Spanish Supreme Court issues judgment on the probative value of foreign tax-residence certificates

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EY Global

20 Jul 2023
Subject Tax Alert
Jurisdictions Spain
  • In a judgment issued on 12 June 2023, the Spanish Supreme Court ruled on the ability of the Spanish tax authorities to challenge the probative value of tax-residence certificates issued by the tax authorities of other jurisdictions for the purposes of a tax treaty with Spain.
  • The Court affirmed that foreign tax-residence certificates establish a presumption of foreign tax residence and any challenges must be routed through the provisions of the applicable tax treaty, as opposed to unilaterally under domestic law.

Executive summary

On 12 June 2023, the Spanish Supreme Court issued a judgment on the probative value of a tax-residence certificate issued by the authorities of a jurisdiction that has signed a Double Taxation Agreement (DTA) with Spain and where the certificate was issued for the purposes of the DTA between the referred jurisdiction and Spain.

The Spanish Supreme Court ruled that the Spanish administrative/judicial bodies cannot unilaterally question the legitimacy of a tax-residence certificate issued by the authorities of another jurisdiction. Moreover, in case of a tax-residence conflict (which cannot be unilaterally appreciated or disregarded), the provisions of the applicable DTA regarding this issue should be followed to determine the tax residence of the relevant taxpayer.

This judgment is of particular relevance, given a trend observed in the Spanish tax authorities' (STA) practice of rejecting foreign tax-residence certificates upfront and deny treaty eligibility.

Detailed discussion


In a Spanish tax audit of a Moroccan-American citizen, the STA challenged the taxpayer's foreign tax residence based on several facts, such as owning four properties in Spain with significant consumption of utilities throughout the year (weighed against owning just one property abroad), as well as owning numerous vehicles and bank accounts in Spain.

The tax auditors concluded that the taxpayer was a tax resident in Spain based on the Spanish Personal Income Tax Law definition of residence (which considers the "center of economic interests" for these purposes) and irrespective of what is stated in the relevant DTA, which was deemed not applicable due to an alleged absence of tax-residence conflict.

The taxpayer appealed the decision to a lower court, claiming that he was a tax resident of Morocco, where his "center of vital interests" was located, and of the United States (US) where his "center of economic interests" lay and where he is a national. To support his position, the taxpayer provided a tax-residence certificate issued by the Moroccan Ministry of Finance and Privatization and certificates issued by the US Internal Revenue Service (IRS) for the purposes of the DTA with Spain. The STA had rejected the Moroccan certificate, asserting it was not a proper tax residence certificate and had not been issued by a competent tax authority, and rejected the US IRS certificates, contending "they are granted to every US national and do not constitute proof of residence."

Spanish Supreme Court judgment

Reviewing the lower court decision, the Spanish Supreme Court drew the following conclusions:

  1. Spanish administrative or judicial bodies are not competent to ascertain the circumstances under which a tax-residence certificate has been issued by another jurisdiction and cannot, consequently, reject its content.
  2. The legitimacy of a tax-residence certificate issued by the tax authorities of another jurisdiction must be presumed for purposes of determining whether a tax-residence conflict must be solved under the provisions of the relevant DTA or exclusively under Spanish domestic rules for residence (which differ), precisely because that DTA was signed.
  3. The DTA definition of residence as "center of vital interests" is broader and autonomous from the Spanish corresponding definition of "center of economic interests."

The Spanish Supreme Court judgment limits the Spanish tax authorities' ability to challenge the legitimacy of foreign tax residence certificates provided by the taxpayers and outlaws the practice of drawing their tax residence to Spain under domestic rules instead of applying the tax-residence conflict provisions in the applicable DTA.

Since the relevant DTA provisions of residence are generally broader than Spanish domestic rules, ring-fencing these conflicts under DTA provisions rather than domestic rules may prove advantageous for taxpayers.

Although the Supreme Court's judgment sheds some light on a controversial practice by the Spanish tax authorities, it does not put an end to tax-residence challenges. It is therefore key that taxpayers adopt a consistent "audit-ready" approach and ensure not only that tax-residence certificates are contemporaneously obtained, but also that they are accompanied by supporting documentation and defense dossiers, particularly for frequent travelers with certain degree of presence in Spain.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Abogados, Madrid
  • Cristina de la Haba Gordo
  • Iñigo Alonso
Ernst & Young LLP, Spanish Tax Desk, New York
  • Jose A. (Jano) Bustos
  • Andres Carracedo

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.