What tax domicile is and how it is determined.

The tax domicile (domicilio fiscal) is the place where a person who has tax obligations toward the tax authorities can be located. There are specific rules for determining it.

The registered office (domicilio social) and the tax domicile usually coincide and appear on the tax identification card (tarjeta de identificación fiscal).
This domicile is the place to which the Spanish Tax Agency (AEAT) sends notifications and information requests. Moreover, they are deemed to have been served even if you do not receive the notification, the only exception being an error in how the address is written.
The tax domicile is the address shown on invoices issued to customers and on those received from suppliers. It also appears in the header of payslips.
For all these reasons, it is essential to inform the Tax Agency of any change. Failing to do so may have the following consequences:
• Notifications continue to be received at the former address.
• If a notification goes unanswered, the person will be responsible for having failed to update the address.
• Invoices containing incorrect address details will not be deductible.
• The correct address does not appear in public deeds.
Registered office
Unlike individuals, legal entities do have a registered office. The registered office is established in the deed when the company is incorporated.
Another important point is that the registered office is public and anyone can look it up, which is not the case with the tax domicile.
The registered office is the place where the company is managed and administered. It is usually the director’s address, a commercial establishment, or the company’s offices.
The registered office is changed by means of a public deed, which is registered with the Commercial Registry, since the change must be made public.
Therefore, to avoid unnecessary notary fees, it is advisable to choose a location where the company will remain and where the company is managed.
Tax domicile of individuals
The tax domicile is determined differently depending on whether or not the individual carries on a business activity.
A) Individuals who do NOT carry on business activities
When an individual does not carry on any business activity, their tax domicile will be their habitual residence. This applies, for example, to employees, students, and retirees.
B) Individuals who DO carry on a business activity
When a business activity is carried on, whether as a self-employed worker or as a professional, the tax domicile is also considered to be the habitual residence. However, the main difference from individuals who do not carry on a business activity is that it is possible to set the tax domicile at the place where the activity is carried out. In other words, where you manage your business.
In any event, the Tax Agency knows both addresses, since, when you start a business activity, you must state both your residential address and the place where the activity will be carried out.
In addition, upon registration with Social Security, you must choose the address at which notifications will be received, as well as other contact details, such as telephone number or email.
Individuals, whether or not they carry on a business activity, must determine their tax domicile correctly. This is because, depending on where that domicile is located, different regional and local rules may apply, which in many cases differ from one another.
Tax domicile of non-residents
Legal entities or other entities that are not resident in Spanish territory will have their tax domicile in Spain, for the purposes of complying with their tax obligations, in the following cases:
• When they operate in Spain through a permanent establishment: In this case, the tax domicile will be the place where the administrative management and direction of the business in Spain are carried out. Where the place of the tax domicile cannot be established under this criterion, the domicile will be deemed to be located where the greater part of the value of the fixed assets is situated.
• When they obtain income from real estate: The tax domicile will be that of their representative and, failing that, the address of the property itself.
• In all other cases, the tax domicile is deemed to be located at the domicile of the representative or, failing that, at that of the jointly and severally liable party.
A special case is that of entities not resident in Spanish territory and without a permanent establishment in Spain which are not required to declare their tax domicile but which act through a representative in Spain: these entities must declare their domicile abroad.