Forcing to pay any taxes in Spain

[jordan1275]

Let's consider following case:

1) I am EU citizen (Poland).

2) I want to rent a flat in Barcelona, Spain from 01.06.2024 to 31.05.2025 (that means I need to have NIE).

3) I want to stay 182 days in Barcelona in Barcelona from 01.06.2024 to 31.05.2025 with a break for Christmas holidays in 2024 (means less than 183 days in 2024 and less than 183 days in 2025) as tourist together with my husband (not working in Spain) and 3 years old son.

4) I am selling Intellectual Property for 1 or 2 clients every month (that means I issue 1 or 2 invoices every month to sell intellectual property) from my company registered in Poland. No one from my clients are Spain located/registered companies.

5) I have house in Poland which won't be rented during our stay in Spain.

6) I don't want to use gevernment public services in Spain, however there is a chance to have private doctor appointment (but not public hospital).

Should I worry about:

A) Being classified as Tax Resident in Spain in 2024 or 2025?

B) Being charged to pay income tax or any other Spanish tax for those invoices issued on that months when I was in Spain in 2024 and 2025?

 

[snoopy90]

@jordan1275 Can't comment on the overall validity of the setup, but do mind that Spain considers short trips out of the country as being IN Spain for income tax residency math. Your XMAS trip out will not count as time OUT of the country, and you'll be a defacto resident with those dates, even if the overall setup ends up being valid. Your company may also be considered resident, assuming it has no substance in Poland.

In any case, it frankly looks like a tax avoidance scheme where you nevertheless spend most of a year in Spain while working (even if remotely). You really ought to take this to a lawyer, not Reddit.

 

[jordan1275]

@snoopy90 Indeed, the time when we want to rent a flat is not accidental. We want to be crystal clear for Hacienda. I tried to dig a bit to find a definition of short trip (how many days) and what is not (to exclude from 183 days rule) but I couldn't find any. The thing is that even trip back home for Xmas reveals that out center of interest is in Poland - we have family, house, nationality and company registered there. We just wanted to have a gap year in Spain to check one point on our bucket list, but don't want to stop charging my clients if they want to continue using my IP.

After all, I will have to consult it with a lawyer in Spain and Poland as well because I don't want to lead to situation when both countries will want taxes about the same. I know the countries have double-tax agreement but who is the party in the dispute? Me vs Spain potentially or Spain vs Poland who should get my money for income taxes?

 

[snoopy90]

@jordan1275 If you register, you'll be declaring you live here for the moment. You'll have a local rental contract or agreement of some kind. Stepping out to go back to Poland will be seen as a vacation if it's ever looked at. After all, immigrants move to Spain and go back home for the holidays, but they still live and pay tax in Spain.

You can be in the crappy situation of being considered a tax resident in both jurosdictions, regarldess of your center of vital interest. You'd likely end up paying tax in both, with credit on what's paid on the cheaper one, plus a lot of expensive admin and consults. Plus fines if Spain thinks you should have been self-employed and paying social security, which I think is likely.

Good luck in any case

 

[tfosria]

@jordan1275 If Spain is your center of economic activity, good luck explaining yourself to local court once you're contesting a tax bill...

Amazing how many folks come to reddit for tax advice, thinking all the tax offices are made of the dumbest people ever... Want to know how to optimize taxes? Consult the best advisors in each country, not reddit...

Plus never assume that local tax offices are clueless. They'll just issue you a tax bill or audit and feel free to contest it..

 

[jordan1275]

@tfosria The thing is that Spain will not be center of my economic activity. The plan is do the business in Poland and then charge the customers the next months since they can't afford to pay one big invoice for the whole licensing period.

I'd be happy to consult advisor in Spain. Appreciate if you can share any. All I know how I struggled to find a good one in Poland (to filter out all those fb/ig experts without proper knowledge).

 

[tfosria]

@jordan1275 Yeah, really check with Spanish advisors, what local tax office deems as tax domicile in the country. In many cases if you are deemed resident, even companies you own might be considered "Spanish" companies for tax purposes. Check Controlled Foreign Corporation Rules.

Unfortunately, I don't have a good idea about Spanish tax code, others here might be more helpful. Regarding tax advisors, just visit a few startup incubators and ask around, I'm sure you'll find few in no-time. Finding someone knowledgeable with cross-border issues is very hard though, in any country. So that might take a bit longer.

Good luck!

 

[deqxter]

@jordan1275 Keep receipts and bank statements.