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Virtual Residency Options in Spain

Virtual Residency in Spain is a service which we arrange quite regularly because it is a location which is very popular with European expatriates. A virtual residency regardless of location needs to be individually tailored to meet very specific needs with the goal of creating the illusion that you actually live in the location where you claim to be. Of course it may be that you are not looking to establish tax residency and just need to create a virtual presence but we can assist with both options. We have outlined below the twelve main reasons why people tend to set up a virtual residency, the list is not in any particular order and we don't seek to analyze or pass judgement on the morality or otherwise of a person’s motives but Spain works well for most of these situations.

The primary advantages of virtual residences are outlined below

 

  • Increased Privacy.
  • Avoiding Identity Theft.
  • To avoid paying a debt.
  • To avoid costly litigation.
  • To secure a tax advantage.
  • To obtain a foreign tax ID
  • Avoidance of child support payments
  • To avoid payments following a divorce.
  • As a prerequisite to actually moving offshore.
  • To avoid being found by people seeking to do them harm.
  • To set up an alternative base with phones, address etc in case of future need.
  • To sue someone while making it hard for them to counter sue and enforce a judgement.
  • To avoid government harassment. Some gay clients and ethnic minorities fall into this category.

 

Example which we have set out below is particularly important in view of the increasing exchange of information between governments because tax residency in a country where you live or may not can be extremely useful to thwart these issues and for tax planning.

THE EU SAVINGS TAX DIRECTIVE

http://ec.europa.eu/taxation_customs/taxation/personal_tax/savings_tax/revised_directive/index_en.htm

THE COMMON REPORTING STANDARD

http://www.oecd.org/ctp/exchange-of-tax-information/automatic-exchange-financial-account-information-common-reporting-standard.pdf

Official residency together with a tax ID is fairly straightforward to arrange and becoming increasingly important with the problems relating to tax information exchange agreements between countries. Of course it started with the savings tax directive in the EU and of course FATCA in the United States but from around 2017 things are going to get much worse with the Common Reporting Standard so for some people being able to say that they are legally tax resident somewhere even if they are not required to pay hardly any tax makes a great deal of sense. We have a number of solutions currently available to obtain legal tax IDs and in Spain where a virtual residence, phone number and official tax ID can be arranged at a cost of €1100 and the annual fee for the address and phone number is €750. Spain can be a good choice but its not the most tax friendly although it can be tax efficient with the right planning because Spain has regulations for the creation of holding companies which are extremely beneficial in international tax planning. Spain is potentially more advantageous now that there is considerable pressure on many of the traditional tax havens. The two best options for tax planning are the Entidad de tenencia de valores extranjeros and Sociedades no residentes, sin establecimiento permanente. If you think that Spain may work well for you feel free to contact us and we can certainly advise on the details. 

Exactly what your requirements would be will depend on where you live, your general plans, long-term goals, sources of income and also your age and whether you are working or retired. Clearly it makes sense to go down this route if you wish to safeguard your bank accounts and not be put in a position where you have to either state your country of residence, lie or alternatively say that you do not reside anywhere. In my opinion if you say you do not reside anywhere there is a risk the bank would simply close the account or worse feel that they should exchange information with the country where you hold a passport. It's for this reason that depending on your circumstances it may well be worth looking that obtaining legal residence with a tax ID somewhere even if you do not actually reside there full time or for a substantial part of the year. It's my opinion that with these tax changes which are coming along we are going to see a lot of countries realising that by offering tax residency under favourable terms they will actually be able to earn significant amounts of money. As the old saying goes one door closes another opens.

Creating a virtual residence requires several ingredients which are an address, a phone-line and maybe a local email address that looks right such as john.smith@telefonica.es or john.smith@terra.es in the case of Spain fortunately we have contacts in most phone and broadband companies who can arrange things to create the right appearance. As far as cost is concerned the average cost of a virtual residency per year is €750. This would cover 12 months rental of a postal address and a dedicated number that can be forwarded to you anywhere worldwide which will ring with the correct ringing tone - something people often overlook! It also includes a local email address either with a local Internet company or a local firm depending on your needs. If you require formal tax residency the cost is €1100 the first year and the annual fee for the address and phone number (including up to 90 minutes of calls per month to most landlines worldwide and 30 minutes to mobiles) is €750 if you just need an address and nothing else the cost is only €395 per year including forwarding a handful of items each month . The prices are summarized below:

 

  • Spanish Virtual Residency with address, cellphone and landline phone numbers, Tax ID and email address with Spanish provider €1100 in first year and €750 in subsequent years
  • Spanish address and landline phone number per year €750 per year including forwarding a handful of items each month
  • Spanish address cellphone card (with roaming) and landline phone number per year €850 per year in year 1 and €750 in year 2 onwards including forwarding a handful of items each month
  • Spanish Landline Phone Number routed worldwide (including up to 90 minutes of calls per month to most landlines worldwide and 30 minutes to mobiles) €395 per annum.
  • Address only €395 per year including forwarding a handful of items each month.
  • Email address with Spanish internet company e.g john.smith@bahiamail.com 

 


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