I'm looking for a cross-border tax specialist to assist us with a complex situation.
We're Hong Kong residents with a BVI company, but we also own majority shares in properties in Las Palmas, Spain. The properties are intended for sale, and we have been informed that we must obtain an NIE to sell them.
Given that we maintain assets and accounts mainly in Hong Kong, Singapore and BVI, we are concerned about potential implications on our tax status from acquiring an NIE.
Does anyone have recommendations for a tax specialist/accountant with cross-border experience in both Hong Kong and Spain? Both Google and ChatGPT search haven't turned up anything.
Any help would be greatly appreciated!
Be VERY CAREFUL because one of the criteria for becoming a tax resident in Spain
[Article 9, point 2 of the Personal Income Tax Law ,>
https://sede.agenciatributaria.gob....s/residencia-habitual-territorio-espanol.html
'That the main core or base of its activities or economic interests is located in Spain, directly or indirectly '
'The tax residence of a natural person is not only determined based on the first criterion of permanence (more than 183 days), but the taxpayer may also be considered a tax resident in Spain if he or she has in this country, directly or indirectly, the main core or base of his or her economic activities or interests.']
is that Spain is your "centre of economic interests." To counter this point in case of a dispute, the Spanish tax authorities (Hacienda) will require you to demonstrate that you have a greater centre of economic interests in the country where you claim to be a tax resident (a combination of countries isn't valid).
The reason tie-breaker rules are even considered is because an OECD tax treaty exists between the UK and Spain. For Hong Kong, it appears there's also something in place, which you can find more information about here:
https://sede.agenciatributaria.gob....s-doble-imposicion-firmados-espana/china.html
There's a specific case involving a Spanish citizen (currently in dispute) that illustrates this: this individual lived in the UK but owned Airbnb(*) properties in Spain. As a result, they were deemed a tax resident in both countries. The first tie-breaker rule is the availability of a permanent home. Obviously, they had one in the UK, and Hacienda interpreted that they also had one in Spain because their Airbnb properties were vacant on certain days of the year, making them available for his use.
This led to the next rule: the centre of economic interests. Here, given that the individual's assets and income originated from Spain, Hacienda informed them that they must pay taxes on all their worldwide income in Spain, along with penalties and surcharges.
(*)If the properties had been under long-term leases instead, Hacienda wouldn't have been able to use that criterion. In that scenario, based on the first tie-breaker rule (permanent home available), the individual would have been a tax resident in the UK.
As a general idea, though I'm not a tax expert: selling properties directly in La Palma isn't the same as wrapping those assets in a foreign corporation and then selling the foreign corporation. If possible, consider the latter to avoid having economic activity directly in Spain.I'd try to avoid getting any id card in spain , especially if your assets in Hong Kong don't outweigh those in Spain.
The best-case scenario is that you'd only have to pay non-resident tax, which I believe is around 28% on capital gains. If you indeed do have more assets in HK then you only pay the non resident tax and are safe. If you don't have more assets in Hong Kong than in Spain and the treaty is based on OECD rules (if a treaty exists, it almost certainly implements OECD rules), the first tie-breaker rule is permanent home available. You'd need to have a home at your disposal in Hong Kong, with utility bills and so on, and not in Spain. From what you've said, I understand you own a percentage of the properties, not the full ownership, which might allow you to escape the "at your disposal" criterion.
Regarding tax specialists, Cuatrecasas is a highly regarded law firm in Spain for tax matters (this is not an endorsement).
General Comment on Avoiding Tax Issues in Spain
It's crucial not to have a permanent home available in Spain, as this is the first tie-breaker rule. This was the trick used by the brother of the Spanish Prime Minister: despite being a civil servant in Spain, working in Spain, and owning properties rented out long-term in Spain, he slept in Portugal. Portugal considers you a tax resident simply for having a permanent home available. Therefore, he was a tax resident in both Portugal and Spain, and by the first tie-breaker rule, Portugal won.
