If you have plans to emigrate to Spain, it is best to consider the consequences on your tax situation. After all, these consequences can be far-reaching. This article explains from when you are liable to tax in Spain and what the tax consequences are.
When am I liable for tax in Spain?
A distinction should be made between a resident and a non-resident. You are fully taxable in the country where you reside. On the other hand, if you are a non-resident, the non-resident tax applies. The non-resident tax does not have a far-reaching impact on your tax situation, but it does entail some obligations.
When am I a resident in Spain?
If you emigrate to Spain, you will have a permanent residence available to you there: you own or rent a property in Spain. The double taxation treaty between Belgium and Spain stipulates that if you have a permanent residence possesses, you are considered a Spanish resident. If you also have a permanent residence in Belgium - for example, a flat that you do not rent out - the country where the centre of your life interests located. This means looking at your personal and economic relationships. Where do you socialise with your family and friends? In which country do you work? Where do you manage your assets?
In case the centre of your life interests is not clear, the number of days per year you spend in Spain is considered. In the country where you spend the most number of days per year, you are a resident. If this rule too does not provide a solution, the country of your nationality is taken as the criterion. In most cases, however, it is sufficient to look at the country where you are more than 183 days a year stays.
If you spend more than 183 days a year in Spain, the Spanish tax authorities consider you a resident.
When am I a non-resident?
You are a non-resident if you receive income from Spain or have assets in Spain and you are a resident in another country. The best-known practical example is a Belgian resident in Belgium with a second residence in Spain. You can find more information on the non-resident tax in Spain.
What are the consequences of emigrating to Spain on taxes payable?
As a resident in Spain, you are fully subject to Spanish personal taxes. And this on your global income and global capability. This means that you are taxed not only on your Spanish income and assets, but also on your income and assets in other countries, such as Belgium. As an example, a common situation is that Belgian equity portfolios and shares in real estate companies are subject to a capital gains tax in Spain. You may also use the wealth tax in Spain don't forget. Wealth tax in Spain also applies to foreign assets.
However, for expats, there is the possibility of invoking the tax concession scheme "Ley Beckham". Here, your income and assets are taxed like a non-resident.
So in addition to paying Spanish personal income tax, you will also be subject to all kinds of other taxes in Spain. In addition, in may remain taxable in Belgium. However, the double taxation treaty between Belgium and Spain will, in most cases, prevent double taxation and determine in which country your income will be taxed. For example, the double taxation treaty stipulates that pensions are in principle taxed in the state of residence.
Consequences on inheritance and gifts
However, the double taxation treaty does not regulate inheritance tax and gift tax. Emigrating to Spain may therefore result in double taxation on your inheritance or gift. Not only will Belgian inheritance tax apply, there will also be Spanish inheritance tax be paid.
Are you moving to Spain and expecting another gift? You may then pay double gift tax. Find more information here.
If you do not make preparations, Spanish inheritance law will also apply to your estate. Indeed, the applicable inheritance law is determined according to your habitual residence.
What if you return to Belgium?
If you move back to Belgium, you basically become a Belgian resident again. This means that Belgium may again tax your income in full. However, you should be careful that the Belgian tax authorities do not tax you for the years you spent abroad.
For example, there are a number of legal presumptions that determine that you never moved for tax purposes. If you return to Belgium within two years, the tax authorities will presume that you never intended to leave Belgium. Similarly, if you were registered in the Belgian population register during your stay abroad, there is a presumption that you are resident in Belgium. However, these presumptions are rebuttable.
Is your property in Belgium your family home? If so, there is an irrefutable presumption that you are a Belgian national resident. Even if your partner or children still reside in Belgium, the tax authorities will assume you are still resident in Belgium for tax purposes.
Do you wish to emigrate to Spain? Confianz can assist you with the administrative steps To become a resident in Spain.
If you decide to emigrate to Spain, it is recommended that you tax advice inquire. With tax planning, you will avoid surprises and tax savings realise.
Update September 2023