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According to our estimates there are two million properties in Spain owned by foreign families. The great majority of foreigners have bought their properties as non-resident owners, using them for several short vacations during the year, while some are living in Spain permanently.
There are also some who live here for the winter and go to cooler areas of the continent during the summer. Many of them are asking the question:
"Should I keep my “tourist” status in Spain or should I get a "residencia"?" From the end of March 2007 a new law decree on the foreigners right to stay in Spain has come into effect, cancelling the obligation for EU-citizens to apply for a residence permit, but instead introducing a certificate of registration. We are dealing with the new situation in the two last chapters of this Fact Sheet.
On the foreigners certificate
In connection with our item on the foreigners certificates in Citizens Report 3-07, we have received from John Carrington, one of our members in Fuengirola, the following:
“ I note the problems being experienced in some parts of Spain with obtaining the Resident Cert.
In Fuengirola, since the change over, they have operated an appointment by phone system, with an English speaking volunteer; thus avoiding queues. They have also recently installed a dedicated line, for English callers (952 197 114) to reduce further communications problems.
Since the abolition of the Residencia it has become apparent many 'foreigners' are increasingly finding problems of proving their identity. My Residencia expired in April and thus I have seen first hand the problems. The British do not have a National ID card and even if they did, like many other countries, they would lose their right to it on moving to Spain. This means the only legally accepted ID is a passport; very difficult to carry at all at times. Again with the Brits it means when the passport becomes ‘dog-eared’ one must apply for a replacement. A UK passport can only be obtained in Madrid and thus the overall cost, including courier service, is around 200 euro. I am seriously considering applying for Spanish Nationality, thus renouncing my British Nationality, so that I can have an ID card.
For about 10 years I have worked as a volunteer translator with the National Police and the Guardia Civil. Many times I have seen officers taking denuncias refuse to accept copy passports, copy Residencias, national driving licences and various other ‘ID documents’ which people have produced, insisting they return with their original passports. I accept some officers are more understanding and will on occasions waive the legal requirement for the original passport.
The Residents Cert, which has a highlighted warning, printed in two places,, that it is not proof of identity, seems to be a worthless piece of A4 paper. Almost nobody I have spoken to can understand why the Residencia was abolished. What was needed was a simplified method of application and immediate issue. At Fuengirola it is anticipated that a machine, which will produce a Spanish ID (DNI) instantly, will shortly be operating. It probably could have produced Residencias too!
Having supported the abolishment of the Residents Card can I now suggest you use the same efforts to have a replacement for it introduced so we are not ‘second class citizens’ required to carry passports as proof of ID having been deprived of our Residencias ! “
The European citizens
The first consideration is if you are a citizen of the European Union (EU) or not. Persons coming from the countries of the Union have certain advantages. It is important to note that in some cases it is enough to be a resident in an EU country to have the advantages, even if your nationality is with a country outside the Union.
From 1 January 1994 the EES (European Economic Space) is in effect and gives all citizens of the EFTA countries (minus Switzerland) the same rights as Union countries when it comes to the free flow of persons, capital, goods and services within the area. In the following, when we write EU, we mean Europe and include Norway, Iceland and Lichtenstein, the other countries outside EU that are members of the EES.
Fiscal residency
Spanish rules
Citizens of the EU, in principle, should be able to move and stay freely, without any limitations within the territory of the EU and EES. As a matter of fact, not only citizens, but anyone with a residence permit in any of these countries. Otherwise, the maximum period a tourist can stay on Spanish territory is 3 months (6 if your come from overseas), within each 6 months period.
This requirement is very much a 'paper tiger', since one can now move within the "Schengen-territory" from Spain and up to Scandinavia without a passport and without anyone asking for it.
If you are not a citizen from such a country where a visa is needed, the options after having stayed in Spain for the legal time period as a tourist, are the following:
- apply for an extension for another 90/180 days as a tourist, or
- leave Spanish territory (only long enough to get an entry stamp at the border), which permits you coming back for another stay of 90/180 days in the same calendar year.
Citizens of countries requiring a visa must, of course, leave the country before the visa runs out and apply for a new visa to come back.
For stays longer than the tourist periods described above you need a residence permit.
For citizens belonging to the EES, the residence permit is called a "tarjeta" and is easier to obtain than the normal "residencia" for the countries outside this area. A "tarjeta" cannot be denied a EES citizen, while others must apply and may have their application denied, without any reason being given by the authorities.
There are several types of "residencias" and "tarjetas," depending on whether you want to work in Spain or not. From FIPE you can get a current list of papers and documents needed. Be aware that this list may be changed at short notice, and that in some local offices they may be more demanding than in others.
The tax implications
Whether you become a fiscal resident, take out a "tarjeta," or a "residencia," you have to make an income tax return to Spain for your world-wide income. This may not be a heavy obligation. Most countries in northern Europe have now higher income tax rates than Spain (from 15 to 45% tax). However, the income levels for the higher tax rates starts lower in Spain than in other countries.
Furthermore, when selling a property in Spain, residents may off-set the costs of purchasing a new dwelling against any capital gains from selling their old property, while the non-resident must pay 35% on the net difference between the values in the old escritura and the sales escritura.
In addition, a resident does not have to pay income tax on the notional value of his dwelling. A non-resident must declare the full value of the fictional use of his property, without any deductions, and pay a flat rate of 25%.
Also, when a resident sells a property in Spain, he is exempt from the obligation of letting the buyer retain 5% of the declared value which is paid into Hacienda (Ministry of Finance) as a guarantee for the seller's tax payment.
On the Inheritance Tax there is a great difference between non-residents and residents in a case where a resident family-member inherits a permanent dwelling from another resident. Then a 95% reduction in the taxable amount can be applied, in addition to other deductions applicable (for details see our Fact Sheet on inheritance).
For most people, regardless of their nationality, the advantages of becoming a resident, seen from the tax point of view, outnumber any disadvantages. But we recommend that you sit down with paper and pencil and make your calculations.
Health services
A person from an EU country, or from any country that has a bilateral agreement with Spain on Social Security coverage, and who is included in the Social Security system of his own country, may use the health system in Spain, both as a tourist and as a resident.
If you are a non-resident staying in Spain as a tourist you must bring with you from the home country the European Health Insurance Card. With this card, you are entitled to free emergency health service. If you want to become resident in Spain, you must bring with you from your home country the form E-121. You can then register with the local health centre and will have complete health coverage in Spain (for further details see Fact Sheet on health).
Cars
A person resident in one of the EES countries can use a car registered in his country of residence without any limitations in Spain. This is a great plus for non-resident owners. But there is always a snake in paradise. The snake, in this case, is that some countries (like UK) do not accept the Spanish ITV (regular technical inspection of the vehicle), and you are expected to drive the car home for each technical inspection. To be without the technical inspection may place you in a situation where your insurance is no longer valid, so be careful.
According to the letter of the law, a non-resident foreigner may not drive a Spanish registered car. This is not being taken very seriously. Since a non-resident foreigner may buy a Spanish registered vehicle, some experts deduce that they must then also be permitted to drive their own vehicle. In addition, according to the letter of the law, a foreign tourist driving a Spanish registered car should have a Spanish driving licence (meaning exchanging your national licence for a Spanish one, until the EU has a common driving licence). Now the European Model driving permit as a plastic card is accepted and need not be registered with the Spanish traffic authorities anymore.
A resident foreigner may drive a Spanish registered car, and must have a Spanish driving licence, unless he has got an European Model drivin permit.. For a period of time, he may also drive his foreign registered vehicle, and on certain conditions (see our Fact Sheet on the foreigner and the car) may even import that vehicle into Spain, without paying any customs duty or VAT, only paying the special registration tax based on the actual value of the car.
Banking
In compliance with the changes within the European Union, Spain has lifted all its foreign currency restrictions and all restrictions on transactions between residents and European non-residents.
Both residents and non-residents may have accounts in Euro. Non-residents may also open a "foreigner's account," both in "Euro ordinarias" and in "Euro convertibles." A resident may have an account in a foreign currency in a Spanish bank, as well as abroad, even if the Bank of Spain wants to have a report on accounts outside the country.
Some banks give residents a better deal when it comes to granting a mortgage. Work/business
From March 2003 any citizens of another EU or EES country may work in Spain without having to take out a residence permit. When he is paying his contribution to the Spanish social security system, or have done so, both he and his family is exempt from the obligation of having a residence permit.
For a person outside the Union area, the matter is more complicated. He has no automatic right to start a business or seek employment, but must apply for it. The Spanish authorities are very restrictive at a time when unemployment is still high. The rule is that a person outside the Space must have 90000 Euro on his account in Spain to be permitted to start his own business.
To work in Spain without a work permit is very dangerous, both for the employee and employer. Heavy fines for the employer can be imposed and the employee may be put on a plane leaving Spain and told not to come back before three years have passed.
Our advice: Never work, self-employed or as an employee, without having all your papers in order! The vote
The vote (based on the Maastricht Agreements for Union citizens and on bilateral agreements for Norwegians) in Spanish municipal and/or European elections, is reserved for persons who are registered on the "padron" in their municipality, therefore included in the electoral roll.
Non-residents have no voting rights, but can, of course, take part in the associations with an interest in social and political matters in Spain.
The importance of as many foreigners voting as possible cannot be stressed enough. Without a vote, we are merely investors and tax subjects who need not be taken very seriously. With many of us registering on the voting lists, the foreigners' situation in general will improve.
So, if you belong to the large group of people who are considering whether to stay on as 'tourists' or register themselves as residents, and find that the difference is not too great, we recommend you to become residents and enter on the voting list. Staying put in Spain?
Some foreigners believe that they have to stay put on Spanish territory almost permanently if they become residents here. This is not correct. The residence permit does not force you to remain in Spain for a certain part of your time or hinder you staying in one or more other countries for prolonged periods. You are not supposed to be resident in more than one country, but can, as a resident in Spain, stay in another country for as long as that country permits. So, yes, it is possible to be resident in Spain and just stay here during the winter, going to your home country and/or any other place in the world during the summer.
Spain's advantage
You should also consider what our host land, Spain, would like us to do, and what benefits the country and your community may have from you becoming a resident.
First of all, the laws of Spain clearly indicate that they expect anyone who, in reality, is something more than an accidental tourist in this country, to take out a residence permit. On several occasions the Spanish authorities have expressed their annoyance at the many foreign owners who, in reality, live here for a longer period than the tourist stay, but refuse to take out a residence permit. This has also led to criticism towards foreigners in Spain by some official authorities.
Secondly, each of our municipalities have a number of benefits resulting from foreigners' registering themselves in the "padron municipal." The municipality will receive more subsidies from the national and regional governments, better facilities for the local post office, more telephone lines, more pharmacies ... So, as you can see, the municipality gets important benefits from our registration, and we gain from their benefits.
Ministry of Interior answers a letter from “Ciudadanos Europeos”:
New law on European citizenship imminent
In April 2004 we sent a strongly worded letter to the Minister of the Interior pointing out they had overrun the time limit established by the European Union for the adoption of Directive 2004/38/CE into National Law; they had tried to fob us off in an earlier letter.
We have now received a polite, detailed and informative answer from the Director of the Cabinet of the Ministry, telling us that to implement the changes in the situation of the European Citizens will require the passing of a new law. He said the preparation of this law is already very advanced and is expected to be approved shortly in a Cabinet meeting. The Director said the new law has been revised by three consultative bodies, the Inter-ministerial Commission for Foreigners, the Three-party Labour Commission and the Forum for the Social Integration of Immigrants.
The Ministry states that our proposal for a plastic card with photo, name and NIE number, issued by the town halls, goes against chapter III of the Royal Decree 178/2003 as the local administration is not competent to issue identity cards to foreigners. In the letter, we are being told the new law foresees that the Foreigner’s Offices (or police stations with a foreigners department) will issue a certificate to the European Citizens and abolish the so called Community Cards (tarjeta comunitaria). Our comments: - It is obvious the Ministry has been working seriously on the matter since April, albeit that it would have been better if this work had been concluded before the time limit run out.
- When the law is published, we will consider it carefully to ensure it is not difficult for foreigners to comply with, not contrary to the concept of the European Citizenship and does not requires new bureaucratic exercises.
New law in force: Tarjeta Comunitaria out – Certificado in
The year long battle of Ciudadanos Europeos to do away with the Residence Permit for European citizens has been crowned by victory. On the 16th March a new Decree (number 240/2007) came into force which liberates European citizens (from EU and EES countries) from obtaining and/or renewing “Tarjeta Comunitaria”.
However, we are not out of the hands of the Ministry of the Interior. The tarjeta has been replaced by a certificate. The wording in article 7 of the Decree, dealing with EU citizens wanting to stay in Spain for more than 3 months is:
“Los interesados estarán obligados a solicitar personalmente ante la Oficina de Extranjeros de la provincia donde pretendan permanecer o fijar su residencia o, en su defecto, ante la Comisaría de Policía correspondiente, su inscripción en el Registro Central de Extranjeros. Dicha solicitud deberá presentarse en el plazo de tres meses desde la fecha de entrada en España, siéndole expedido de forma inmediata un certificado de registro…”
The content of the text in English is the following:
- That European citizens will have to register on a Central Registry of Foreigners - This application must be presented within 3 months of the date of their entry to Spain - The application must be presented at the Foreigners Office in the Province where the applicant intends to live, or at a police station - The Registration Certificate will be issued immediately
Questions without answers
It is said in point 2 of article 7 that one must present ones passport or national identification document when applying to be registered. Nothing is said about having to submit photos, fingerprint or presenting a Spanish NIF (fiscal identification number) or a NIE (foreigners identification number). Are we to believe local officials will not ask for these? In the second disposition of the decree, three Ministries are given the right to add “medidas de desarollo” to the law. Will the answers to the questions come from there?
What about those who have already applied for a “tarjeta comunitaria” or for a renewal of their Residence Card? Common sense would answer that such application could be cancelled at the time of applying for the registration in the Central Registry. In the first transition disposition is said that an application submitted before this new decree came into effect (16th March 2007) can be resolved in accordance with the new decree, or with the previous law, if the applicant so wishes.
Is the certificate valid for life or just for a certain period? Nothing is said about this in the Decree. Shall we risk the guess this will come in the “medidas de desarollo” in an unknown future? And will all sections of the Administration know about the new decree and not demand a Residence Permit? I have been asked for, and even turned away when not being able to produce a current residence permit, even through I was exempt under the law introduced by the Aznar government some 4 years ago…..
“Residencia Permanente”
In Chapter IV, article 10 a new category is introduced, the “Residencia Permanente” for European citizens that lived legally in Spain for more than 5 years. Also this right will be verified by means of a certificate issued by the Foreigners Office or a police station of the National Police with a Foreigners Department. Also, a person in business or work in Spain, who has stayed here for less than 5 years, but reached the Spanish retirement age, will have the right to apply for a “Residencia Permanente”. The same goes for a person in business or work who has retired due to permanent incapacity.
There are special conditions for family members from countries outside EU and EES, both when it comes to applying for a Registration or for “Residencia Permanente”.
Preliminary conclusions
We expect the new law Decree (and the “medidas de desarollo” to come) will be read carefully by the legal experts of the European Commission to see if they really conform to Directive 38 of 2004 from EU. Spain has a reputation in Europe for trying to dodge certain Directives and Resolutions whilst extracting maximum financial subsidies and support.
We do not like the wording “having to apply” and would have preferred it to be “having to register”. We do not like that we are still referred to as “foreigners” and would have preferred “European citizens from another EU country”. Neither do we like still to be in the sometimes long waiting lines at the Foreigners Office or Police Stations with Foreigners Departments and would have preferred registration at local town halls. We do not like to be registered in yet another Registry, in addition to the NIF-registration, the NIE-registration and the registration on the “padron”. One registration, sent to the other departments that have a need to know, should be sufficient.
We shall be waiting for the “medidas de desarollo”.
Even if you think it is beneficial for you to stay "tourist" for fiscal reasons, you may become a fiscal resident if you stay in Spain for more than 183 days per calendar year. This is spelled out both in the Spanish fiscal laws, as well as in the Tax Treaties signed between Spain and a number of other countries.
How can the public administration know if a foreigner has been in Spain for more than 183 days now that passports are not stamped when one enters and leaves the country? If the administration's suspicion is aroused, or if someone denounce you for any reason, the burden of proof rest with you. If you intend to stay a "tourist", even if spending a great part of the year in Spain, you need to get the stamp of entry and departure in your passport.
The fiscal year of Spain runs concurrent with the calendar year. The 183 days are computed as a total, so it does not matter if your total stay has been made up of several smaller periods.
What are the effects of being a fiscal resident in Spain?
A fiscal resident must make an income tax return the same as a resident, including his world-wide income, without having any of the advantages the residence permit may grant. Some countries have the agreement with Spain that pensions paid out by a government agency for previous work in local or central administration are free from taxes in Spain. If you have such a pension, it may be worthwhile taking residency in Spain and becoming a fiscal resident here. |
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