Under Spanish tax law, an individual is considered a tax resident if they spend more than 183 days in Spain within a calendar year, which determines whether they are taxed on worldwide income or only on income connected to Spain; in Shakira's case, the court found she spent only 163 days in Spain in 2011, which was 20 days short of the legal threshold, meaning she was not a tax resident and thus not liable for worldwide taxation.
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Shakira May Not Receive $64 Million Tax Refund Until Final Court Ruling, Expert SaysAdded:
All right, well Shakira has won a major legal victory in her long-running tax battle in Spain. A Spanish court cleared the singer of fraud allegations tied to her 2011 taxes and ordered the government to return more than $64 million in penalties and interest.
Authorities claim Shakira lived in Spain long enough to owe taxes there, but the court found they could only prove 163 days of residency, short of the legal requirement. So, Rachel, why did the court decide Shakira's time spent in Spain did not qualify her as a legal resident for tax purposes? The key issue was residency. Under Spanish law, Shakira would generally be treated as a tax resident if she spent more than 183 days in Spain within a calendar year.
And [music] that matters because a Spanish tax resident can be taxed on their income that they earn worldwide, anywhere in the world. Um, while a non-resident is generally taxed only on income that's earned or connected to Spain itself. Um, so the court here found that Spanish tax authorities could only prove that Shakira spent 163 days in Spain in 2011, which is 20 days short of that legal threshold. [music] And one of the biggest pieces of evidence her defense team leaned on was the fact that she was actually on a world tour in 2011. And because she had such a grueling tour schedule, that gave her significant evidence that she was physically outside of Spain for most of 2011.
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