Does the Spain’s residency by investment have effects on tax residency status of the applicant?
Under Spain’s Act 14/2013, from September 27, on support for entrepreneurs and their internationalization, certain cases are regulated in which, for reasons of economic interest, the approval of visas and residency permits is facilitated and expedited in order to attract investment and talent to Spain. This measure is addressed, among others, to investors, as well as their spouses and children, through an agile and rapid procedure before a single authority and for a variable term depending on the different cases contemplated.
In the same way, with respect to tax consequences, in Spain, individuals who have their habitual residence in Spanish territory or those who reside in a foreign country and meet the requirements provided for in article 10 of the LIRPF are taxpayers for Spain’s Personal Income Tax (hereinafter, “IRPF”).
Thus, in regards to an investor’s effective stay in Spain, the sixth additional provision of Law 14/2013 establishes the following:
“Without prejudice to the need to properly credit, in accordance with current legislation, the continuous stay in Spain for the acquisition of long-term residency or Spanish citizenship, the renewal of the residence may be carried out even if there are absences exceeding six months per year in the case of residence visas and authorizations for foreign investors or foreign workers of companies that carrying out their activities abroad have established their base of operations in Spain”.
In this regard, in its binding ruling V346 / 2015, from January 30, the DGT concluded that “having a residency permit granted in accordance with the provisions of the sixth additional provision of Act 14/2013, from September 27, in support of entrepreneurs and their internationalization, does not presuppose that they have tax residency in Spain, which is not acquired or lost by granting or denying a visa or administrative residency permit, but rather by meeting with the requirements established by article 9.1 of LIRPF “.
Therefore, an investor with a visa or residency authorization under Act 14/2013 will be considered a tax resident in Spain, within a certain tax period, insofar as any of the circumstances included in the LIRPF are meet, as well as, under the Conventions for the avoidance of double taxation signed by Spain, other criteria such as the center of vital interests and the possible evidence of tax residency in another State.