As a result, her worldwide income would be liable for taxation in Spain.
In February 2017, the Spanish authorities confirmed they were targeting high net worth individuals after information sharing through the Common Reporting Standard went live.
Not just the days
International tax lawyer Miles Dean, managing partner of Milestone International Tax, said: “Residence in Spain is determined not simply by the number of days in the tax year an individual is present in the country, but also by whether the individual’s centre of vital interests is located there.
“In other words, Shakira could, in theory, have spent less than 183 days of the Spanish tax year in the country, but if her home, partner and other interests were in Spain then she could be caught out.”
Shakira’s partner, since 2010, is Barcelona footballer Gerard Pique, who is the father of her two children.
The singer officially made Spain her country of residence in 2015, the same year in which the Beckham Law was reinstated.
“This law, which was introduced to attract higher earners to Spain by taxing them on a territorial basis – ie tax would only apply to Spanish source income – had previously been amended in 2010 to limit its application,” Dean explained.
“However, from 2015, all ‘employment’ income, foreign or Spanish, is taxed as a Spanish source of income, while other non-Spanish source income – for example royalties, performance fees, etc – will continue to fall outside the scope of Spanish taxation.”
Few expats will qualify for the Beckham Law, introduced specifically so the football legend could protect his income while playing for Real Madrid.
However, those who opt to remain non-residents, and limit their time in Spain to 183 days per financial year, could fall foul of the Spanish tax authorities if it thinks it worthwhile to pursue them.
Dean said: “Shakira, like many other high-earning individuals, will fall under the taxman’s spotlight at some time during their career. It isn’t unusual for the taxman to scrutinise an individual’s residency status, as this will often determine whether they are taxed on their worldwide income if resident, or only on a source basis if non-resident.”
He added: “The use of the word ‘evasion’ is unfortunate in these situations because it unfairly ascribes a degree of criminality to the individual. Shakira may well simply have been badly advised or, more likely, the Spanish authorities are continuing in their witch hunt of the rich and famous, launching criminal proceedings in an attempt to make examples of them.”