Maribel and Jordi emigrated to Chile in 1998. He ran an engineering firm; she taught at a Spanish school in Santiago. They retired there and now want to return to Girona, where their grandchildren live. Almost all their assets are in Chile: a house in Viña del Mar worth about 210,000 €, an account holding 85,000 € and investment funds worth 140,000 €. Jordi has also received an offer to advise a Catalan construction company for two years. They have tickets for September, but they wonder whether they would be better off bringing the journey forward to June or putting it back to January.
That question (when to return) is the most valuable of all, and almost nobody asks it. Once you are resident in Spain, the decisions make themselves.
The year is won or lost as a whole
Spain does not recognise residence by months. Under article 9 of the Spanish personal income tax act (IRPF) you are resident if in the calendar year you spend more than 183 days here, if the main centre or base of your activities or economic interests is here, or (unless proven otherwise) if your spouse, not legally separated, and your dependent minor children live here. If you meet any of the criteria, you are resident for the whole year; if you meet none, you are not resident for any of it.
For Maribel and Jordi, with no minor children and all their assets in Chile until the move, the criterion that decides it is the number of days:
| Arrival in Girona | Days in Spain that year | Foreseeable result |
|---|---|---|
| 15 June | 200 | Resident that year, with worldwide income from January to December |
| 20 September | 102 | Not resident that year by days; resident from the following year |
| 10 January | 355 | Resident from the first year, with no overlap |
"Foreseeable" because the economic interests criterion can bring residence forward even if the days are not met (for example, if before coming they move their assets here or Jordi starts working for the construction company). And because Chile will apply its own rules to that same year, something only their adviser there can confirm. If both countries consider them resident, the treaty's tie-breaker criteria resolve it.
What goes into the first year's return
If they turn out to be resident, they are taxed in Spain on their worldwide income for the whole year: the Chilean pension, the interest on the account, gains on the funds if they sell them, and Jordi's salary. Whatever was taxed in Chile in the overlapping months is corrected under the treaty and, where appropriate, through the double taxation credit in article 80 of the IRPF act, which allows what was paid abroad to be subtracted, limited to the Spanish average rate on that income.
This is where the first significant decision appears: selling before or after becoming resident. If Jordi and Maribel sell the funds while they are not yet resident in Spain, the gain does not enter Spanish income tax. If they sell afterwards, it does. How that sale is taxed in Chile is Chilean law, and it must be asked about there before deciding. It is not a recommendation to sell: it is a date worth keeping in mind.
Moving the account or the funds, or buying a home in Spain months before the move, can shift the centre of your economic interests here and make you resident that year even if you do not reach 183 days. The order of the steps matters as much as the date on the ticket.
Modelo 720 in the first year
Being resident triggers the obligation to report assets you hold abroad through Modelo 720 (the Spanish foreign assets return). The Reglamento de gestión (the tax management regulations, articles 42 bis, 42 ter and 54 bis of Real Decreto 1065/2007) imposes it on residents and organises it in blocks: accounts; securities, fund units, insurance and annuities; and real estate. A block only has to be declared if it exceeds 50,000 €, and the return is filed between 1 January and 31 March of the following year.
With Maribel and Jordi's figures, adding up what they own jointly:
- Accounts: 85,000 €. The block exceeds 50,000 €.
- Investment funds: 140,000 €. The block exceeds 50,000 €.
- House in Viña del Mar: 210,000 €. The block exceeds 50,000 €.
When the assets belong to both, each spouse is obliged by their own ownership, and how the threshold is counted in each block with joint ownership (and with authorisations on accounts) is reviewed asset by asset. With these figures, the prudent course is to assume that both will file all three blocks in March of the year after their first year of residence.
In later years a block only has to be filed again if its value rises by more than 20,000 € compared with the last return, or if something is sold or closed. After the judgment of the Court of Justice of the European Union of 27 January 2022 (case C-788/19), the special penalty regime for the 720 was struck down, but the reporting obligation remains in force. The blocks are explained in the three blocks of the 720.
Wealth tax becomes worldwide
As residents, they will pay Spanish wealth tax on a personal basis: on all their assets, wherever they are. The Chilean house, the account and the funds enter the base. With the tax-free allowance set by Catalonia (the national one is 700,000 €, but each region can set its own) and the 50 % split, they may have no tax to pay, but the calculation has to be done under the region's rules. We explain it in who has to file a wealth tax return.
The inbound workers regime: perhaps for Jordi, not for the pension
The special regime in article 93 of the IRPF act, known as the Beckham regime, allows someone who moves to Spain to be taxed under non-resident income tax in the year of the move and the following five. Among other things, it requires that the person was not resident in Spain in the five previous tax periods and that the move is due to an employment contract, to being a director of a company or to an entrepreneurial or professional activity on the terms of the law.
A pensioner who returns to retire does not fit: retiring is not one of those circumstances. Jordi, on the other hand, is returning with a job offer after twenty-eight years away. If he signs an employment contract with the construction company, it could be looked into. Employment income would be taxed at 24 % up to 600,000 € and 47 % on the excess; the application is made on Modelo 149 within six months of registering with Social Security; and the annual return is filed on Modelo 151. Someone who opts in is not required to file the 720, although Maribel, if she does not opt in, would be. Whether it is worthwhile depends on their income: the regime treats all employment income as obtained in Spain, and how Jordi's Chilean pension fits into that is one of the questions to be studied before opting. It is a calculation done with figures, not headlines; we develop it in Modelo 149, deadline and documents.
If you are preparing a similar return, the pensioners form lets us see the planned date, what assets you hold abroad and whether you are coming back to work or just to live, which are the three facts that change the result.
What to have ready before boarding the plane
| What | Why |
|---|---|
| Valuation of assets at the date of arrival | Basis for the 720 and wealth tax, and a reference for future sales |
| Tax residence certificate from the country you are leaving | To prove until when you were resident there |
| Evidence of the date of arrival | Tickets, rental contract, registration on the padrón (local population register) |
| Documents for each pension | To classify it under the treaty |
| Consultation with your adviser in the country you leave | What happens there with your departure and with any sales |
What happens in the country you leave (whether it taxes you on departure, how it treats the last year, what happens to your pension plans) is not something we can answer: your adviser there confirms it, and we coordinate the Spanish side with that adviser so that the dates fit.
The return of someone who lived in retirement abroad, with the pension, the assets and the first year's returns, is described in the Salama Tax section for pensioners, and the year of arrival seen only from the foreign pension in I am returning to Spain already retired.