advice of "Ciudadanos Europeos": Never work, self-employed or as an employee, without having all your papers in order!
The Vote
The Electoral Roll
The vote (based on the Maastricht Agreements for Union citizens and on bilateral agreements for Norwegians) in Spanish municipal and/or European elections, is reserved for persons who are registered on the "padron" in their municipality, therefore included in the electoral roll.
Non-Residents
Non-residents have no voting rights, but can, of course, take part in the associations with an interest in social and political matters in Spain.
The Importance Of Voting
The importance of as many foreigners voting as possible cannot be stressed enough. Without a vote, we are merely investors and tax subjects who need not be taken very seriously. With many of us registering on the voting lists, the foreigners' situation in general will improve.
Recommendation
So, if you belong to the large group of people who are considering whether to stay on as 'tourists' or register themselves as residents, and find that the difference is not too great, we recommend you to become residents and enter on the voting list.
Staying Put In Spain?
Residents Don't Have To Do So
Some foreigners believe that they have to stay put on Spanish territory almost permanently if they become residents here. This is not correct.
You Can Stay In Another Country As Long As It Permits
The residence permit does not force you to remain in Spain for a certain part of your time or hinder you staying in one or more other countries for prolonged periods. You are not supposed to be resident in more than one country, but can, as a resident in Spain, stay in another country for as long as that country permits.
Possible To Be A Resident And Just Stay For The Winter
So, yes, it is possible to be resident in Spain and just stay here during the winter, going to your home country and/or any other place in the world during the summer.
Spain's Advantage
What Would Spain Like Us To Do?
You should also consider what our host land, Spain, would like us to do, and what benefits the country and your community may have from you becoming a resident.
The Laws Of Spain
First of all, the laws of Spain clearly indicate that they expect anyone who, in reality, is something more than an accidental tourist in this country, to take out a residence permit.
Criticism Of Foreigners
On several occasions the Spanish authorities have expressed their annoyance at the many foreign owners who, in reality, live here for a longer period than the tourist stay, but refuse to take out a residence permit. This has also led to criticism towards foreigners in Spain by some official authorities.
Benefits Of Municipalities
Secondly, each of our municipalities have a number of benefits resulting from foreigners' registering themselves in the "padron municipal". The municipality will receive more subsidies from the national and regional governments, better facilities for the local post office, more telephone lines, more pharmacies.
The Municipality Gains And So Do We
So, as you can see, the municipality gets important benefits from our registration, and we gain from their benefits.
By becoming a member of the National Association Of Ciudadanos Europeos and paying a modest annual fee, you will have the right to ask any personal questions you may have, request an opinion on contracts for buying, selling or letting a property or make an appointment for a personal conversation on any question related to a property or your stay in Spain.
To become a member of Ciudadanos Europeos, please
click here.
About Ciudadanos Europeos.
