BackIn recent judgments of 8, 9 and 22 July 2024 (Rec. 1909/2023, 1913/2023, 7744/2022), the Supreme Court has dealt with cases of taxpayers who, despite having submitted certificates of tax residence in the UK, did not sufficiently demonstrate that they were taxable in the UK on their worldwide income.
In the judgment of 8 July 2024, the Supreme Court reviewed the tax situation of a professional footballer who, although employed by a UK club, had been loaned to a Spanish club during the tax year in question. Having spent no more than 183 days in Spain, the Court analysed whether he could be considered a tax resident in Spain on the grounds that the core of his activities or economic interests could be found in Spain. In this regard, the Court concluded that the fact that the player had most of his assets, both movable and immovable, in Spain was an indication that the centre of his economic interests was in Spain, even if his income came mainly from abroad. The Court states that, in order to identify the centre of a person’s economic interests, factors such as the location of his assets, the place of management of those assets, and other links that may be relevant, must be considered.
In view of the above and given that the tax authorities did not question the footballer’s tax residence in the United Kingdom, the Supreme Court recognised a situation of dual residence, which must be resolved in accordance with the tie-breaker rules of Article 4 of the Double Taxation Convention between the two countries. With regard to the validity of tax residence certificates, the Court reiterated its doctrine established in a judgment of June 2023, in which it concluded that Spanish authorities and courts cannot disregard tax residence certificates issued by the competent authorities of a country with which Spain has a double taxation agreement, provided that such certificates have been issued in accordance with the terms of the agreement.
As regards the Convention’s tie-breaker rules, the Court turned to the ‘core of vital interests’ criterion to determine tax residence. In considering that the taxpayer had a residence in both countries, the Court emphasised that this criterion has an autonomous interpretation in relation to domestic rules and is broader than the concept of ‘core economic interests’. Finally, the Court concluded that the taxpayer’s interests and activities were mainly in Spain, and that Spain was also the only country with demonstrable personal links, and therefore decided that tax residence should be attributed to Spain.
These conclusions were reiterated by the Supreme Court in the rulings of 9 and 22 July 2024, in which the taxation of this taxpayer in the first and the taxation of another taxpayer for income from movable capital and an imputation of income for a property located in Spanish territory are addressed.
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