In July 2007, a Spanish national moved his residence to Thailand, where he established his permanent residence together with his wife, a native and resident of that country, and one of his daughters.
The Spanish national's tax residence, therefore, has been in Thailand from 2008 to date, uninterruptedly, as evidenced by the tax residence certificates issued by the authorities of that country.
However, in 2010, his mother died in Spain and, likewise, an incapacitation procedure was initiated for his father, so that his stay in Thailand in that year was reduced to 114 days. In this regard, the Thai tax authorities considered his absences to be sporadic, and issued him a certificate of tax residence in Thailand for the year in question.
On the other hand, in the tax periods 2008 to 2012, the individual filed personal income tax returns form 100 and, noticing the error, proceeded to file the IRNR form 210 without PE, for each of those years. The Administration admitted his residence outside Spain, and for the year 2010, issued several provisional settlements for the IRNR, in which it agreed not to refund the taxpayer, because it considered that he was a tax resident in Spain.
These assessments were confirmed by the TEAR and, against them, a contentious administrative appeal was filed before the TSJ.
According to the LIRPF, an individual is resident in Spain if he or she stays in Spain for more than 183 days during the calendar year, among other cases (LIRPF art.9.1).
Sporadic absences are not computed (i.e. if the individual leaves Spain for a few days, these are not subtracted from the computation of the period of stay in Spain), unless tax residence in another country is proven.
In addition, the DTA signed between the two countries establishes how to proceed in the event that a person can be considered a tax resident in two countries. Thus, if he/she has a permanent residence in one of them, he/she is considered resident there. If he has a permanent residence in both countries, he is considered to be resident in the country where he has the closest personal and economic relations (Thailand DTT art.4.2).
In this case, given that his wife is Thai and both she and his daughter reside in Thailand, the Court considers the Spaniard to be a tax resident there as well, based on the following arguments:
1) Tax law is a public law and, therefore, indisposable, so that the elements of the tax liability cannot depend on the will of the parties. Therefore, even if the tax returns are presumed to be true, if a taxpayer made a mistake and filed personal income tax returns instead of non-resident income tax returns, he is entitled to rectify them, having to prove that his tax residence was not in Spain.
2) For the purposes of determining the tax residence of a natural person in Spain:
- it is irrelevant that he/she has real estate in Spain, even more so if he/she acquired it before moving abroad;
- contributions to the self-employed scheme or the payment of health insurance do not justify that the centre of vital interests of a subject is in Spain, because they are residual payments with an exclusively health-related purpose;
- the ownership of bank accounts in Spain is not relevant either, if most of the financial assets are outside Spain; and
- the electricity consumption of the habitual residence during the stay in this country does not contribute anything to the controversy, because this residence was inhabited precisely during a period of sporadic absence.
