CMS Albiñana & Suárez de Lezo’s Tax department, together with Pérez-Llorca, and González Fornos Abogados, have managed to obtain a Supreme Court decision to admit an appeal in cassation against a judgment of the Spain´s National High Court in which a natural person whose only link with Spain was the ownership of real estate in this territory was considered to be a tax resident in Spain. This was despite the fact that he had tax residence certificates within the meaning of the Double Taxation Avoidance Agreement with the United States.
The judgment under appeal of High Court admits on a theoretical level that “tax residence certificates constitute an indisputable and qualified means of proving the tax residence” of a taxpayer in a given State, although in the case under analysis, the certificates provided were considered to be a mere circumstantial element insufficient to counterbalance those obtained by the tax authorities, on the understanding that “such a residence certificate is issued to all US nationals simply because they are US nationals.”
Finally, even though the Audiencia Nacional did not consider it necessary to apply the double taxation agreement, it concluded that, in any case, a possible conflict of residence would have been resolved by resorting to Spanish domestic legislation, by equating the concepts of “centre of vital interests”, used by the agreement, and “core or base of their activities or economic interests”, provided for in the Personal Income Tax Law.
The Supreme Court will now decide the degree to which the Spanish Administration and Courts are bound by the residence certificates issued by another State. Therefore, this ruling could affect a large number of foreign nationals who have significant holiday assets in Spain.
CMS acted with Tax partner Diego De Miguel and Tax counsel Silvia Morro, while Pérez-LLorca acted with Tax partner Clara Jiménez Jiménez and Tax of counsel Jesús Cudero. Tax lawyer María González Fornos, from Gonzalez Fornos Abogados, also acted on this proceeding.