“How barbaric. Impossible. Juan Carlos I cannot acquire Emirati nationality,” said a source very familiar with the decision of the Emirati at the beginning of this week. Zarzuela Palace to start in the first days of August 2020 the path of banishment to Abu Dhabiwhen asked about the issue of tax residence before the alleged decision of the king emeritus not to pay taxes in Spain and do it where he lives.
Because, according to the Agreement between the Kingdom of Spain and the United Arab Emirates (UAE) signed in Abu Dhabi on March 5, 2006 and modified on December 22, 2021 – that is, one year after the emeritus king moved to said country – to avoid double taxation and prevent tax evasion in matters of income taxes and on the heritage to have tax domicile there Emirati nationality is required.
Article 4.1, Resident, establishes that “for the purposes of this Agreement the expression ‘resident of a contracting party’ means in the case of the United Arab Emirates, natural persons domiciled in the UAE and who are nationals of the UAE, as well as companies incorporated in the UAE having their place of effective management there.”
Although the provisions of this Agreement “shall not affect the tax liens enjoyed by members of diplomatic missions or consular offices in accordance with the general principles of international law or by virtue of the provisions of special agreements”. It is not, therefore, the case of the emeritus, who does not enjoy any tax privilege. Therefore, if you are not an Emirati national, it would be difficult for you to have what is called, according to the Convention, fiscal residence in the UAE.
Economic interests
However, the idea that “the main nucleus or the base of its economic activities or interests” – the formula used to justify this new fiscal residence – no longer resides in Spain raises the question: what does that nucleus or basis of economic activities or interests?
Because the Tax Agency has never registered a statement of assets and checking accounts of Juan Carlos I abroad.
On September 5, 2018, the National Fraud Inspection Organization (ONIF) and the State Tax Administration Agency (AEAT) responded to a requirement of the central court instruction number 6 of the National Court on the existence of those assets.
As they pointed out “His Majesty the King Emeritus Don Juan Carlos I has not submitted an informative declaration on assets and rights located abroad (model 720)”.
And they added: “In the different sources of information available to the AEAT there is no evidence that HM King Emeritus D. Juan Carlos I possesses checking accounts abroad.
Subsequently, on the occasion of the two “spontaneous” regularizations presented by Juan Carlos I at the end of 2020 and the beginning of 2021 (he paid just over 5 million euros for the 8 million hidden), the Tax Agency inspected his accounts. And he found no patrimony of his abroad.
Investments in Spain
“What seems serious to us is that the emeritus would seem to have interests outside of Spain since this would justify being a tax resident in the UAE,” Carlos Cruzado, president of Gestha, the union of technicians from the Ministry of Economy, told El Periódico. “Serious because the Tax Agency and the Prosecutor’s Office, which gave the green light to regulations they ignore those interests outside of Spain. The nationality of the United Arab Emirates is of course essential to pay taxes there. Why not do it when you have been living since August 2020? In 2021 I could have done it,” she noted.
The story now of change of tax domicile. Could it be related to the fact that at his 85th birthday on January 5, the king emeritus prepares the inheritance issues for his children?
“Without a doubt, it gives the impression that he wants to have his patrimony there. And has he obtained all this patrimony in the last year? What interests does he manage from there if he no longer has more than his investments in Spain? What happens: that he is not going to be a fiscal resident there or here? Perhaps that is what it is about,” Cruzado pointed out to questions from this newspaper.
In his statement of March 15, 2020, one day after the state of alarm for the coronavirus was declared, Felipe VI issued a statement according to which he wanted “that it be publicly known that HM King Juan Carlos is aware of his decision to renounce the inheritance of Don Juan Carlos that may correspond to you personally, as well as any asset, investment or financial structure whose origin, characteristics or purpose may not be in accordance with the law or with the criteria of rectitude and integrity that govern your institutional and private activity and that must inform the crown activity”
Related news
Is the resignation general to all the patrimony that his father may possess or only to that part of it whose origin is from dubious legality? Will it be audited?
Is this what lies behind the issue of the new fiscal domicile that Juan Carlos I processes in exile?