If you've been keeping up with Spanish news recently, you'll know that Colombian superstar Shakira last month won a long-running legal battle with Spain’s Tax Agency that last a total of eight years.
A Spanish court ordered the tax authority to refund the popstar more than €55 million over a dispute involving her tax payments in 2011.
The "Hips Don’t Lie" singer was audited for the years 2011-2014. In 2023, Shakira came to an agreement with the Tax Agency for the last three of those years and acknowledged residency in Spain, paying up accordingly, but she maintained that in 2011 she wasn’t a tax resident as she only spent 143 days in the country.
Technically, you are only a tax resident in Spain if you spend over 183 days here, but there are other factors that decide your tax residency beyond the number of days you spend here, including your centre of economic interests and where your family live.
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The law also states that “sporadic absences” will be counted as living in Spain unless a tax residency in another country is proven.
This means that you can’t live in Spain for 170 days for example and then just leave for two weeks in order to not meet the 183-day rule.
Shakira claims that she had residency in the Bahamas, whilst spending the rest of the time travelling on her international tour, but the authorities argued that this did not demonstrate a genuine effective stay in another country.
They also maintained that her life was in Barcelona, regardless of where her work or income was actually based, because of the fact that at the time she was in a relationship with ex-Barça football player Gerard Piqué.
The Tax Agency had registered that Shakira spent 163 days in Spain (below the 183-day threshold) and the court agreed with this, but ruled that the tax authorities had failed to prove that the singer had the centre of her economic interests in Spain.
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The Spanish Treasury is now seeking to overturn this ruling. Their appeal will specifically focus on these “sporadic absences” and when a taxpayer has no effective tax residence.
As a result, the tax agency is targeting the legal definition of intermittent travel or "sporadic absences" and trying to clamp down on taxpayers who organise their lives around international travel to avoid going over the 183-day residency threshold and claim that they aren't tax resident here.
This could mean that in future they may also require stricter proof that they have lived in Spain less than 183 days, more proof of where their centre of economic interests and established family ties are, which could mean that non-resident foreigners or those who split their time between Spain and other countries will have to gather a lot more evidence.
Furthermore, this could also change rulings for high-earning individuals in the future and have several implications as to how similar cases are handled.
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Spain’s High Court ruled in Shakira’s favour for 2011 because they stated that at the time she and her ex-partner Piqué were not married, they didn’t have any children, and she had not reached the 183‑day threshold for tax residency.
The companies through which Shakira were paid were not Spanish and the courts ruled that she had proved that she essentially split her time between several different countries while on tour, without establishing tax residency in any of them.
The ruling reiterated that “an absence that is inherently prolonged and lasting, for a period exceeding 183 days, cannot be considered occasional or sporadic,” because accepting otherwise would render the concept of habitual residence as meaningless.
Alejando Del Campo, a Mallorca-based lawyer the Local has interviewed on numerous occasions, told Spanish newspaper Vozpópuli that the Spanish Tax Agency may have to "clarify, refine, specify or, if necessary, correct" the jurisprudence on sporadic absences to the Supreme Court.
In the case of tax havens, like the Bahamas, the current rule is that the Tax Administration may require proof that you have lived there for at least 183 days within a calendar year, not simply having tax residency there and then spend time in other countries.
The Treasury essentially wants to prevent scenarios in which a taxpayer can have no effective tax residence.
José María Mollinedo, secretary‑general of the tax‑technicians’ union Gestha, told Spanish newspaper El País “no one can be a tax stateless person”.
José María Peláez, spokesman for the Association of State Tax Inspectors, believes that if Shakira had been able to demonstrate more than 183 days in another country, the dispute with the Spanish authorities would likely never have taken place.
Shakira is not the first high-earning foreigner who has had cases brought against them by the Tax Agency.
Footballer Lionel Messi and his father were convicted in 2016 on three counts of tax fraud for evading €4.1 million in taxes in Spain, and Portuguese superstar Cristiano Ronaldo also settled in 2019 for €18.8 million.
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