Spain and Argentina have different tax systems. It is best to be clear when and how much tax to pay if you live in one country, but have income in the other. We explain the most common cases of tax situations that you may encounter in your relationship with Spain.
The Double Taxation Avoidance Agreement is the tax framework between Argentina and Spain. As its name indicates, the same tax will not be charged twice. However, a tax that does not exist in one country and does exist in the other will be charged. In addition, one of the objectives of the agreement is to prevent money laundering.
It is important to be clear about where one's tax residence is located. If taxes have to be paid, they will be paid mainly in the country where you are a tax resident. Both Spain and Argentina consider tax resident those who live 6 months plus one day a year in the country. Therefore, it does not depend on your nationality, nor is it optional.
Furthermore, even if you live in Spain for less than 6 months, the Spanish tax authorities may consider you a tax resident if you have your base of activities or economic interests here, directly or indirectly. If your non-legally separated spouse and your minor children live in Spain, you can also be considered a tax resident in Spain.
Case 1: Bringing money from Argentina
The most common tax query is from Argentines who live in Spain and have money in Argentina that they want to bring. But they do not know if they have to pay taxes in Spain. As a general rule, if you are a tax resident in Spain, the profits you have obtained in Argentina must be paid in Spain.
This does not mean that if any other tax was paid in Argentina, the same tax should not be paid in Spain. That is why the Agreement was made, to avoid double taxation. But if there is a tax in Spain that does not exist in Argentina, it is possible that it will have to be paid when bringing it to Spain. And this will depend on the origin of the funds.
Case 2: Emigrating to Spain with money
For Argentines who emigrate to Spain, taxation is different. As they are not yet tax residents, they do not pay taxes in Spain,therefore, the money they bring with them is not taxed.
But the money can be retained when it is transferred to a Spanish bank from abroad. This is a preventive measure of the Spanish State to avoid money laundering. When it is proved that it is not black money, that it was declared in Argentina and paid the corresponding taxes, it can be disposed of.
You can enter Spain with up to €10,000 in cash without having to declare it. If you exceed this amount, you must make the declaration Model S-1 and present it at the airport of origin, before traveling. At that time, the origin of the funds must be accredited.
If you send your money to Spain by wire transfer, the account of origin and destination must be of the same holder. It is important that the movement of money is made before the taxpayer must be a tax resident in Spain, because otherwise tax will be payable.
Case 3: Living in Spain with assets in Argentina
Tax residents in Spain are required to file a tax return with the Spanish tax authorities all assets abroad exceeding €50,000. The declaration - Form 720 - is made between January 1 and March 31, based on their net worth situation as of the previous December 31.
This is an informative declaration and does not imply in itself the payment of taxes. Later it will be decided whether or not to pay depending on the origin of those assets. But failure to file Form 720 can result in fines of up to 50% of the undeclared value, if the Tax Agency considers that it is an unjustified capital gain. The statute of limitations expires after four years. You can read more information in our post Why do you have to declare your assets in Argentina if you live in Spain?
In Spain, on the other hand, the Wealth Tax is levied on assets and rights both in Spain and abroad. Some autonomous communities allow it (such as Madrid), but others apply it effectively (such as Catalonia or the Valencian Community). There are exempt minimums that vary by region.
Case 4: Living in Spain, getting paid in Argentina
This is the case of tax residents in Spain with income from Argentina. Being a tax resident entails the obligation to declare the income obtained abroad and to pay tax on it if applicable. This includes the property rentals in Argentinaincome from remote work or sporadic face-to-face work, stock dividends. And also any other type of occasional income such as inheritances. The amount to be taxed for this income will depend on each case and should be studied carefully.
If, in any case, you decide not to declare it and bring it to Spain, you must be aware that it is money that cannot be justified.
If the Internal Revenue Service considers that a person resides more than half of the year in Spain, even if you do not have a residence permit, the tax rules will apply to you as if you were a tax resident. Tax residency is an empirical fact, it does not depend on what the DNI says.
Case 5: Living in Argentina, getting paid in Spain
For example, Argentines who lived in Spain and bought a property, but then returned to Argentina and left it rented. In this case, payable in Spain Non-Resident Income Tax (IRNR). The Tax Agency controls more those who live abroad, because the risk of not paying taxes is higher. For example, if a person lives in Argentina and sells a property in Spain, the Spanish notary will withhold 3% of the amount as a preventive measure for the taxes to be paid. That 3% is settled after the IRNR.
Case 6: Paying taxes for leaving Spain
If you live in Spain and plan to return to Argentina, you should find out about the "Exit Tax" or departure tax. Yes, sometimes you have to pay a tax before leaving Spain. But only affects entrepreneurs or investors with 10 years or more of tax residence in Spain. You can read more information in our post Exit Tax in Spain: what it is and when it applies.
How can MBT Abogados help you?
The Spanish tax system is complex and non-compliance with tax obligations is a serious matter. We advise you to seek advice from specialists in Spanish tax law. When significant amounts are involved, it is better to be well informed than to make decisions that have no way back.
We are a law firm in Barcelonaspecializing in services to Argentines, taxes and property relocation. Write us by email or Whatsapp for a free initial evaluation of your case. If you want an appointment with a tax lawyer from our firm the fee for a one hour consultation is 150€.
