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Has your tax residency day count been affected by COVID-19?

Due to COVID-19 lockdown restrictions around the world, many people will have been forced to spend longer than planned in countries where they would not normally be a tax resident.

Last week, the Spanish Directorate-General of Tax confirmed that if individuals spend more than 183 days in Spain in the 2020 fiscal year, they will be deemed Spanish tax-resident.

The ruling could also affect inheritance and gift tax liabilities of Spanish residents, by determining the autonomous region where they habitually live during the 2020 fiscal year.

Some countries including Canada, the United States, Australia, India, and Malaysia, have stated they will consider lockdown restrictions to be exceptional circumstances for people being unable to leave the country and therefore exceeding their tax residency day limit.

In the UK, individuals have up to 90 or 120 days (depending on their ties) in a tax year before they are considered a UK tax resident. HMRC stated that some individuals may be allowed to discount some of their days from their Statutory Residence Test (SRT) day count.

However, the statutory limit for the number of days that can be discounted is 60 and, more importantly, this doesn’t apply to everyone. It is specific to individual circumstances which include considerations such as when the individual arrived in the country, their intention to leave, and whether they have gained any more ties since they have been here.

If you are concerned or need advice on your residency status, please contact Ann Bibby on abibby@ellacotts.co.uk or 01295 250401. You can read more about our residence and domicile services.