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Confirming your residency

Published 10/06/2011

Confirming your residency

The fiscal residency certificate is an important document to have. Many people confuse it with the green civil residency certificate but it’s the fiscal version that is needed to prove your status as resident if you should sell your house or need to pay inheritance tax. Without it you can find yourself losing the allowances and benefits that come with being resident.

When you first move out to Spain, deciding where ‘home’ is can take you a little while. In fact it can become an issue in itself. You wait with anticipation for the day when you no longer refer to going to the UK as going home and instead it just becomes the country you visit to check on the relatives. It can be a long process with you passing through a period of feeling you inhabit no man’s land and could, literally, be at home wherever your hat is.

The trouble is, try using ‘where your hat is’ as a criteria with the
Spanish Tax Authority. As you might imagine, they need slightly more convincing about where you live than that. At one time your residency card might have been proof enough. Now with only the green certificate to suggest you’ve laid your hat in Spain you need something with a little more substance. That’s why we recommend you have a fiscal residency certificate.

You obtain a fiscal residency certificate once you have completed your
annual tax declaration. It doesn’t matter if you do not earn enough to pay any tax, the fact that you have made your declaration means that you are ‘known’ to the tax authorities and your status as a resident is confirmed. And it is important. There are times when proving that you are a resident in Spain is vital.

We were recently approached by a prospective client who was in the process of selling her house. She was two weeks off completion but had just discovered that she would have to provide the tax authority with 3% of the proceeds of the sale usually only demanded from non-residents. This
3% retention is required of non-residents as a security that they pay any additional taxes owing, such as capital gains tax. It isn’t a requirement from a resident sale. Usually.

Much to her mortification she was well and truly between a rock and a hard place. In order to get her fiscal residency certificate both her and her husband would have to pay 75 euros for the last five years as a fine for not having made a tax declaration. The alternative was to accept the categorisation as a non-resident and pay a back log of 5 years non-resident imputed income tax, plus fines.

It’s not just in relation to the 3% retention that proof of residency is important. Capital gains tax and inheritance tax are also dependent on the status that you hold. If you can’t prove this status then you may miss out on the benefits that being a resident can provide.  


Susan Partridge Helme

Susan Partridge Helme
Tax Advisor

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