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A look at tax residence amid Spain’s COVID-19 state of alarm

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The case also raises the practical question of the quantification of benefits and their allocation.

Jose Maria García-Valdecasas Alloza of García-Valdecasas & Viola assesses how Spain has approached the ‘duration of stay’ criterion for determining an individual´s tax residence during the coronavirus pandemic.

On June 17 2020, the Directorate-General of Taxes of the Ministry of Finance (DGT) issued a ruling concluding that a married couple from Lebanon who had entered Spain in January, with the intention of spending three months travelling around the country, and who were forced to remain until the end of June due to the state of alarm resulting from the COVID-19 crisis, would be regarded as tax residents in Spain if, as a consequence of the foregoing, they remained in Spain for more than 183 days of the calendar year (i.e. more than half the year).

Spanish law lays down two criteria for determining an individual´s tax residence: (i) length of stay, and (ii) the centre of economic interests. The DGT relied on the ‘duration of stay’ criterion to conclude – based on the straightforward wording of the rules – that the couple concerned could be classed as tax residents in Spain if they were to remain in Spain for more than half the year. To that end, account would be taken of the time they had spent in Spain during the state of alarm (March 14 to June 21 2020).

The interpretative criterion used by the DGT, which ignores the exceptional situation arising from the COVID-19 crisis, is a cause for surprise. Likewise, is the fact that the DGT failed to consider valid interpretative criteria such as the social backdrop against which the rules should be applied and their context, spirit and purpose.

The interpretative criterion used and, therefore, the conclusion reached is also at odds with the recommendations issued by the OECD in April as a result of COVID-19. In essence, and for our purposes, the OECD recommends that anyone who has been accidentally trapped in a country as a consequence of lockdowns imposed due to COVID-19 should not be regarded as a tax resident.

Moreover, it should also be noted that the DGT's interpretation is contrary to the case-law criteria developed by the Spanish courts. In particular, in its judgment of September 24 2018, the High Court of the Region of Murcia held that, even though a particular taxpayer had remained in Spain for more than 183 days, he should not be considered to be a Spanish tax resident because his stay was the result of random events consisting of the death of his mother, his involvement in a probate procedure and a separate incapacitation procedure affecting his father. 

In line with the above, it can be argued that the correct approach is to interpret the rules having regard to their context, spirit and purpose. Implicit in the ‘duration of stay’ criterion is the notion of will, i.e. intent, on the part of the person in question, or at least the existence of a personal interest in remaining or living in the country for a period of time. That is patently not the case when a person is trapped in a country as a result of a social, economic and health crisis such as that caused by COVID-19.

Accordingly, the view can be taken that when calculating the 183 days required under the ‘duration of stay’ criterion established by the law on personal income tax, account should not be taken of days which a person was forced to spend in a country as a result of the lockdowns imposed to combat the COVID-19 crisis.

Jose Maria García-Valdecasas Alloza



García-Valdecasas & Viola

T: +34 93 395 89 80


Jose Maria García-Valdecasas Alloza is a partner at García-Valdecasas & Viola. 

With more than 15 years’ experience as a lawyer, having practised in some of Spain’s best legal firms, Jose Maria prides himself on his client-first approach. His areas of expertise include the provision of advice on company law, family businesses, mergers and acquisitions (M&A), corporate law, private equity, corporate and individual taxation, as well as international taxation. He also specialises in defending taxpayers’ interests before the Spanish tax authorities and the courts.

Jose Maria has lectured on national and international taxation at a number of higher education institutions, such as the University of Barcelona, ESADE Business School, ISDE Business School and the International University of Catalonia.

Jose Maria has a background in economics, having completed a MBA from ESADE Business School, incorporating an exchange with UCLA Anderson School of Management and studies in finance at the London School of Economics and Political Science (LSE).

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