Norway
Tax residents in Spain with income from Norway
(The content of this document is for informational purposes only and has been prepared for educational purposes only. For further information, please consult the Personal Income Tax Act and the Spanish-Norwegian Agreement to avoid double taxation.
I.- Tax residence
A natural person is resident in Spanish territory when any of the following circumstances occur:
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They have stayed longer than 183 days in Spanish territory over the calendar year.
To determine this period of stay, sporadic absences will be taken into account unless the taxpayer proves his tax residence in another country (through a tax residence certificate issued by the tax authorities of that other country). In the case of countries or territories labelled as tax havens, the Tax Administration can demand proof of stay in that tax haven over a period of 183 days within the calendar year.
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They situate the main base or centre of their activities or economic activities, directly or indirectly, in Spain.
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They have dependent not legally separated spouse and/or underage children who are usually resident in Spain. This latter situation accepts evidence to the contrary.
II.- Personal Income Tax
If a natural person, in accordance with the above, turns out to be tax resident in Spain , he/she will be a taxpayer for the Personal Income Tax (IRPF) and must pay taxes in Spain on his/her worldwide income , that is, he/she must declare in Spain the income he/she obtains anywhere in the world, without prejudice to the provisions of the Agreement to avoid international double taxation signed between Spain and the country of origin of the income.
The agreements list certain types of income and, with respect to each of them, establish the tax powers that correspond to each signatory State:
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In some cases, exclusive power for the taxpayer's country of residence,
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In others, exclusive power for the country of origin of the income and,
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Finally, in some cases, shared power between both countries, with both being able to tax the same income but with the obligation for the taxpayer's country of residence to take measures to avoid double taxation.
The personal income tax period is the calendar year. A person will be a resident or non-resident throughout the calendar year since a change of residence does not imply an interruption of the tax period.
The income tax return of individuals who are tax residents in Spain is submitted in the months of April, May and June of the year following the year of accrual. The Personal Income Tax regulations set limits and conditions that determine the obligation to file a tax return, which must be consulted each year. Exempt income is not taken into account when determining the obligation to file a tax return.
Example: Taxpayer, tax resident in Spain, whose only income in 2019 is a pension from Norway, caused by having worked in a company in that country (Spain has the exclusive power to tax . The treatment in the Convention is explained below). If the pension exceeds the amount of 14,000 euros per year, taking into account the limits and conditions of the obligation to declare for the 2019 financial year, you would be obliged to file a personal income tax return for 2019, since the payer of the Norwegian pension is not obliged to make withholdings on account of Spanish personal income tax.
Spanish-Norwegian agreement
(The text of the Agreement can be consulted at https://sede.agenciatributaria.gob.es in the following path: Home > Regulations and interpretative criteria > International taxation)
In a simplified manner, taking into account the provisions of the Convention between Spain and Norway ( CDI ), the taxation for tax residents in Spain on the income from Norwegian sources most commonly obtained would be:
Pensions (article 18 CDI):
Pensions and similar remuneration, and annuities from Norway, as well as pensions and other payments under the Norwegian Social Security system, paid to a tax resident in Spain, may only be taxed in Spain. The tax authority to tax pensions from Norway received by residents in Spain is exclusive to Spain. Unlike other CDIs, the Spanish-Norwegian CDI does not differentiate between private and public pensions, with Article 18 being applicable to both cases.
Income from real estate (Article 6 CDI):
Income from real estate located in Norway may be taxed in both Spain and Norway. The resident taxpayer would be entitled to apply the deduction for international double taxation in the personal income tax in Spain.
Dividends (article 10 CDI):
Dividends from Norwegian sources may be taxed in Spain in accordance with its domestic law. These dividends may also be subject to taxation in Norway, if this is the State in which the company paying the dividends is resident and according to its internal legislation, but if the recipient of the dividends is the beneficial owner resident in Spain, the tax thus required in Norway will have a maximum limit of 15% of the gross amount of the dividends. The resident taxpayer would be entitled to apply the deduction for international double taxation in the personal income tax in Spain up to that limit.
Interests (Article 11 CDI):
Interest from Norway paid to a resident of Spain may be taxed in Spain in accordance with its domestic law. However, such interest may also be taxed in Norway, the country of origin and in accordance with its domestic legislation, but if the recipient of the interest is the beneficial owner, the tax required in Norway may not exceed 10% of the gross amount of the interest. In Spain, you would be entitled to apply the deduction for international double taxation in your personal income tax up to that limit.
Remuneration of members of boards of directors of companies resident in Norway (Article 16 ICC):
They can be taxed in both Norway and Spain. In Spain, the taxpayer would be entitled to apply the deduction for international double taxation in personal income tax.
Capital gains:
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Derived from real estate (article 13.1 CDI) : Gains from the sale of real estate located in Norway may be taxed in both Spain and Norway. The taxpayer has the right to apply the deduction for international double taxation in the personal income tax in Spain.
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Derived from movable property belonging to a permanent establishment or a fixed base (article 13.2 CDI): Gains from the alienation of movable property belonging to a permanent establishment or a fixed base that a resident of Spain has in Norway for the performance of business activities or the provision of independent personal services, including gains derived from the alienation of the establishment or the fixed base, may be subject to taxation in both Norway and Spain. The taxpayer has the right to apply the deduction for international double taxation in the personal income tax in Spain.
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Derivatives of shares or interests in a company whose assets consist mainly of immovable property , if the immovable property is located in Norway ( article 13.4 CDI ): Gains from the sale of these shares or interests may be subject to taxation in both Spain and Norway. The taxpayer has the right to apply the deduction for international double taxation in the personal income tax in Spain.
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Derived from shares or participations in a company resident in Norway , which form part of a substantial participation in the capital of the same ( article 13.5 CDI ): The profits derived from these shares or participations may be subject to taxation in both Spain and Norway, in which case, in Spain you have the right to apply the deduction for international double taxation in your personal income tax.
A person is deemed to have a substantial interest when he or she holds, alone or in association with other persons, directly or indirectly, shares or other rights which together amount to 25% or more of the share capital or similar interests in said company, or when he or she holds 25% or more of the right to the profits of said company.
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Derivatives of shares or other rights, as well as options, or other financial instruments related to such shares or rights of a company resident in Norway (Article 13.6 ITC) : The profits obtained from the sale of these shares or rights may be subject to taxation in both Spain and Norway when the transferor has been a resident in Norway at any time during the 5 years preceding the sale, in which case in Spain the resident has the right to apply the deduction for international double taxation in personal income tax. Otherwise, they only pay taxes in Spain.
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Derived from other class of goods ( article 13.7 CDI ): In general, profits derived from the alienation of any other type of assets other than those mentioned above may only be subject to taxation in Spain, provided that this is the State of residence of the transferor.
In addition to those mentioned above, the Agreement lists other types of income (business profits, professional services, remuneration for salaried work, artists and athletes, public functions, other income, etc.), the treatment of which can be consulted in the text of the Agreement.
III.- Obligation to report assets abroad
Residents in Spain must inform the Spanish tax authorities about three different categories of assets and rights located abroad:
- accounts in financial institutions located abroad
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Securities, rights, insurance and income deposited, managed or obtained abroad
- Real estate and rights to real estate located abroad
This obligation must be fulfilled, using Form 720, between January 1 and March 31 of the year following the year to which the information to be supplied refers.
There will be no obligation to report on each of the categories of assets when the value of the set of assets corresponding to each category does not exceed 50,000 euros. Once the information declaration has been submitted for one or more of the categories of assets and rights, the submission of the declaration in subsequent years will be mandatory when the value has experienced an increase of more than 20,000 euros compared to that which determined the submission of the last declaration.
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