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 is 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 sense, the Thai tax authorities considered his absences as sporadic, and issued him a certificate of tax residence in Thailand for the referred year.
On the other hand, in the tax periods 2008 to 2012, the individual filed self-assessments model 100 of the IRPF and, noticing the error, proceeded to file the IRNR model 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 the non-refund requested by 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/she remains 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 the tax residence in another country is proved.
Additionally, the DTA signed between both countries establishes how to proceed in the case 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 will be considered 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, unavailable, so 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 personal income tax returns, he/she has the right to rectify them, having to prove that his/her tax residence was not in Spain.
2) For the purpose of determining the tax residence of an individual in Spain:
- it is irrelevant that he/she has real estate in Spain, even more so if he/she acquired it before moving abroad;
- the contribution in the self-employed regime or the payment of medical insurance do not justify that the center of vital interests of a subject is in Spain, because they are residual payments with an exclusively sanitary 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.