Spain’s tax system faces criticism for what critics describe as an unfair stance toward public employees who are European residents in Spain. The Tax Administration has challenged whether the property they occupy qualifies as their habitual residence, a question central to eligibility for certain tax benefits. In Alicante, Victor Riera, chief executive of Riera Consulting and an authority on international taxation, has argued that this practice denies legitimate tax relief to individuals who live and work in Spain. Practically, this means they may be blocked from access to benefits tied to habitual residence and may bear higher tax burdens than comparable residents. A complaint has been lodged with the European Commission to address the perceived inequities. The focal point is the tension between free movement within the European Union and the application of national tax rules, with EU officials asserting that tax treatment should respect the rights of resident workers and capital movement across member states. (Source: European Union law and EU Commission statements)
João Negrão: “Alicante provided EUIPO with growth conditions”
Riera’s position is clear: if European officials live and work in Spain, they should not be denied the tax benefits tied to habitual residence. The core argument is that non-resident status should not automatically bar residents who meet the statutory definition of habitual residence from these benefits. The basic question is why the law would exclude someone whose home satisfies the criteria for habitual residence, simply because their status differs. This discrepancy, according to Riera, undermines fundamental freedoms within the European legal framework. When a taxpayer’s home qualifies as habitual but the individual is classified as non-resident, the tax advantages associated with habitual residence should still apply. (Source: EU law and statements from tax experts)
From a practical perspective, non-residents may face ongoing obligations under real estate imputation and Non-Resident Income Tax, while residents often have exemptions. If a European Union Intellectual Property Office (EUIPO) official based in Alicante maintains tax residence in another EU state, they could end up paying foreign income tax on gains from selling a home worth significantly more than its purchase price, despite potentially lower or zero tax exposure for local residents. A hypothetical scenario illustrates the impact: selling a property bought for 100,000 euros for 300,000 euros and purchasing a new home for 400,000 euros could trigger substantial tax differences compared with residents. (Source: detailed tax comparison scenarios)
Non-Resident Income Tax
Riera emphasizes that the matter extends beyond a single tax provision. Each year, the Tax Administration may require payment under real estate imputation and Non-Resident Income Tax. While some taxpayers remain exempt as residents, others face additional charges based on residence status and ownership. The issue also affects the exemption from habitual residence tax under Wealth Tax, and questions arise regarding inheritance and donation tax treatment for heirs who continue to own the property. (Source: tax regime analyses and expert commentary)
Inheritance Tax Reform and Processing in Alicante
Estimates suggest that a sizable group could be affected—potentially several thousand EU officials, representatives, and their families. The scope extends beyond EUIPO to include other European agencies and related offices with a presence in Spain, including regional centers and European institutions. The current process is moving through formal channels as discussions continue on aligning Spain’s tax criteria with EU expectations. (Source: statements from tax experts and EU agency references)
Currently Under Review
The objective is to refine tax criteria to reduce discrimination and align with European principles of mobility and equality before the law. The dialogue with Brussels remains ongoing, with developments watched closely by officials who aim to resolve conflicts that affect taxpayers and cross-border movement. A formal resolution could influence how Spain administers tax rules for habitual residence and related exemptions, and the ultimate decision may rest with the Court of Justice of the European Union if needed. (Source: ongoing European Commission discussions)
Experts in EU tax regimes note that the issue has drawn attention from scholars and practitioners focused on the taxation of community workers in Spain. The debate grew out of broader considerations prompted by Brexit and its impact on the taxation of EU agencies based in Alicante. If enhanced consistency is achieved, affected claimants may seek refunds of any overpaid amounts, provided there is no statutory expiry. (Source: tax law analyses and Brexit commentary)