Crackdown on False Tax Residency Abroad by Spanish Tax Authorities


The Ministry of Finance is set to intensify its focus on false tax residency outside of Spain, as outlined in the recently published guidelines for the Annual Tax Control Plan for 2024 in the Official State Gazette (BOE).

Regarding the control of relevant assets, the BOE explains that accumulated experience has brought to light “extremely harmful behaviors” detrimental to the interests of the Public Treasury. These behaviors are particularly observed in cases involving high-net-worth individuals who manage to achieve effective taxation lower than what is due.

Consequently, the Tax Authorities will direct its attention to taxpayers who, while residing in Spain, “fictitiously place their residency in other territories, notably those with low taxation.”

Tax Authorities have observed that “a certain number of non-national individuals choose to live in Spain, establishing their habitual residence in Spanish territory, remaining in it for more than 183 days in the natural year. However, they do not commence being taxed as residents for their worldwide income but continue to do so incorrectly through the Non-Resident Income Tax, solely for income obtained or generated in Spain. These behaviors will be subject to verification.”

Throughout 2024, direct investigations will persist into high-capacity economic contributors, known as HNWI (High Net Worth Individuals) or UHNWI (Ultra High Net Worth Individuals), for the detection and regularization of any irregular behaviors they may incur.

In this context, Lullius Partners strongly recommend that our clients proactively verify the correct compliance with their tax obligations. This step will help avoid potential verifications by Spanish Tax Authorities and ensure regulatory compliance.

For further information or to discuss your specific tax obligations, please do not hesitate to contact us.