Hacienda takes advantage of the confinement of foreigners in Spain to tax them.

  • Maintains the 183-day limit for them to be considered tax residents

  • Government restrictions prevent them from returning home

  • OECD calls on countries to halt counter for “force majeure”.

    The tax authorities are taking advantage of the confinement of foreigners who have been caught out by the coronavirus crisis in their second homes in Spain and cannot return to their countries to demand that they pay taxes. Contrary to the recommendations of the OECD, the Tax Agency maintains the obligation to reside outside Spain for 183 days in order to prevent the Treasury from automatically considering these people as tax residents in Spain and obliging them to pay taxes to the Spanish tax authorities.

    The mobility restrictions decreed by the government, and articulated through the state of alarm, have caused these people with tax residency abroad to be trapped in the country. In this way, many of them will end up accumulating a long period of residence, more than 183 days, after adding up the duration of these restrictions and the time they have stayed in Spain before and after them.

    Strange escapes

    The situation has set off alarm bells among foreigners who have been caught within Spain’s borders. Many have managed to leave the country by unusual means. “A few days ago, a desperate client had to face a long journey to his country, with many complications and several boats so as not to accumulate permanence in Spain and not to be considered a tax resident here”, points out tax expert Alejandro del Campo, a partner at DMS Consulting in Mallorca, with a large portfolio of foreign clients. “In the event of the imminent death of a family member, you might even have to pay inheritance tax,” he points out.

    The consequence of staying 183 days on Spanish soil is the immediate application of Article 9 of the Personal Income Tax Act (IRPF). The foreigner thus becomes a Spanish taxpayer and the Tax Agency will require him to pay, among other taxes, personal income tax on all his worldwide income.

    The Inland Revenue will demand Wealth Tax on their worldwide income and Inheritance Tax on any inheritance they receive in any country. 

    In addition, the Inland Revenue will also force them to pay Wealth Tax – except for those foreigners residing in Madrid, who are currently 100% exempt – also on their worldwide wealth. This tax does not exist in the vast majority of neighbouring countries.


    As in Spain, foreigners also face the death of family members due to the coronavirus. If this situation surprises them in the country, and they spend 183 days in Spain this year, they will be obliged to pay Inheritance and Gift Tax on any inheritance or donation they receive anywhere in the world.

    In addition, the application of the new article of the Personal Income Tax Law implies the presentation of the Inland Revenue’s Form 720. This declaration obliges to report all assets and rights that the taxpayer has abroad, whether they are accounts, securities or real estate, if any of these groups of assets exceeds 50,000 Euros.

    The General Secretariat of the Organisation for Economic Co-operation and Development (OECD) has already called on countries to freeze the meter. The OECD considers the pandemic to be a force majeure that prevents people from moving between countries, according to its recommendations paper Analysis of Tax Treaties and the Impact of the Covid-19 Crisis.

    Countries stop the meter

    The OECD urges tax administrations to follow the practices of some member countries, such as Australia, the UK and Ireland. The tax authorities of these countries have expressed their intention to ignore the days of presence on their territory of natural persons such as employees, agents, executives or directors.

    Although the OECD Secretariat’s notes do not necessarily reflect the official position of OECD member countries, its arguments are based on the Model Convention, where it has interpretative value.

    “The DGT should consider that this health crisis is a force majeure that prevents them from returning,” explains prosecutor Javier Gómez Taboada.

    “In Spain, the Directorate General of Taxes (DGT) should follow the recommendations of the OECD, and the praxis of other Administrations in our environment, in the sense of understanding that the health crisis is a cause of force majeure and, as such, should not have an impact on the tax residence of those persons whose movements have been limited against their will”, considers tax lawyer Javier Gómez Taboada, partner of Maio Legal.

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