Spanish Tax Law: Spatial and Temporal Application Rules
Tax provisions: According to Article 11 LGT, compulsory contributions will be implemented in accordance with the criteria of residence and territoriality as legislation provides in each case. Absent any such provision, compulsory contributions of a personal nature will be applied in accordance with the residence criteria, while all other compulsory contributions will be applied in accordance with territoriality criteria.
According to this, the laws regulating each compulsory contribution can determine the application of spatial criteria, either the residence or the territoriality one. If the legislator does not provide any precise criteria:
- In compulsory contributions of a personal nature, we will apply the residence criteria.
- In other compulsory contributions, the territoriality criteria that best suits the nature of its object will be applied.
We have to distinguish between two different aspects of spatial application of provisions: berlini.
Effects in Space: Eficacia de la Ley en el Espacio
It consists of determining the space in which legislation has effects as such, and it implies:
- Courts are bound by it.
- As an element of the legal system, it has to be taken into account, although it is just as an interpretative element.
Extension in Space: Extensión de la Ley
It consists of determining the facts that the legislation of a state can regulate when they occur out of its territory or are made by a citizen of another state. Although usually both aspects coincide, sometimes the extension can go beyond the effects of the legislation in space; for example, intracommunity acquisitions in VAT. In some cases, the extension could be narrower; for example, diplomatic staff in the Personal Income Tax (IRPF).
Subjection Criteria: Nationality vs. Territoriality
This is solved by subjection criteria, of which we have two: nationality or territoriality versus residence (Article 11 LGT).
Nationality Criterion
According to this criterion, tax provisions are applied to nationals of a state. Nationality is something that goes with the person; nationality is relevant for civil law issues but not for taxation.
Territoriality Criterion
It refers to the space and those things that occur inside a territory. According to this criterion, tax provisions are applicable to the people who reside in a state and also to those who have economic relations in that state. The basic argument of this criterion is that all economic relations made in Spain can benefit from the public services given by the state.
Residence vs. Territoriality
Residence is a subjective circumstance that derives from the territoriality criteria. It changes if the person modifies some circumstances. The difference between territory and residence is that:
- Compulsory contributions based on territoriality depend on the place where the taxable event occurs.
- Compulsory contributions based on effective residence depend on the circumstance of being resident or not.
In conclusion, in personal taxes, both residence and territoriality are used in a cumulative way. In the case of real taxes, we apply the territoriality criteria.
Temporal Scope of Tax Provisions
Regulated by Article 10.1 LGT, tax provisions will enter into force 20 days after their publication in the corresponding official journal, which reproduces Article 2.1 of the Civil Code (CC).