Law in Spain

Hacienda, the Spanish version of HMRS, is taking advantage of the COVID19 crisis mooring people in Spain to crack down on them. They are arguing that if you spend more than 183 living in Spain (regardless of the circumstances) then you are a Spanish resident and you are liable to do your tax return here (IRPF in Spanish).

Not only a foreign citizen would have to pay, according to the Hacienda interpretation of the law, their yearly tax returns but also Inheritance Tax if somebody dies while the heir has spent 183 or more days in Spain.

Furthermore, Hacienda will also make foreign citizens pay Wealth Tax (Impuesto del Patrimonio) taking into account their worldwide wealth. In order to do that, the 720 form needs to be filed in at the Hacienda offices informing all the rights, shares and ownerships one has that exceeds the €50,000.00.

The Organisation for Economic Co-operation and Development has urged national tax offices to follow the guidelines left by some of its members like Australia, United Kingdom or Ireland. These tax offices have decided to ignore the time spent in their countries by workers, agents, executives or administrators.

Here at Abad Abogados we believe that Hacienda should consider the unwilling extended stay in Spain of foreign citizens to be force majeure, and to not include that time in their calculations for residency. Particularly when the affected person has made efforts to return to their home country as soon as the travel bans are lifted.

If you have stayed in Spain during the COVID19 crisis unwillingly and would like advice regarding its impact on your tax obligations in Spain, the Abad Abogados bilingual team in Spain is ready to help you, as it counts among its ranks with legal professionals in Tax Law and litigators ready to fight for you.

Due to the current COVID-19 situation, plenty of people have seen their income decrease and paying their monthly instalments for mortgages and loans become an insurmountable obstacle. Here in Spain the Government has issued two new bills Real Decreto 8 and 11 / 2020 in order to open the door to delay payments on loans for those affected the most. Although at the beginning only mortgages were considered, now all kinds of loans are.

The requirements for this mortgage moratorium need to be all met by the applicant and they are:

• To have their status changed to unemployed or, if you are a freelance or business owner, to have your profit decreased in at least 40%.
• For your household income not to be higher than €1,613 in the month before the application.
• That the monthly loan payment plus the basic utilities rises up to be at least 35% of the household income.

If the loan is a mortgage, it is also required:

• That it is set upon your primary residence, upon a property that you use  for your business (i.e. your office) or upon a property that you let but whose rent you have not collected since the 14^th March 2020 for COVID-19-related reasons.

Banks and other financial institutions will offer you bank products that are not equivalent or do not have the same advantages as the ones contain on the recent bills. If you believe you meet the requirements abovementioned you could be benefitting of a moratorium or pay grace period. Abad Abogados has a team of English-speaking professionals that can help you in these difficult times. Contact us today!