Residencia

What is a Residencia?

Due to the recent law change, residencia cards are no longer issued to EU citizens. Under the new system, an applicant will receive a residencia certificate incorporating their personal details. Non EU applicants will still be issued with a Residencia card.

Who Should Apply for a Residencia?

Anyone legally working, either as an employee or in a self employed capacity, is automatically counted as a Resident but must still apply for the certificate of residencia. Those who are not working but live in Spain for more than 183 days in any one period throughout the calendar year, or who wish to be regarded as Resident will need to apply for the certificate of residencia. They should also complete a Spanish Income Tax Declaration every year and pay Spanish Income Tax on world wide income. Due to a new Law passed in 2012, they will also be obliged to submit an ASSET DECLARATION for any assets over 50.000 Euros in any of the 3 groups OUTSIDE OF SPAIN. The 3 groups are: 1) Bank Accounts; 2) Investments, Bonds etc.; 3)Property.

If you are selling a property, the Notary Office will need proof that an individual is a Resident, and therefore subject to different rules in respect of Capital Gains Tax payments. This new certificate of residence is not sufficient proof on its own. You will need to obtain a certificate of Residence for Tax Purposes from the Tax Office (Hacienda). This will only be granted if you have submitted a Spanish Income Tax Declaration in the last year.

Requirements to Apply for a Residencia Certificate

You will need the following:

Current passport + 1 photocopy
The relevant application form, duly completed + 1 photocopy
NIE number
Proof of income of at least 600 Euros per person as confirmed in a Certificate from your Spanish Bank
Proof of Health Insurance – either the form S1 from the DHSS in the UK or Private Health Insurance

These documents are then presented to the Comisaria in Denia/Benidorm, together with the payment form – Modelo 790. You will be issued immediately with your certificate of residence.

If you have a form S1 from the DHSS in England, you must take this to the Seguridad Social office in Denia, together with the residencia certificate, to register on the health service. The form S1 may be for temporary cover, usually up to two years, for individuals taking early retirement or looking for work. Or it may be for permanent cover and is issued when the age of 65 is reached for men and 60 for women.

Holders of an S1 will receive a temporary medical form, which should be taken to the health centre local to your area. Eventually you will then be issued with the plastic SIP card.

How to do it

The application for the residencia certificate must be made in person at either Denia or Benidorm. If you wish, Hot Property can recommend a lawyer to complete the residencia application form and prepare the paperwork/ copies on your behalf. The charge will be 50,00 Euros + IVA.

Please remember that once you have obtained your Residencia certificate you should exchange your British Driving Licence for a Spanish Licence, again your lawyer can assist with this process.

Renewing a Residencia

If you are in possession of the previous residencia card, then once this has expired, you should apply for the new certificate of residence. You will not be reminded when your Residencia needs renewing, so it is up to you to check.

The new certificate of Residence is a permanent document and will not need renewing.
Advantages/Disadvantages of Being a Resident

As already mentioned, your tax obligation as a Non-Resident is:
- Renta – Income Tax on the own use of your property, based on the rateable value.
Our tax obligation as a Resident is:
- Income Tax on all income received worldwide.

Asset Declaration for all assets OUTSIDE SPAIN with a value in any one of the groups of more than 50.000 Euros (see above)

Inheritance Tax

As a Non-Resident each direct heir will receive a free allowance of 15.956,57 Euros and have to pay Inheritance Tax as per the Tax Office tables. As a Resident, each direct heir residing in the Alicante Province will receive a free allowance of 40.000 euros. Furthermore, a 99% discount in the Inheritance Tax payable if they can prove they were resident in Spain during the last 5 years (with the Padron Certificate from the Town Hall)

On the sale of your property:

As a Non-Resident you will be obliged to deposit 3% of the new declared Escritura value with the Tax Office as an advance payment for Capital Gains Tax and then apply for a refund (if applicable) – see the House Purchase/Sale information sheet. The refund will be repaid within 12 – 18 months after the sale. Capital Gains Tax is calculated at 21% of net profit (i.e. difference in Escritura values).
As a Resident, you will not have to pay the 3% advance payment of the Capital Gains Tax. Instead, the sale of your property and any resulting profit therefrom will be declared in the following year´s Income Tax Declaration. Capital Gains Tax is calculated at 21% of net profit. However, if all the sales proceeds are re-invested in another main residence within 2 years of the sale, then no Capital Gains Tax is payable. Also, if you are over 65 years of age and have owned the property for 3 years when you sell your main residence, no Capital Gains Tax is payable.

Should you require further advice on taxes, we recommend you seek the assistance of a registered tax adviser and Hot Property can recommend one, on request.

Vehicles:

As a Non-Resident, your English registered vehicle may remain in Spain all year without the need to change to Spanish number plates. You will need to tax the vehicle on a UK tax disc. You may MOT (ITV) the vehicle here but the MOT (ITV) will only be valid for driving in Spain.
As a Resident, you will be granted a period of 6 months after obtaining the Residencia to legally ‘import’ your vehicle. Your lawyer will be pleased to assist you with this matter.

Rules regarding Residencias are regularly changing and, whilst we endeavour to amend our information accordingly, Hot Property advise you check the current position regarding Residencia certificates if you are considering applying for same.