Are you a foreigner and have you been quarantined in Spain? The Spanish Treasury may require you to pay taxes

The lockdown imposed by the Spanish state in recent months has resulted in some foreigners being trapped in their second residences in Spain and unable to return to their places of origin. This situation has caused them to stay in Spain for more than 183 days of the year (the legal limit to define whether or not they are a resident of Spain), and for this reason, the Treasury has required them to pay taxes.

When is it understood that a taxpayer has their residence in Spain?

To fully understand the problems that have arisen, it is important to pay attention to the wording of article 9 of the Personal Income Tax Law, which establishes that a taxpayer is considered to have their habitual residence in Spain when any of the following circumstances apply:

• The individual stays more than 183 days a year in Spanish territory.
• The main nucleus or the base of their activities or economic interests is in Spain.
• It is presumed unless proven otherwise, that the taxpayer resides in Spain when their spouse and minor children reside in Spain.

What taxes can the Treasury oblige foreigners to pay?

Based on what is established in terms of residence, if the period of lockdown is counted as a residence in Spain, many foreigners will exceed the limit of 183 days a year, for which they may be required to file and/or pay the following taxes:

• Personal Income Tax (IRPF) is charged on all the income the taxpayer receives around the world.
• Wealth Tax is charged on total global assets. You should also bear in mind that there are autonomous communities that regulate rebates on this tax, as is the case in the Community of Madrid.
• Inheritance and Donations Tax. Many foreigners have suffered the death of relatives due to COVID-19, and have inherited, so if they reside in Spain they will have to pay Inheritance and Donation Tax. In this case, there are also bonuses regulated by the Autonomous Communities that mean that in some places it is much cheaper to inherit than in others.
• Form 720. This form is the declaration of assets and rights abroad held by the taxpayer. Failure to submit this form may lead to the imposition of sanctions.

On the other hand, a resolution of the General Directorate of Taxation, regarding a binding consultation of a Lebanese couple that was trapped in Spain during the lockdown, has determined that the lockdown period is included for the purpose of determining the residence time in Spain.