The Directorate General of Taxes (DGT) in its Consultation V2440-22, dated 25 November 2022 clarifies how a Spanish person who is a tax resident in Portugal and who has been working for a Portuguese company until April 2020 is taxed. Subsequently, in April 2020, he started working as a remote worker for a Spanish company. In September 2020, he moved to Spain and continued working for the same Spanish company. During this time, he worked from a rented property in Portugal and his property in Spain was rented to a third party. For 2020, he has a tax residence certificate issued by the Portuguese authorities.
The question raised is about where his tax residence will be in 2020 and where should he be taxed. In response, the DGT indicates that the tax residence of an individual in Spain is established on the basis of the criterion of permanence (more than 183 days during the calendar year) and the criterion of centre of activities or economic interests.
A tax residence certificate issued by the Portuguese tax authorities is only evidence of the permanence criterion. The examination of the criterion of activities or economic interests is a matter for the management and inspection bodies of the Tax Agency.
Given the above, it could be understood that you are resident in Spain if your centre of activities or economic interests is in Spain, even if you have proven your stay in Portugal for more than 183 days by means of a Portuguese residence certificate.
According to the provisions of the agreement to avoid double taxation between Spain and Portugal, as the worker has demonstrated that he spends more than 183 days a year in Portugal (by means of a residence certificate) and lives in that country, even if it is in a rented property, as well as having his property in Spain rented to a third party, the dispute over his tax residence can be resolved in Portugal’s favour.
The Spanish-source income referred to in the query would be taxed as follows:
(a) For work carried out for the Spanish company on a remote working basis from Portugal they would be taxed only in Portugal, because the work is carried out exclusively in Portugal.
b) For the work carried out for the Spanish company once he moves to Spain in September 2020, but maintaining his tax residence in Portugal, could be taxed in Spain, as this is where the work is carried out, or in Portugal, where he has his tax residence; with Portugal, as the State of residence, it will be such country responsible for eliminating any double taxation that may occur.