What is a NIE and why do we need it?  

NIE is a national identification number for non-spanish citizens, and is a number which is required for any legal documents or transactions which you may participate in.  This number will remain the same during your lifetime and does not alter.  The NIE certificate is issued by the police station. 

 What is Residencia?

Your residency number will coincide with your NIE number, however forms part of a register of individuals who reside in Spain and/or the Canary Islands.  The condition for applying for residency, is that you must reside within the Spanish territory (in this case, in the Canary Islands) for the duration of more that six months per year.  The residency document is issued by the police station.  New residents used to be issued with plastic ID cards, however nowadays, it is simply an A4 sheet of paper, and is not classed as photograpic ID, hence always needs to be accompanied by a valid passport.