Most expats might think they have little in common with international singing superstar Shakira – but if you are an expat in Spain you need to follow her tax affairs closely.
The Hacienda – the Spanish tax authority – is looking at the details of her residency between 2011 and 2014 to establish she lived in the country, which would make the millions of dollars she earned worldwide subject to tax in Spain.
The case hinges on several factors, but the most important are:
- The number of days Shakira spent in Spain
- If her ‘vital interests’ were in the country. These would include where her children lived and went to school, where she considered home and similar factors
International tax lawyer Miles Dean, of Milestone International Tax, said: “Residence in Spain is not determined by the number of days in the tax year someone is in the country.
“Shakira could, in theory, have spent less than 183 days of the Spanish tax year in the country, but if her home, partner and other interests were in Spain then she could be caught out.”
Shakira is the partner of high-profile Barcelona soccer star Gerard Pique, who is also the father of the couple’s two children.
She designated Spain as her home in 2015, but moved there in 2010, when she left her home country of Columbia to join Pique.
The tax expert is warning that expats who are non-resident and spend fewer than 183 days a year in Spain may not escape the attention of the tax authority.
Dean said: “Shakira, like many other high-earning individuals, will fall under the taxman’s spotlight at some time during their career. It isn’t unusual for the taxman to scrutinise an individual’s residency status, as this will often determine whether they are taxed on their worldwide income if resident, or only on a source basis if non-resident.”
“The use of the word evasion is unfortunate in these situations because it unfairly ascribes a degree of criminality to the individual. Shakira may well simply have been badly advised or, more likely, the Spanish authorities are continuing in their witch hunt of the rich and famous, launching criminal proceedings to make examples of them.”