The Superior Court of Justice of Catalonia validated a settlement by the Spanish tax authorities in a case in which a retired person declared tax residence in Portugal, but ended up being considered resident in Spain, as it was understood that his center of interests never left the country. The news was released by the Spanish portal Noticias Trabajo.
According to the same report, the court considered that the change of residence was fictitious and that tax residence does not depend only on what the taxpayer says he wants, but on objective elements that show where, in fact, the center of his life and his economic base is.
At issue is a case in which the Spanish Tax Agency argued that the retired person should be taxed in Spain in the IRPF (the equivalent of the IRS), for all income, including pensions and other income paid by public entities, and cannot be treated as a tax resident in Portugal. Also according to Noticias Trabajo, the process involves assets and income valued at around 1.78 million euros.
What weighed on the alleged “fictitious residence”
According to Noticias Trabajo, in the analysis of the case, factors such as the maintenance of several properties in Spain, the permanence of bank accounts in the country and a pattern of expenses that pointed to a continued connection to Spanish territory were valued.
The court understood that, although there were formal elements of connection to Portugal, this was not enough, in itself, to demonstrate the effective transfer of the core economic interests.
183 days and “center of interests”: what Spanish law says
Spanish law defines tax residence in article 9 of Ley 35/2006 (IRPF Law). According to this rule, anyone who stays more than 183 days in Spain in a calendar year, including sporadic absences, is considered a resident, unless the taxpayer proves tax residence in another country. Alternatively, anyone who has the main nucleus or base of their activities or economic interests in Spain can also be considered a resident.
The Spanish Tax Agency explains this framework in its official materials and also reminds that this assessment is made without prejudice to what may result from conventions to avoid double taxation.
In the case now reported, and according to , as it was not possible to accurately determine the number of days in each country, the core economic interests criterion was applied, and it was also mentioned that the taxpayer admitted spending several months per year in Spain.
Warning for those who “change countries” during retirement
The practical conclusion is clear: changing your address and gathering documents helps, but does not replace a real shift in the center of life and economic interests. When this change is not effective, the risk of tax requalification and subsequent settlements, with potentially very high values, increases.
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