UPDATES ON APPLICATION PROCEDURES FOR EU APPLICANTS  FOLLOWING CORONAVIRUS PANDEMIC

ONLINE RESIDENCIA APPLICATIONS FOR APPOINTMENTS (APPLY HERE) ARE NOW BACK UP AND RUNNING AFTER THE CORONAVIRUS SHUTDOWN. HOWEVER, APPOINTMENT AVAILABILITY IS RUNNING AT REDUCED CAPACITY DUE TO CORONAVIRUS PROTOCOLS AND STAFFING ISSUES. The procedure for applying for residencia is explained further down in this article.

What is Spanish Residency / Residencia?

Much confusion reigns over what Spanish Residency actually means and what is required to obtain it. Below, we will separately explain ‘Residency’ and the separate concept of ‘Tax Residency’ and also the procedure for applying for residencia.

‘Residency’ in Spain .

The truth is that some foreigners in Spain never get around to applying for residencia. However, most law-abiding people who come and live permanently in Tenerife will apply for residency (colloquially referred to by locals and expats as ‘Residencia’).

The rules governing residencia for European Union citizens are set out in Royal Decree 240/2007.

For stays of up to 3 months, residencia is not required and you simply need a valid EU passport.

For stays of longer than 3 months, Article 7 says that EU citizens shall be entitled to do so, provided they apply for Spanish Residency.

‘Tax Residency’ in Spain

This is entirely different to ‘Residency’ explained above. Applying for Spanish Residencia does not make you ‘tax resident’ in Spain. Tax residency only applies when you spend for than 182 days in Spain in any tax year (or your main centre of interests is in Spain). We explain more about ‘tax residency’ at the bottom of this article.

Residency Card / Certificate

Before applying for residencia, you must first obtain TWO other documents, namely a NIE certificate (Spanish tax number) and then a Certificado de Empadronamiento (Town Hall Registration Certificate). If you click on each item, it will take you to a page explaining how to obtain them.

Once you have your NIE and EMPADRONAMIENTO, you can then proceed to apply for your Residencia Card (procedure explained below).

When you obtain your first Residencia Card in Spain, it technically has TEMPORARY status. However, after 5 years of residency in Spain, you are entitled to PERMANENT residency status. The differences between the two are very minor, which we explain further below.

Below (top) is an example of the latest credit-card-sized green card that EU residents will receive, whilst below (middle) is an example of the old green A4 certificate (which is still valid, but can voluntarily be exchanged for the card version). 

Whilst the police may tell you that the card must not be altered in any way, many people take the flimsy paper green card to their local photocopy shop to get it laminated for protection. We have never seen any business or authority refuse to accept a laminated card. Although in Tenerife, anything is possible!

Application Procedure for Residency for EU Nationals

Before applying for residencia, remember that you first need to obtain your NIE followed by your Empadronamiento certificate! Both are required to apply for Residencia.

Next, you need to download, print and complete form EX18, which can be found HERE.

Then, you must also complete Payment Form 790, which you can fill in online HERE and print off or download directly. Please then take a paper copy of the completed Form 790 to a major bank to pay a fee of approximately €12,00 in advance of the appointment at the Police Station. Not all banks accept cash payments against these forms. However, we understand that most La Caixa Bank branches do accept them.

You must then apply ONLINE for an appointment in advance. The official web-page for requesting appointments can be found HERE

At the Police Station Appointment, you need to bring:

• Completed Application Form EX18
• Modelo 790 Form stamped with the €12.00 payment made at the bank
• Original and a photocopy of your passport
• Original and a photocopy of your NIE certificate
• Original and a photocopy of your Empadronamiento Certificate.
• 1 Passport sized Photo (same photo requirements as for passports)
•  Evidence of financial eligibility (see info below)
•  Evidence of access to state medical care or private medical insurance (see info below)

Financial Requirements necessary to apply for Residencia for EU Residents

You must prove that you will not become a financial drain on the state by satisfying at least ONE of the following 4 conditions:

1. You are employed or self-employed in Spain (including an imminent job offer written on the employer’s headed notepaper); OR
2. You are in receipt of an EU Pension equal to, or greater than the minimum Spanish state pension; OR
3. You have sufficient funds to support yourself AND any dependents that intend to accompany you (which must be capital of at least €5,350, or alternatively income of at least the Spanish minimum wage); OR
4. You are enrolled as a student in a recognised educational establishment AND have private medical insurance covering all risks AND have sufficient resources to support yourself and any dependents.
5. You are a relative (from anywhere in the world) joining or accompanying an EU citizen who complies with one of the requirements at 1 – 3 above.

Any certificate or document not in Spanish must be officially translated in order to be accepted by the police here.

If you do not have a job contract or pension income etc), the standard requirement to prove financial means is to show that you have in excess of 5,350€ Euros (per adult applicant) in a Spanish bank account.This requires ordering a special bank ‘balance certificate’ from your bank, not simply showing a bank statement.

If relying on this €5,350 ‘Sufficient Resources’ category, (or relying on proving other income from outside Spain), you must also show that you have private medical insurance in Spain to cover you and all of your dependents, because you are unlikely to have access to Spanish state healthcare. If producing evidence of private medical insurance, you must bring the original policy document PLUS a receipt for latest payment under the policy.

If working or retired, you can instead show that you have an income or pension(s) equal to or greater than the Spanish state pension.

Again, any documents you produce as evidence of your above financial status that are not in Spanish MUST be officially translated. Furthermore, documents originating outside Spain may also need to be Legalised/Apostilled in the country of the document’s origin.

IMPORTANT: Once you have registered and obtained your Spanish Residency Card as an EU citizen, provided you continue living in Spain, your Residencia DOES NOT EXPIRE, nor does it ever require renewing, despite certain official sources or websites claiming otherwise. However, if you leave Spain for more than 12 consecutive months, then your Residencia is technically revoked (but only if the police become aware of your absence – there are no checks at airports etc). So, provided you are able to continue to support yourself and any dependents financially, you can continue to reside in Spain indefinitely on the standard green Residencia Card.

Obtaining a replacement Residency Card (EU Nationals only)

For anyone needing to replace their residency card (e.g. lost, damaged, stolen, change of address, upgrading from an old A4 certificate etc) then simply follow the same procedure as with initial residency using the same Forms EX18 and Modelo 790 with bank payment, plus supporting documentation, but instead tick “Duplicado” (duplicate) in the box in the above form EX18.

If you are unable to produce the old certificate/card, (e.g. lost or stolen cards/certificates), the police may first require you to fill in a Police Report explaining the circumstances behind the lost or stolen card. You can do this at the Police Station, or you can also now file a Police Report by telephone. See HERE for how to do this. They have English speaking operators available from 9.00am to 9.00pm every day of the week. However, you cannot file the lost card report AND apply for the replacement card during a single appointment.

Permanent Residency rights after 5 years in Spain

As explained above, the basic green A4 sheets or small green Residencia Cards for EU nationals DO NOT EXPIRE, NOR DO THEY REQUIRE RENEWAL, NOR DO THEY NEED HANDING BACK IF YOU LEAVE SPAIN. Confused residents have previously read on the National Police Website (‘Sede Electronico’) that the certificates/cards expire after 5 years in accordance with Article 7 of Royal Decree 240/2007. However, there is NOTHING in Article 7 that refers to the certificate or card expiring. For those wishing to check for themselves, you can access the text for Article 7 yourself HERE and put it through Google Translate.

In any event, after having resided in Spain for 5 years and having complied with certain requirements, Spain offers a VOLUNTARY procedure to apply for ‘Permanent Residency’.

Given that the basic Residencia does not expire, many people ask whether there is any point in applying for Permanent Residency. Indeed, the vast majority of foreigners resident in Spain never actually apply for it. The application may however serve as a stepping-stone for those wishing to obtain full Spanish nationality and a Spanish passport. Also, in the unlikely event that the EU were to impose any residency restrictions on UK nationals following Brexit, this application could provide a way to stay in Spain permanently.

Application for Permanent Residency after completing 5 years of Basic Residency – EU Nationals

The application for Permanent Residency is made to the same police station(s) where ordinary residency is granted.

You must show evidence that you have been living in Spain for at least 5 years plus additional information/documentation. This will include:

1. Your original residency certificate/card obtained upon your original arrival;

2. Evidence that you have lived continuously in Spain in the intervening period (e.g. rental contract(s), employment wage slips, utility bills, bank statements etc)

3. Evidence that you have been working, looking for work, self-employed, studying, self-sufficient etc

4. Evidence that you have sufficient income or funds to support yourself and any dependents.

5. Evidence that you qualify for public healthcare, or that you have a private medical insurance covering Spain.

You may also be asked to obtain a Criminal Records certificate from your home Country, details of any marriage or divorce, or certain medical certificates, depending on your personal history and circumstances in Spain.

Once you have satisfied the above requirements, you should be issued with a Permanent Residency card without undue delay. The card looks almost identical to the standard green Residency Card, but has different wording to reflect that you are now a Permanent Resident. This card then allows you to live and work indefinitely in Spain and to enjoy state benefits where applicable. You can also generally move between other EU member states and stay in any given state for up to 3 months without obtaining additional paperwork.

Financial/ Tax Residency AND other EU Nationals

Regardless of whether you have basic Residency or full Permanent Residency, you are legally required to take certain additional steps to inform relevant parties that you are now in fact resident. These include your bank, your employer and of course, the Spanish tax office (Agencia Tributaria).

Tax Residency in Spain is entirely separate from obtaining your green Residencia. Tax Residency simply that means you spend 183 or more days in Spain in any given tax year (January – December), or that your centre of main interests is in Spain (e.g. your business headquarters and family home).

A fair percentage of foreigners living in Spain (who may already hold the basic green Residencia card or even a Permanent Residency card) still fail to comply with one or more of the fiscal/tax requirements. Whilst there are downsides to being fiscally resident in Spain (e.g. Spain will want to tax you on your worldwide earnings), there are various advantages, e.g:

• Resident bank accounts attract lower fees than non-resident accounts.
• Residents routinely receive more generous mortgage deals on better terms.
• Residents are not charged ‘notional income tax’ on their principal residence in Spain (Non-residents are taxed on a notional 2% income on each property even if they don’t actually rent it out!)
• Residents can make lifetime gifts or leave assets in Tenerife under their Will to first line descendants with a 99.9% reduction on Gift Tax or Inheritance Tax.
• Residents can sell a property in Spain without the buyer having to deduct 3% retention on account of your potential Capital Gains Tax liability
• Residents over 65 who have lived in a property for 3 years don’t have to pay any Capital Gains Tax when they sell, regardless of the profit.
• Residents may offset the costs of purchasing a new home against any capital gains applicable on selling their old home.
• New Residents may import a vehicle and various other personal effects within 12 months of arrival without paying the usual Customs Import Tax (subject to conditions).

As stated above, the potential disadvantage of being fiscally resident is that Spain will tax you on your worldwide income. However, this may not be a disadvantage to everyone. Many countries have higher income tax rates than Spain, but in Spain the higher-rate tax calculation kicks in at a lower amount than in most countries. Also, many countries have double-taxation treaties, meaning that if you have to pay tax in a foreign country, your country of residence (i.e. Spain) will give you a credit for that overseas tax paid, meaning that you don’t pay twice.

An additional disadvantage with being fiscally resident in Spain is that since 2013 residents are required to declare all assets held in other countries where those assets (or group of assets within one type) are worth in excess of €50,000 Euros. The relevant form for making the declaration is Form 720. Penalties for non-disclosure can be severe. The form can be completed online HERE if you have an electronic NIE / DNI or alternatively a ‘Cl@ve’ PIN.

Failure to correctly register your true residential status can technically result in a fine of €300. However, TENERIFE GURU has not heard of any case where this fine has been levied. We also suspect that €300 is not an effective deterrent for those with more to gain financially by avoiding Spanish residency.

The requirement to file a Resident Tax Return depends on your personal circumstances and applies regardless of whether you have yet applied for basic or permanent residency.  If you spend more than 182 days in Spain in any calendar year, or have your centre of economic or vital interests in Spain, then you will be considered a resident for tax purposes. Then, if you ALSO earn greater than €22,000 income from any source in the relevant tax year (salary, dividends, business income etc), then you are required to file a Residents Tax Return.

Those actual residents who don’t file a ‘residents’ tax return are liable to late filing penalties plus interest on any tax payable. The taxman can go back up to 4 tax years in respect of false or non-declarations and unpaid tax. In addition, those who fail to register for tax-residency at all may be excluded from certain resident’s exemption schemes (e.g. a 99.9% inheritance tax reduction on assets they leave in the Canary Islands upon death).

Contrary to popular belief in some quarters, non residents in Spain must also file a non-resident tax return if they own any property in Spain, or earn more than €22,000 per annum from all of their Spanish based income.

For most foreigners who own a property in Tenerife but don’t earn any significant income here, they are simply required to complete and file a basic tax return (Modelo 210). Under this form, the taxman charges standard income tax upon a notional income of 2% per annum on any property held by a non-resident, even if the property is not rented and generates no actual income. This rule was introduced many years ago in response to the vast majority of non-resident owners renting out their properties but failing to declare the income. It is quite unfair on honest owners who don’t actually rent out, but that is the current law. Hence, the owner of a small apartment will typically pay a few hundred Euros per annum in respect of this tax.

Those non-residents who do rent out their property and who generate more than 2% income per annum are required to file a more detailed tax return, depending on the individual circumstances.

Due to the greater complexity (and cost) involved in filing a more detailed return, it appears that many non-residents just file the basic Modelo 210 and take their chances that they won’t get caught. Naturally, Tenerife Guru could never endorse such a brazen approach! The taxman is also stepping up checks to try to catch those renting out their property for a substantial part of the year. Such checks now include reviewing electricity and water usage for the property. Where such usage exceeds the deemed average use for 6 months per year (i.e. more than 50% of a typical permanent resident’s bill), further investigations may be conducted.

Tenerife Solicitors are English Solicitors and Spanish Abogados who can assist you with Non-Resident Modelo 210 forms. For more information, visit their website at: www.tenerifesolicitors.com