The plan of the emeritus king to spend seasons in Spain and pay taxes in Abu Dhabi collides with tax regulations

The return to Spain from Juan Carlos I will foreseeably occur when the file by the Prosecutor’s Office of the Supreme court of the three proceedings opened against him for possible crimes of money laundering, against tax authorities public bribery and influence peddling.

At that time, one of the unknowns to solve will be that of the tax status of the ex-monarch depending on the length of your stay in the country and also taking into account your absence of income, Since in principle it would be a retiree whose son, King Felipe VI, removed the benefit in March 2020.

So things, current tax regulations would threaten their plans to spend time in Spain and pay taxes in Abu Dhabi, according to tax experts consulted by El Periódico de España. Your obligations with the Spanish Treasury depend on several factors to analyze, such as the stay time in our country, the place where the core of its possible economic activities and also what is stated in the agreement to avoid double taxation signed with the United Arab Emirates, which determines that to be considered a tax resident in that country, one must have Emirati nationality.

Sources from the Spanish Association of Tax Advisors (AEDAF) forcefully point out to this newspaper that in principle, and from a technical perspective, “indeed, the king father you are not tax resident in Emirates, for the purposes of the double taxation agreement. “The spokesman for the Technical Union of the Ministry of Finance (Gestha), Carlos Cruzado, agrees with this analysis, and goes further by stating that, in his opinion, Juan Carlos I should continue to pay taxes in Spain today.

The aforementioned agreement published in the Official State Gazette (BOE) in 2007 indicates in its article that the expression “resident of a Contracting State” implies, in the case of the Kingdom of Spain, any person who, by virtue of the laws in force in our country country, is subject to tax due to your domicile, residence, etc. In the case of the United Arab Emirates, it should only take into account “natural persons” domiciled in said territory “and who are nationals of the United Arab Emirates.”

“ATTRACT TALENT”

In this way, the Convention It should not serve the king emeritus to skirt a tax imposition in our country derived from a continuous residence, since Emirati nationality is expressly required to claim that their tax residence is in Abu Dhabi and that for this reason they should not be taxed again in Spain.

There is no record that said nationality has been granted, and that despite the fact that the Arab country reformed its law last January to offer the citizenship to certain groups of foreigners, in order to attract “talent” that it contributes to the development of the country, as Prime Minister Sheikh Mohammed bin Rashid Al-Maktoum explained on that occasion.

In any case, according to the president of the Association of Tax Inspectors, Ransés Pérez Boga, it is not always necessary to be in the double taxation agreement, because the requirements may not be met to place the subject in question in said situation of taxation in two countries at the same time, which is what the document tries to avoid.

In the case of the emeritus, some details are unknown in order to establish what exactly his tax situation would be, but a general scenario can be drawn, adds this expert, who goes through the analysis of several factors.

The first of them would be the one related to period of residence in our country, and whether or not this can be considered “sporadic”. In general terms, a factor to take into account is whether or not this residence is higher than 183 days (six months) that establishes the law to generate tax obligations, although it is not the only one. The problem, in any case, would end if the king had certificate of tax residence in Abu Dhabi, a documentation that is not difficult to obtain in countries like the one that Juan Carlos I chose to settle in August 2020, although it seems to clash with what the aforementioned Agreement indicates.

It would also be necessary to analyze, in the opinion of Pérez Boga, where the nucleus of emeritus economic activities, which does not seem to be Abu Dhabi (there is no evidence that it has any business there), and it could be located in Spain if it has properties or assets here.

Another factor to analyze according to tax inspectors is to determine the tax domicile based on where the spouse lives and the minor children of the person to study. In the case of Juan Carlos I, there are no longer any underage descendants, but his wife is still Queen Sofía, a resident of Spain.

As reported by El Periódico de España, and once the investigations are filed against King Juan Carlos – which is expected to occur in the first weeks of 2022, despite the fact that the three proceedings have been extended for six months as the legal deadlines expire this December. – both the Zarzuela as La Moncloa will give the go-ahead on their return. This will take place when it suits Felipe VI, at the time that the announcement that the previous monarch steps on Spain again does not cloud any act of the Crown on designated dates.

THE INVESTIGATIONS

The first of the investigations opened to the emeritus was for the possible charge of the AVE to Mecca, in Saudi Arabia, although it focuses on the activities of the emeritus while he was Head of State and therefore inviolable according to the Spanish Constitution.

What’s more, the case has deflated after last December 13 the Swiss prosecutor Yves Bertossa filed for lack of evidence the investigation he initiated for money laundering after learning that Juan Carlos I had received 100 million dollars (64.8 million euros) in 2008 from the Government from Saudi Arabia, which he later donated to his former lover Corinna Larsen in 2012.

The second line of investigation opened and also recently extended analyzes the payment of up to 800,000 euros in credit cards in the name of Air Force Colonel Nicolás Murga, who acted as the monarch’s straw man. The investigations have also remained in force after Juan Carlos I regularized with the Treasury the travel expenses paid by his cousin Álvaro de Orleans with the Zagatka Foundation.

The third cause refers to bank movements of accounts that were destined for the British island of Jersey. The Public Prosecutor’s Office opened its investigation after receiving a report from “financial intelligence & rdquor; from the Laundering Prevention Service (Sepblac) that pointed out that the ex-monarch could be the beneficiary of a company that was hiding almost ten million euros.