Are You a UK Expat in Spain? Why a Court Ruling on Maltese Passports Will Impact Your Tax Status
For many British expats, arranging one’s affairs to spend significant time in Spain while remaining tax resident in the UK is a familiar goal. It’s a strategy built on careful planning, day-counting, and a clear understanding of the rules. However, a recent landmark ruling from the EU’s highest court has sent a clear signal across Europe: the era of relying on mere formalities is over, and the rules of the game have been significantly reinforced.
The Court of Justice of the European Union (CJEU) recently invalidated Malta’s investor citizenship scheme, ruling that EU member states cannot grant citizenship or residence rights without a “real and effective connection” to the country. While a case about Maltese “golden passports” may seem distant, its core principle—the primacy of “substance over status”—has immediate and significant implications for British nationals with interests in Spain.
This ruling empowers tax authorities across the EU, including Spain’s notoriously thorough Agencia Tributaria, to prioritise a person’s real-life circumstances over their formal residency paperwork. It’s a fundamental shift that demands your attention. This guide explains what it means for you and why your genuine ties to Spain now matter more than ever.
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The Principle of 'Genuine Links': What Does It Actually Mean?
At its heart, the legal principle of “genuine links” or “substance” refers to the tangible, factual connections a person has to a country. It’s not about what your visa, residence permit, or property deeds say; it’s about where the centre of your life truly is. The CJEU has confirmed that formal status, acquired under special regimes, cannot override the substance-based approach required by international standards.
This is not a new idea but a powerful reinforcement of existing international tax law. As León Fernando del Canto, a Barrister and Spanish Abogado at Del Canto Chambers, highlights in Taxation Magazine, “The decision aligns with OECD and tax treaty standards… and will guide the interpretation of double tax treaties”. This ruling effectively harmonises the approach to residency across the EU, moving it firmly away from tick-box exercises.
The immediate ramification is that tax authorities in Spain can now, with greater confidence and legal backing, “disregard golden passports or investor visas that lack genuine substance”. For British expats, this means that any tax planning based on spending just under 183 days in Spain, or using residency schemes in places like the UAE or certain Caribbean countries, is now under a much brighter, harsher spotlight.
Spain's Tax Residency Rules: The Framework Now More Enforceable Than Ever
Spain already has a robust set of rules for determining tax residency. This ruling simply gives the Agencia Tributaria more legal weight to enforce them strictly. The primary tests are laid out in Article 9 of the Spanish Personal Income Tax Law. Understanding them in detail is no longer optional.
The 183-Day Physical Presence Test
This is the most straightforward test. You are considered a tax resident if you are physically present in Spain for more than 183 days during a single calendar year.
- The ‘Sporadic Absence’ Trap: This is a crucial detail that many overlook. Days you spend outside of Spain (e.g., holidays, business trips) may still be counted as days of presence in Spain unless you can definitively prove you were a tax resident in another country during that period. The burden of proof lies entirely with you. Spanish courts have consistently ruled that simple administrative ties, such as a foreign address, are insufficient; you must demonstrate actual, effective residence elsewhere.
The ‘Centre of Vital Interests’ Test
This is the most powerful and often misunderstood rule. Even if you spend fewer than 183 days in Spain, you can be deemed a tax resident if Spain is the centre of your economic or personal life. This is the case if:
- Economic Interests: The main base of your business, professional activities, or significant investments lies in Spain. The Spanish Supreme Court has already established that continuing business activity and economic decision-making in Spain can establish tax residence, even when the person spends considerable time abroad.
- Personal & Family Interests: Your non-legally separated spouse and/or minor dependent children reside in Spain. This creates a strong legal presumption that you are also a resident, which you must then rebut with compelling evidence.
Are You at Risk? Three Common Scenarios for British Expats
Let’s move from theory to reality. Do any of these relatable situations, reflecting patterns seen by tax authorities, sound familiar?
Scenario 1: The ‘Six-Month Swallow’
You meticulously count your days to stay under the 183-day threshold, returning to the UK for the summer. However, your partner lives in your Spanish villa in Jávea year-round, your golf club membership is in Spain, and your car has Spanish plates.
- Analysis: The “Centre of Vital Interests” test, based on your clear family and social ties, would likely override your day count. The Agencia Tributaria would argue your life’s focal point is Spain, making you a tax resident.
Scenario 2: The ‘Digital Nomad’ in the City
You have a UK limited company and a UK employment contract, but you live and work from a stylish apartment in Valencia. You have a Digital Nomad Visa, which you believe defines your status.
- Analysis: Your visa grants you the legal right to reside, but it does not define your tax status. Your “habitual abode” and the centre of your daily life—where you shop, socialise, and exist—are in Spain. The authorities can argue your genuine links are with Spain, making your UK contract secondary.
Scenario 3: The International Investor
You hold a Portuguese Golden Visa and have a tax number there. However, your primary business interests involve developing property on the Costa del Sol, and you frequently travel between Malaga, London, and Lisbon.
- Analysis: The Spanish authorities, emboldened by the CJEU ruling, could now more easily disregard the Portuguese visa as a “low-substance” arrangement. If your core economic activity is in Spain, they will assert that this is where your tax obligations lie.
These scenarios highlight the growing complexity of determining tax residency. If your situation resembles any of these, or if you are uncertain about how your ties to Spain are viewed by the authorities, it is wise to seek professional clarification. The expert team at ABAD Abogados can help you analyse your position and understand your specific risks.
The UK-Spain Double Tax Treaty: The Final Arbiter
If both the UK and Spain claim you as a tax resident under their domestic laws, the UK-Spain Double Tax Treaty provides a set of “tie-breaker” rules to determine a single country of residence. This hierarchy is logical and mirrors the “genuine links” principle, assessing in order:
- Where you have a permanent home available to you.
- If you have a home in both, where your centre of vital interests lies (where your personal and economic ties are closer).
- If this cannot be determined, where you have a habitual abode (the country you live in most regularly).
- If all else fails, it comes down to nationality.
The CJEU ruling powerfully reinforces the logic of these treaty rules, making a substance-based argument from the Spanish tax office significantly harder to challenge.
The Substance Audit: A Checklist for Reviewing Your Spanish Ties
It is now essential to proactively assess your own situation. Ask yourself these honest questions:
- Your Home: Where is the home that is available to you at all times? Where do you keep your most valued personal belongings?
- Your Family: Where does your spouse or long-term partner live? Where do your children go to school?
- Your Social Life: In which country are your primary social and community ties? (e.g., club memberships, regular social circles, healthcare providers).
- Your Economic Life: From where do you derive the majority of your income? Where are your most significant assets or business interests located?
- Your ‘Admin’ Life: Which country’s driving licence do you use? Where are your main bank accounts? In which country are you registered with a doctor?
If the answer to most of these questions is “Spain,” you have strong genuine links, regardless of your formal status or day count.
Conclusion: Your Next Steps in a World of Greater Scrutiny
The legal landscape has shifted. The era of viewing tax residency as a simple box-ticking exercise is over. Tax authorities are now coordinating their efforts more than ever, using tools like the Common Reporting Standard (CRS) to exchange data on financial accounts automatically. Formality alone will not shield you.
We advise all expats with cross-border interests to take the following steps:
- Conduct a thorough “substance audit” of their affairs, using the checklist above.
- Collate your evidence. The burden of proof is on you. An official tax residence certificate from another country is the most critical document, but it must be backed by the reality of your lifestyle.
- Seek expert, cross-border legal and tax advice. Given the increased scrutiny, ensuring your arrangements are robust and compliant is not a luxury—it’s an absolute necessity.
For a confidential review of your tax situation and expert guidance on all matters of Spanish taxation contact the specialised international tax team at ABAD Abogados today and ensure your peace of mind in Spain.
About Mr Isaac Abad Garrido
Mr Isaac Abad Garrido is the Senior Partner at ABAD & ASOCIADOS Lawyers & Accountants, with over 25 years of experience specialising in Real Estate Law, Tax Law, Corporate Law, Bankruptcy Law, Business Restructuring, and Community Administration.
He has been consistently recognised among The Best Lawyers in Spain™ from 2020 to 2025 for excellence in Tax Law, and in 2022, he was named “Lawyer of the Year” in Tax Law (Murcia, Spain).
A member of the International Bar Association, he is also an Associate Partner of the Spanish Royal Academy of Jurisprudence and Law. Additionally, he serves as a Professor at the University of Murcia, teaching Tax Law, and is a regular contributor to leading international tax law publications, including Newsweek.
Mr Abad Garrido holds degrees in Law, Business Administration, and Accounting, complemented by postgraduate studies at IE Business School. He is a Certified Auditor registered with the Official Registry of Auditors (ROAC).
For legal enquiries, visit abadabogados.com or connect with Mr Abad Garrido on LinkedIn.
