Teleworking and tax residence in an Autonomous Community in the COVID period

The resolution of the General Directorate of Taxation (DGT) to the consultation V1983/2020, of June 17, considered a Lebanese couple to be taxpayers of Spanish income tax (IRPF), for having exceeded the period of 183 days in Spanish territory in 2020 due to the movement limitations caused by the COVID environment. This pronouncement once again showed that the mere physical permanence in a territory can be decisive to be considered a tax resident in it, and all this regardless of the taxpayer's intention to reside permanently or not in this territory. 

Considering this ruling, which resolves a transnational issue, it is foreseeable that the same criterion will be followed in the field of domestic residence, that is, to determine the residence of a taxpayer in one or another Autonomous Community. The "new normal" and remote work have caused many taxpayers to have moved outside their habitual residence and, not infrequently, from their Autonomous Community, at least while the exceptional measures that the pandemic has brought last. 

For these taxpayers, it is important to take into account that the transfer to another Autonomous Community can have a significant impact on the tax burden, both in personal income tax (IRPF) and in the Wealth Tax (IP), since the taxation in relation to both taxes, and more especially in relation to the second of them, it differs notably between some Communities and others, both by the applicable rate and by the establishment of own deductions and discounts. 

The Tax Administration currently has a great capacity to obtain information in relation to the real location of taxpayers (electricity or gas consumption, payments made with cards, extended vacation rentals or, even, changes in schools) , among many others, leave a trace of physical presence in a territory) and residency checks between Autonomous Communities are not infrequent, but, just as this can pose a risk, it can also be the opportunity to enforce residence in a more beneficial territory. 

We indicate the maximum tax rates in personal income tax (IRPF) and in the Wealth Tax (IP) in 2020, in the following map that can be downloaded.

From Lener, we are at your disposal to clarify any questions that may arise.

For more information:

Jesús Pérez Esquide
Tax Department Partner

Guadalupe Díaz-Súnico
Tax Department Partner