# spanish tax system



## karenangell (Feb 6, 2011)

Hi to everyone. I still find the spanish tax system very confusing We are still thinking of relocating to spain. It been a few years but we are saving and obviously doing our research. We have been to spain in the last few years about four times for holidays and we always go to different parts we recently came back from tarragona which was a very nice part of spain. What I dont understand is about the tax in spain is how much does a family say of three have to pay. We would be renting our home out in england and its worth £180,000 so do they tax us on how much that is also my husband has a small business and will be commuting but would still be a spanish resident as he will be in spain more than england. With the tax once a tax return has been filled in do we pay the tax over a monthly period?? Many thanks for replies on this quite confusing business


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## snikpoh (Nov 19, 2007)

karenangell said:


> Hi to everyone. I still find the spanish tax system very confusing We are still thinking of relocating to spain. It been a few years but we are saving and obviously doing our research. We have been to spain in the last few years about four times for holidays and we always go to different parts we recently came back from tarragona which was a very nice part of spain. What I dont understand is about the tax in spain is how much does a family say of three have to pay. We would be renting our home out in england and its worth £180,000 so do they tax us on how much that is also my husband has a small business and will be commuting but would still be a spanish resident as he will be in spain more than england. With the tax once a tax return has been filled in do we pay the tax over a monthly period?? Many thanks for replies on this quite confusing business


I don't think that tax is any more complicated here than it is in UK.

On UK property rental, the norm is to pay tax on this income in UK!

As far as I understand, your husband will have to decide if he is conducting the business here in Spain - although it's a UK based company. He will presumably be drawing a wage from the company so this income will need to be declared and tax paid on it here in Spain.

If he is actually conducting the business from Spain, then I believe that he will have to declare himself to be self-employed in Spain and hence pay the necessary tax and SS (NI) payments here.


On a different note, what health care provision will you and your husband have here in Spain? Will it be private?


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## zenkarma (Feb 15, 2013)

If you're resident in Spain, you pay Spanish tax on your worldwide income.

Spanish tax is complex, I strongly advise you to have a look through this site, which explains it all fairly well: Spanish income tax


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## snikpoh (Nov 19, 2007)

zenkarma said:


> If you're resident in Spain, you pay Spanish tax on your worldwide income.
> 
> Spanish tax is complex, I strongly advise you to have a look through this site, which explains it all fairly well: Spanish income tax


A good link - thanks.

Having read the link, I still don't think it's any more complex than tax in UK. The main difference is that, as foreigners, it is (perhaps) more complicated for US.


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## Stravinsky (Aug 12, 2007)

zenkarma said:


> *If you're resident in Spain, you pay Spanish tax on your worldwide income.*
> 
> Spanish tax is complex, I strongly advise you to have a look through this site, which explains it all fairly well: Spanish income tax


Not all of it no. Some of _our _income is never taxed in Spain under the tax treaty

As regards your business, you can run the business as a UK business, it also depends a lot on what kind of legal setup you have for the business. I run a UK internet business from here. It incurs Uk taxes, and I have to pay Spanish income tax on any income I take.

As regards your rental, a lot of the agents in the UK remove the tax element from the rental they collect for you. You can change this (I cant remember how) so that they give you it 100%, I think you have to de register for tax in the UK to do it. Whatever, it is income and comes under your worldwide income so even if you do pay tax on it in the UK, the Spanish tax man will want the difference between the UK rate and the Spanish rate here.

Overall, avoid registering your business here, its too much hassle and expense

You can be a domicile resident in Spain and not a tax resident you know, although the circumstances you describe dont seem to lend to that scenario


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## karenangell (Feb 6, 2011)

Stravinsky said:


> Not all of it no. Some of _our _income is never taxed in Spain under the tax treaty
> 
> As regards your business, you can run the business as a UK business, it also depends a lot on what kind of legal setup you have for the business. I run a UK internet business from here. It incurs Uk taxes, and I have to pay Spanish income tax on any income I take.
> 
> ...


Ok many thanks for all of your replies. We will look into all of this. He is already paying income tax and stamp on his wage he earns through his business so therefore hel have to pay a second tax on this then? is this right and how much will that be roughtly he only earns a small income or aroung 11000, which is ample for us to live on as we will have our rental income to pay for rent etc. We have savings aswell will they have to be taxed?


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## zenkarma (Feb 15, 2013)

karenangell said:


> He is already paying income tax and stamp on his wage he earns through his business so therefore hel have to pay a second tax on this then? is this right and how much will that be roughtly he only earns a small income or aroung 11000, which is ample for us to live on as we will have our rental income to pay for rent etc. We have savings aswell will they have to be taxed?


It will all be subject to tax either in the UK and/or in Spain.

All earned and unearned income (that includes rent and interest on savings) will be taxed. As tax residents in Spain you will also have to declare to the tax authorities every single bank account, savings account, investment account, shares and any financial account or investment account you have.

The only way to fully understand this is to read through the link I gave you and work out exactly what your tax liabilities will be both in the UK and in Spain.

One of the reasons you still have to pay Spanish tax even though you've paid UK tax is because Spanish tax allowances are lower than UK ones. Eg in the UK you can earn approx £7,500 before paying any tax, in Spain it's €5,050. So if the UK Inland Revenue calculate your total tax to be say £5,000 and the Spanish tax office £5,750, you pay £5,000 to the Inland Revenue and £750 to the Spanish tax office.

Don't forget the rental income from your house will also be subject to both UK and Spanish taxation.


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## Stravinsky (Aug 12, 2007)

karenangell said:


> Ok many thanks for all of your replies. We will look into all of this. He is already paying income tax and stamp on his wage he earns through his business so therefore hel have to pay a second tax on this then? is this right and how much will that be roughtly he only earns a small income or aroung 11000, which is ample for us to live on as we will have our rental income to pay for rent etc. We have savings aswell will they have to be taxed?


.

I think you have to get your head around this. OK, he pays NI and tax in the UK, but you are saying he will be habitually resident in Spain, and after spending 183 days here he will also be tax resident

As a tax resident he will have to pay Spanish tax on his worldwide income. Thats earned income, interest, and such things as investments that are coming to fruition .. even tax free lump sums on pensions that have matured. Worldwide income means income that you are paying tax on in the UK ... however due to the dual tax treaty you wont pay twice, just the difference between the rates and allowances. So to conclude, your property income, his business income, interest from bank accounts etc etc will all be subject to Spanish tax IF he spends more than 183 days a year in Spain

He (and you) will have to declare all assets (joint or single), investments, business interests, property details for anything that falls over €50k ... please see the declaration to hacienda thread for details.


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## nikkisizer (Aug 20, 2011)

Hello karenangell,

You will need to complete a UK tax return each year regardless of where you are classed as resident if you have:

- £10,000 or more income from UK savings and investments
- £2,500 or more income from untaxed UK savings and investments
- £10,000 or more income from UK property (before deducting allowable expenses)
- £2,500 or more income from UK property (after deducting allowable expenses)

In most circumstances you will still be entitled to the UK personal allowance for tax purposes even if you are not UK resident.

Residency is a very complex area and the existing HMRC UK residency rules are set to change with effect from the 2013/2014 tax year which will involve the statutory residency test (SRT). 

Various tests are performed to see if you have ties such as home, work, family etc. in the UK which may well class you as UK resident for tax purposes regardless of where you reside. 

If classed as UK resident under the new (SRT) you would then be taxed on your worldwide income so it is very important that your individual circumstances are dealt with correctly to protect your residency status and exposure to UK taxation.


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## Guest (Mar 3, 2013)

There is nothing to be confused about. You simply find a good gestoria, they will sort your tax out, answer any questions you may have. I would guess most people on here are as confused about tax whether in Spain or the UK. 
Within the EU there is something called dual taxation, which means as a resident, you pay your taxes in Spain or the UK depending on your circumstances. You do not pay any tax twice. Your gestoria will sort that out for you. The cost is really inexpensive, unlike an accountant in the UK.


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## Stravinsky (Aug 12, 2007)

nikkisizer said:


> Hello karenangell,
> 
> You will need to complete a UK tax return each year regardless of where you are classed as resident if you have:
> 
> ...



Whilst I might agree with the second two, once you have completed FD9, the second two would not normally require you to submit a tax return in the UK as FD( covers pensions & interest


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