Spain extends tax residency rules to lockdown-enforced stays

Spain has announced that all individuals who spend more than 183 days in any given tax year will be treated as resident in the country for tax purposes, even if their stay was mandatory due to covid-19 travel restrictions.

The announcement, which was made by the Spanish Directorate-General of Tax this week, will apply to many foreigners who had originally intended only to stay a few weeks or months in the country. They risk now being categorised by the Spanish tax authorities as having changed their country of residence.

The Personal Income Tax (PIT) Act considers anyone residing in Spain for more than 183 days in a given calendar year as eligible for taxation on their income or paying wealth taxes. 

Madrid's announcement caught many foreigners by surprise, as most European countries have said they will make exceptions for stranded travellers during the covid-19 pandemic and its widespread travel restrictions. More widely the US, Canada Australia, India and Malaysia have all confirmed they will extend exceptional circumstances to expats.

In April the OECD issued guidance to tax authorities advising them not to treat individuals stranded abroad as having changed their country of residence.

The tax authority's announcement comes as Spain recorded 7,039 new cases of covid-19 in a single day, representing its biggest increase since May. 

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