In accordance with the provisions of the aforementioned Order, the taxpayer, regardless of their nationality or tax residence, may direct debit the payment of self-assessments or deferred and instalment payments of Spanish taxes through an account opened in a non-collaborating credit entity, provided that it is located within the Single Euro Payments Area (SEPA Area), formed by the Member States of the European Union, the United Kingdom, Switzerland, Monaco, Andorra, Norway, Liechtenstein, Iceland, San Marino and Vatican City.

To do so, the self-assessment or application for deferment and instalments must be submitted electronically, through the Electronic Office of the State Tax Administration Agency, designating the bank account held by the taxpayer, choosing the collaborating entity responsible for managing the direct debit and electronically signing a debit mandate.

The collaborating credit entity will collect the amount of the debt paid by direct debit plus the commissions and other bank charges imposed by the latter.

The date on which the debit is made shall generally be regarded as the date of payment for the purposes of discharging the tax debt for the taxpayer.

Finally, this procedure will apply to direct debits of the deferral and payment in instalments of tax debts with the Spanish Tax Authority that are applied for from 1 July 2023; and to direct debits for State tax returns and self-assessments that are filed from 1 February 2024. However, in the latter case, self-assessments filed between 1 July 2023 and 31 January 2024 may be paid by direct debit through an account opened with an entity in the SEPA Zone, if at the same time deferral and payment by instalment of the tax debt is applied for.

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In two recent rulings of 28 March and 25 April, the Central Economic-Administrative Court (TEAC) has analysed how the variables that lead to determining that the taxpayer’s tax residence is in Spain should be interpreted based on the criterion of being there for more than 183 days, establishing three different types of days for the purposes of calculation:

1. Days of certified presence: these are days for which direct proof of the taxpayer’s presence in Spanish territory is available.

2. Presumed days: these are days for which the presence of the taxpayer in Spanish territory can be presumed as they are between days of certified presence without there being direct proof of presence abroad. The TEAC clarifies that the qualification of a period as presumed must be made in a reasonable manner without it being possible to use this presumption to prove long periods of stay in Spain.

3. Days of sporadic absences: sporadic absences are regulated in Article 9.1 of the Personal Income Tax Law and are those that are added to the days of certified presence consisting of stays in the territory of another state for a short period of time.

Likewise, in the second ruling, the TEAC also went on to assess how the calculation should be made in cases where the taxpayer has been in the territory of two different countries on the same day, concluding that all those days on which the person was physically present in Spanish territory at some point during the day should be taken into account. Thus, and by virtue of this interpretation, it concludes that if the taxpayer proves their being abroad on the same day on which there is certified presence of their being in Spanish territory, it will be calculated as a day of being in both countries, specifying that the days on which they start or end a trip from a Spanish airport will be calculated as days of being in Spain and in the territory of origin or destination, as the case may be.

Finally, with regard to the aforementioned tax residence criteria, the determination of the number of days the taxpayer has spent in Spain is of particular importance. In this regard, the AEAT is carrying out checks and investigations of taxpayers whose tax residence is in doubt, using all kinds of methods to prove that they have been in Spain for more than 183 days, such as, amongst others, the monitoring of credit cards, analysis of bills paid, household utilities, and even monitoring of social networks and the tracking of digital footprints.

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In principle, the STLF is temporary in nature, with an initial validity of 2 years, to be applied in 2022 and 2023, after which the Government will assess whether to maintain or abolish it depending on the amount collected. It should be reminded that the Wealth Tax (hereinafter “WT”) was also introduced as a temporary tax, but it is still in force today, although in comparison with the other 27 European Union countries, none other has this type of tax.

The STLF is proposed as a complementary tax to the WT that applies to assets exceeding €3,000,000 valued on 31 December of each year, for the part that has not been taxed by the WT payable in some Autonomous Communities. The main purpose of this new tax is to harmonise the taxation of WT in Spain, meaning that the Autonomous Communities most affected by STLF are those that grant tax relief or have a lower maximum WT tax rate than the new tax.

It should be recalled that the taxpayers of STLF are the same as those of WT, i.e. individuals who have their habitual residence in Spanish territory and also any other non-resident individuals, as well as residents under the Impatriate Regime (better known as the Beckham Law), for assets and rights located in Spain.

It is important to bear in mind, as a new feature for both STLF and WT, that shares or (unlisted) holdings in foreign entities, 50% or more of whose assets are made up of real estate located in Spain, are considered to be assets located in Spanish territory. Thus, under current rules, non-resident individuals investing in investment funds or any other type of investment vehicle (even if they do not have a controlling interest) that invest the majority of their value in real estate assets in Spain may be taxed under WT and/or STLF.

The STLF Taxable Base is comprised of the value of the net assets, that is to say, all assets and rights minus charges and encumbrances, although for Spanish residents the first €700,000 are exempt.

The tax rates range from 0% to 3.5%.

In contrast to WT, the obligation to file a tax return for STLF only arises when the final tax liability, minus the WT tax actually levied, results in an amount to be paid.

Having described the general framework of the STLF, it merits raising certain considerations in order to try to mitigate its cost:

(i) Some assets and rights are exempt from taxation:

• The main residence is exempt up to €300,000.
• Shareholdings in entities commonly known as family businesses are also exempt provided they meet certain requirements with regard to both the shareholder and the company, which should be verified on an annual basis. In certain Autonomous Communities, the .Inspection Bodies are particularly active in conducting reviews, not only on the application of .the exemption, but also on its scope. For this reason, we recommend checking with special .attention the composition of the asset and its allocation to the economic activity carried out, as having access to this exemption does not mean.having full access to 100% of its scope. In order to adapt this scope, there are formulas that.allow cash surpluses to be used as allocated assets, including, among others, holdings in Venture Capital Companies or other vehicles that invest in .real estate assets, provided that they have their .own organisational structure with sufficient material and human resources.

(ii) The advantages that may arise in these taxes as a result of reducing wealth through gifts or inheritance agreements should be considered, although it is true that the tax impact on other taxes, such as Inheritance and Gift Tax or capital gains in Personal Income Tax, must be taken into account.

(iii) It is also necessary to consider the joint limit of taxation on Income, Wealth and STLF, as this allows for a reduction in the tax payable on the latter two taxes.

(iv) Finally, the door is open to the challenge of the STLF, taking into account that recently (on 21 March and 18 April 2023), the Constitutional Court has admitted the appeals of unconstitutionality presented by the regional governments of Andalusia, Madrid and Galicia (the three Autonomous Communities most affected by this tax). However, it should be noted that the challenge interrupts the statute of limitations for these years, but if the unconstitutionality is upheld, the Court could limit the effects of the ruling (the refund of the taxes paid) to those debts that have been duly challenged.

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