The 183-Day Rule Explained: Lessons from Shakira’s Tax Case and Expert Insights from ABAD Abogados
Shakira’s recent tax settlement with Spanish prosecutors has reignited interest in the 183-day rule, a cornerstone of Spanish tax law.
While the pop star avoided jail time by settling her case on November 20, 2023, she paid a steep price—€7.3 million in fines on top of €14.5 million in previously unpaid taxes.
The case illustrates how intricate and far-reaching tax residency rules can be, especially for individuals with international ties.
But what exactly is the 183-day rule, and why does it matter not just for celebrities but for expatriates, digital nomads, and global citizens? Let’s break it down.
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Understanding the 183-Day Rule in Spain: A Clear Guide with Examples
The 183-day rule is a fundamental principle in Spain for determining tax residency.
While it might seem straightforward, its application can be complex, with significant implications for expatriates, digital nomads, frequent travellers, and international businesspeople. Here’s everything you need to know to navigate this rule effectively.
Shakira’s Case: A Modern Cautionary Tale
Between 2012 and 2014, Shakira maintained that her tax residency was in the Bahamas, a known tax haven.
However, Spanish prosecutors argued that her primary residence was in Spain.
Using a combination of social media posts, public appearances, and financial records, authorities constructed a timeline showing she spent more than 183 days annually in Spain during that period.
As tax lawyer Mr. Isaac Abad of ABAD Abogados explained in a Newsweek interview , such evidence has become increasingly critical in determining tax residency in high-profile cases.”
“This case is as easy or difficult as the evidence,” he noted, emphasizing how even digital footprints can be used to establish residency.
In the end, Shakira accepted a plea deal to resolve the case, avoiding jail time but paying millions in fines.
Her legal team argued they could have won the case but chose to settle to protect her family’s well-being and end the drawn-out proceedings.
The Basics: What Is the 183-Day Rule?
In Spain, the rule states that if you spend more than 183 days (approximately six months) in the country during a calendar year, you are considered a tax resident. This designation means you are required to pay taxes on your worldwide income, not just the income earned in Spain.
Key Details:
Calendar Year Basis: The Spanish tax year runs from January 1 to December 31.
Non-Consecutive Days Count: The 183 days don’t have to be consecutive. For example:
If you spend 120 days in Spain from January to May and return for 70 more days in October and November, you surpass the threshold.
Partial Days Count: Any part of a day spent in Spain—such as the day you arrive or leave—counts as a full day.
Additional Factors Beyond the 183-Day Rule
Economic Ties:
If your primary source of income or business operations is in Spain.
Example: A digital nomad who generates most of their income through Spanish clients may be subject to Spanish taxes.
Family Connections:
If your spouse and minor children reside in Spain, authorities may presume you are also a resident, regardless of your physical presence.
Example: A business executive frequently travelling outside Spain but whose family lives in Murcia may still be classified as a tax resident.
Practical Implications of Being a Tax Resident in Spain
Becoming a tax resident triggers several obligations:
Global Income Taxation: Residents must report and pay taxes on income from all sources, whether earned in Spain or abroad.
Example: If you earn rental income from a property in the UK, salary from a US company, and dividends from Spanish stocks, you must declare it all in Spain.
Filing Requirements:
Tax residents must file an annual income tax return using Modelo 100 by June 30 of the following year.
Other Taxes:
Tax residents may also be subject to wealth tax (Impuesto sobre el Patrimonio) on global assets exceeding a certain threshold.
Examples of the 183 day Rule in Action
Let’s break this down with some real-world scenarios:
Example 1: The Frequent Traveller
Dave, a digital marketing consultant, splits his year between Spain and the UK. She spends:
- 150 days in Spain from January to June.
- 50 days in December visiting family.
Outcome: Dave spent 200 days in Spain during the calendar year, surpassing the threshold. He is considered a tax resident in Spain.
Example 2: The Business Nomad
James, an IT consultant, spends 100 days in Spain and travels extensively the rest of the year. However:
- His main client base is in Spain.
- His bank account and business address are registered in Spain.
Outcome: Even though James spent fewer than 183 days in Spain, his economic ties make him a tax resident.
Example 3: The Family Scenario
Laura, a pilot, spends only 150 days in Spain annually due to her travel-heavy schedule.
However:
- Her spouse and children live full-time in Alicante.
- She owns property in Spain.
Outcome: Laura’s family connections establish her as a tax resident, even though she spends less than 183 days in Spain.
How to Prove Non-Residency
If you want to avoid being classified as a tax resident in Spain, you must prove residency in another country. A certificate of tax residency from the foreign jurisdiction is critical.
This document demonstrates that you are paying taxes elsewhere, potentially protecting you from Spanish tax claims.
Tips for Managing Your Tax Residency
- Track Your Days Accurately:
- Use tools like travel logs or apps to document your movements.
3 Tools to help you track your stay in Spain and avoid falling foul of the 183 day rule
1. Tracking Days
TrackingDays is a popular app designed specifically for residency travel tracking. Key features include:- Automatic tracking of travel days and nights in all countries worldwide
- Schengen Area tracking for the 90 in 180 days rule
- Rolling 365-day count for countries like New Zealand and Malaysia
- Highly accurate tracking, even at country borders
- Privacy-focused, with no collection of user travel locations
- Flexible for various residency situations, including the 183-day rule
2. Monaeo
Monaeo is a personal audit defense system that offers:
- Automatic day counting and location tracking
- Real-time alerts as you approach residency thresholds
- Audit-ready reports and data
- Calendar display of annual travels
- Data security and encryption
Link: Tax residency audits can be a pain | Protect yourself with Monaeo Personal Edition
3. Tax Bird
Offers a free version with basic features for tracking residency days.
- Automatically tracks your location
- Shows days spent in each state
- Provides alerts when approaching residency thresholds
Link: TaxBird | Track & Prove State Residency for Tax Purposes
Keep Documentation Safe:
- Keep boarding passes, hotel receipts, and proof of residency in another country to support your claims.
Seek Professional Advice
Spanish tax law is nuanced, and individual circumstances vary. Consulting a tax expert can help you navigate residency rules and avoid costly surprises.
90/180 Day Ap for Android & iOS & Online Calculator Reviewed
Having mastered the rules for entering Spain when Covid took hold we found ourselves negotiating a new set of rules following the U K exit from the EU.
These new rules as to how long we could stay in the Schengen Countries appeared complex in that we were told during a rolling 180 day period we could only spend 80 days in Spain.
So how would that work?
Very quickly, help arrived in the form of apps. And I immediately downloaded two which assured me they would make the whole process of working out how I would comply easy.
To fall foul of the rules would land me with all sorts of fines and worse of all a possible jail sentence. So I had to get it right. No room for mistakes.
The first app was The Schengen Calculator ( Android – iOS) . I found this quite difficult to negotiate.
And a lot of guesswork went into inputting entry and exit dates and wondering if I had got it right. Then identifying where on the app how long I would be allowed to stay.
There were calendars and no clear notes or explanations that I could see. Along with other icons, the whole thing was just a bit confusing.
However, obviously the site works, and maybe it’s just that as an older user, I lack the technical ability to navigate my way through it.
I then had a go on a web site, The Short Stay Visa Calculator. This was much more straight forward. And I could easily see where I had to input the entry and exit dates. The app calculated the number of days for each stay. Press confirm and I could see immediately how many days I could legally stay in Spain. The whole process just took a couple of minutes.
I should stress that these apps make it clear that they are only a helping tool. They do not constitute a right to stay for a period resulting from their calculations. So the buck stops with the user.
Finally, I suppose the third way to calculate my permitted length of stay would be to look at my diary or calendar and resort to maths to work it out myself , the old fashioned way.
The choice is yours.
Reviewed by Mr R.Rose
Protecting Yourself: How ABAD Abogados Can Help
Navigating Spanish tax laws requires expert guidance, especially for those with international ties. As demonstrated in the Newsweek articles, ABAD Abogados is a trusted authority in tax law, with extensive experience handling cases like Shakira’s.
Whether you’re:
- An expatriate unsure of your residency status.
- A business owner managing global income.
- A digital nomad seeking clarity on tax obligations.
- A homeowner who visits regularly
ABAD Abogados can provide tailored solutions to protect your finances and reputation. With a deep understanding of Spanish and international tax law, their team ensures you remain compliant while minimizing tax liabilities.
FAQs
1. How does the 183-day rule work in Spain?
The 183-day rule is a key factor in deciding tax residency status in Spain. If you are physically present in the country for more than 183 days within a single calendar year (January 1 to December 31), you are classified as a tax resident. As a tax resident, you are required to report and pay taxes on your global income, not just the income earned in Spain.
It’s important to note that the 183 days don’t have to be consecutive, and even spending a part of a day in Spain—such as arriving or departing—counts as a full day toward the total.
2. Can I stay in Spain for 90 days twice a year?
Yes, under the Schengen Visa rules, non-EU nationals can stay in Spain for 90 days within any 180-day period. This means you could stay for 90 days, leave for 90 days, and then return for another 90 days. However, this applies to short-term visits and does not affect the 183-day rule for tax residency, which calculates your presence over the entire calendar year.
3. How long can I stay in Spain if I own a property there?
Owning property in Spain does not automatically grant you any special residency rights. You can stay for up to 90 days within a 180-day period under Schengen rules if you are a non-EU citizen. To stay longer, you would need to apply for a visa or residency permit. Be mindful of the 183-day rule, as staying longer could make you a tax resident, regardless of property ownership.
4. Is Spain removing the 90-day rule?
No, Spain is not removing the 90-day rule. This rule is part of the Schengen Agreement, which applies to all Schengen Zone countries. Non-EU citizens must adhere to the 90-day limit unless they hold a residency permit or visa. However, things do change and we will be sure to keep this blog post updated, here you can bookmark this page
5. How long do I have to leave Spain before I can return?
Under the 90/180-day rule, you must leave Spain (and any other Schengen countries) for 90 days before re-entering for another 90-day stay. The 180-day period is a rolling timeframe, so the calculation considers your travel history over the past 180 days.
6. What does 183 days in a row mean?
The 183 days do not need to be consecutive. The rule calculates the total number of days you are physically present in Spain during a calendar year. For example, you could spend 120 days in the spring and 70 days in the autumn, and you would still meet the threshold for tax residency.
7. How does the 90 days out of a 180 work for Spain?
This rule is part of the Schengen visa regulations. It allows non-EU citizens to stay in Spain (or any other Schengen country) for 90 days within a rolling 180-day period. For instance, if you spend 90 days in Spain, you must leave and stay outside the Schengen Zone for the next 90 days before returning.
8. How many days can you live in Spain without paying tax?
You can stay in Spain for up to 183 days in a calendar year without being classified as a tax resident. However, you may still have tax obligations if:
- You earn income in Spain.
- Your primary economic ties are in Spain (e.g., your business is based there).
To avoid tax residency, ensure your stay does not exceed 183 days and keep documentation proving tax residency in another country.
9. What are the new rules for residency in Spain?
Recent changes mainly affect non-EU citizens after Brexit. UK nationals, for example, must now apply for a visa or residency permit to stay longer than 90 days in any 180-day period. Common permits include:
- Non-lucrative Visa: For retirees or those not working in Spain.
- Golden Visa: For property investors.
- Digital Nomad Visa: For remote workers (introduced in 2023).
For EU citizens, residency rules remain unchanged, but they must still register with local authorities for stays longer than 3 months. For more information about how ABAD Abogados can help with residency, please contact us today
10. How long can you leave Spain without losing residency?
If you are a Spanish resident, the amount of time you can spend outside Spain without losing your residency depends on your permit:
- Temporary Residency: You cannot spend more than 6 consecutive months or 1 year in total outside Spain over the 5-year period.
- Permanent Residency: You can leave for up to 12 consecutive months or 2 years in total over a 5-year period.
Tax Residency: If you are a tax resident, leaving Spain for an extended period may affect your tax obligations, but not your residency permit.
