Grammy-winning Columbian singer Shakira reached a last-minute deal with Spanish prosecutors on Nov. 20, the opening day of her trial for alleged tax fraud. The settlement, which will allow the singer to avoid jail time, follows a multiyear investigation into the singer's tax affairs. (One investigation in Barcelona reportedly involved two alleged counts of tax fraud in 2018. The Spanish trial centered on allegations of tax evasion amounting to about $16 million from 2012, 2013, and 2014.)
Shakira, who is known for hits including "Whenever, Wherever" and "Hips Don't Lie," has throughout the years, denied the charges and previously paid millions to settle a portion of the alleged tax debt. The current deal involves a three-year suspended sentence and a fine of about 7.6 million dollars (7 million euros).
Shakira tax fraud settlement
Shakira, originally from Colombia but now residing in Miami, has previously said she followed the advice of tax professionals and complied with the law. However, Spanish prosecutors in the tax case sought up to eight years in prison.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In a statement, Shakira said that she resolved the case "with the best interest of my kids at heart, who do not want to see their mom sacrifice her personal well-being in this fight."
Why does it matter? This case highlights the impact residency and living in a different country, even temporarily, can have on an individual's tax liability — even when you’re not a pop star. So, here's what else you need to know if you're living abroad for a while.
Residency 183-day rule: Do you pay taxes if you live abroad?
- According to Spanish tax authorities, Shakira resided in Spain for over 200 days annually from 2012 to 2014, making her liable to pay taxes there.
- If you spend more than 183 days in Spain during a calendar year, you are considered a resident for tax purposes.
Spain isn’t the only country that uses the “183-day rule” to determine whether you are a “resident” for tax purposes. (The 183-day rule generally says that if you spent 183 days or more in a country during a year you are considered a tax resident of that country for that year.) Different countries use different criteria to determine whether a person living there should be taxed as a resident.
For example, the United States has “tests” (a "green card test" and a "substantial presence test") for determining tax residency status. The calculations can be confusing because the substantial presence formula has a 31-day component, a 183-day component spread over three years, and numerous exceptions.
Some U.S. states also have residency requirements based on the 183-day rule. But each state varies in terms of how it calculates the time you spend there and how that time factors into whether you have to pay that state's income taxes. For example, establishing residency for tax purposes in Florida, a state with no income tax, might not be easy. (Residency and taxes can be a factor when you live in one state and work in another.)
Taxes for U.S. citizens living abroad
As for U.S. citizens and "resident aliens" (the IRS term for non-U.S. citizens who meet either the green card or substantial presence tests), the IRS says your worldwide income is subject to U.S. income tax — no matter where you live. However, some tax breaks are available to taxpayers that qualify, like the foreign earned income exclusion and foreign income tax credits.
If you’re living abroad and are unsure about your tax liability, consult a trusted professional tax or financial advisor before tax season. You can also visit the IRS page on resident and non-resident tax status to learn more. You don’t want to be caught off guard by a tax bill you can’t shake.
Related
-
USPS Is Raising Prices for Holiday Shipping: Dates and Increases You Need to KnowWhat the USPS's $16 price hike means for your wallet and your small business.
-
July CPI Report Ignites a Risk-On Rally: Stock Market TodayMarket participants price out worst-case scenarios for tariffs and inflation and will now turn their attention to employment and growth.
-
The Fall Garden 'Tax': What to Plant and How to PrepareTax Tips Fall gardening could increase your taxes this season. Here’s what to know while planting in 2025.
-
Texas Sales Tax-Free Weekend 2025Tax Holiday Here's what you needed to know about the Texas sales tax holiday.
-
Retirees Should Watch These Four Key Tax Changes in 2025Tax Changes This year brings key tax changes that could affect your retirement taxes and income.
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund, a smaller one or something in between next year. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ PocketsTax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's FinancesTax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.
-
Why Your Summer Budget Feels Tighter: Tariffs Push Up InflationTariffs Your summer holiday just got more expensive, and tariffs are partially to blame, economists say.
