The concept of sporadic absences and the figure of the tax stateless person have become the two main technical cards of the Ministry of Finance to try to overturn the ruling of the National Court which, this Monday, dealt a severe blow to the tax administration by siding with Shakira in the dispute they maintained. These are terms little known to the general public, but increasingly present in million-dollar proceedings and especially useful for the inspection when trying to dismantle strategies based on calendars full of trips, fragmented stays, or difficult-to-prove international moves.
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Shakira was subject to inspection for the period 2011-2014. For the last three years, the singer reached an agreement with the Prosecutor’s Office and acknowledged her residence in Spain, paying millions of euros in fines. The real point of friction, however, was in 2011. In that year, the Colombian acknowledged having spent 143 days in Spain, while the Tax Agency accredited 163 days. In any case, both figures are below the threshold of 183 days that normally marks tax residence in a territory. What did the Treasury then claim? That the alternative proposed by the singer ―residence in the Bahamas while the rest of the time was spent on an international tour― did not prove an actual effective stay in another country. According to the agency, those trips were sporadic absences, that is, temporary trips compatible with maintaining the true center of life in Spain, further reinforced by her budding relationship with footballer Gerard Piqué.
The National Court adopted a different and much stricter interpretation of the literal law. There was no marriage with Piqué, they had no children, and the famous 183 days were not reached. Furthermore, the companies channeling Shakira’s income were not Spanish. All this, at least in the eyes of the court, served to deduce that the singer would have lived on tour, dividing her time among several countries and without consolidating clear residence in any of them. And here is where the great underlying debate appears, to which, according to several experts, the State Attorney’s Office will cling in its cassation appeal before the Supreme Court, which will have the final word in this process.
The Treasury’s thesis tries to avoid such scenarios that, in practice, border on the figure of the tax stateless person. These would be taxpayers capable of organizing their lives and filling their weeks with intermittent absences that do not count, so that no country can fully claim them as residents. For this reason, Francisco de la Torre, State Treasury inspector, explains that the key will be “what is really understood by a sporadic absence and whether those days should count or not in the final tally used to establish residence.” In his opinion, it is reasonable to think that, in Shakira’s case, with 163 days accredited in Spain and the rest spread across multiple jurisdictions due to tours and concerts, the conclusion would have been different if those days had been counted.
José María Mollinedo, secretary general of the Ministry of Finance technicians’ union (Gestha), also believes so, recalling that “no one can be a tax stateless person” and that, in this case, it is being determined whether Shakira should pay taxes in Spain or not pay them anywhere in the world.
Strengthening the doctrine
The Supreme Court admits those cases that allow “reaffirming, strengthening, completing, qualifying or, if necessary, correcting the doctrine already established.” This is the main argument the high court expresses in its rulings whenever it accepts to consider matters, since generally it does not evaluate evidence already examined by lower bodies. From the CMS Albiñana & Suárez de Lezo department, they emphasize that the Supreme Court will analyze this issue if the State’s legal services manage to sufficiently justify the cassation interest of the matter, since it is not enough to allege a violation of the legal system. Thus, the head of Contentious Taxation and Tax Litigation at the firm, Antonio Puentes, agrees that the way to get the judges of the highest Spanish judicial instance to reconsider Shakira’s case could consist of introducing a “technical-legal issue,” such as “the scope of presumed days or sporadic absences,” whose interpretation is required from the legal and tax field. “Otherwise, there is a high risk of inadmissibility due to lack of cassation interest, as the debate may be considered essentially evidentiary and, therefore, barred from cassation,” he clarifies.
Other sources consulted point out that the Supreme Court usually enters these debates simply because they are high-profile cases, as has happened in other matters related to celebrities, artists, or athletes. The time it will take to resolve is indefinite, since, according to these sources, although the Contentious-Administrative Chamber has been clearing cases stuck since the pandemic or due to lack of judges, it is still taking between 9 and 12 months to admit appeals and years to resolve them.
José María Peláez, spokesperson for the Association of State Treasury Inspectors, also believes the case may have a future in the Supreme Court. He recalls that the so-called sporadic absences play a decisive role in the analysis. According to the IRPF legislation, these are temporary trips that do not alter habitual residence and therefore must be counted within the annual stay tally. In his view, the National Court ruling does not sufficiently address this underlying issue. “The ruling does not really evaluate tax residence, and that, in my opinion, is one of its weak points,” he maintains.
Furthermore, Peláez recalls that the IRPF law establishes a particularly demanding evidentiary regime for those who claim to reside in tax havens such as the Bahamas. In those cases, “it is up to the taxpayer to prove to the Treasury that they have stayed more than 183 days in that territory, thus reversing the burden of proof.” The reason is that, since there is no double taxation agreement with these types of jurisdictions, the Administration has greater leeway to question the declared residence and demand reinforced evidence of effective stay outside Spain. Additionally, he adds, if the singer had been able to prove a stay longer than 183 days in another country, the conflict with the Treasury would hardly have existed.
