# That CGT question again!



## Relayer (Mar 27, 2015)

Hi all.

Many thanks in advance and apologies... as I fear this question has been asked a few times. I think I understand but just wanted to confirm.

If I sell my UK home and use the profits to buy a place in Spain there is NO CGT to pay providing I purchase with in two years after selling. Can I also assume that would be the same if I was to buy in France?


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## Rabbitcat (Aug 31, 2014)

Good question which I am also interested in. 

To take it further if you sell your sole UK home and do not buy in Spain for a few years ( maybe just rent there) why would you owe the Spanish CGT? Does this only apply if you have been tax resident in Spain since the UK sale?


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## larryzx (Jul 2, 2014)

Correct me if I am wrong, but in UK I thought one's home was free of CGT. So unless one has moved to Spain, thus it would not be one's primary home, then there would be no tax to pay. 'If I sell my UK home'.

Spanish CGT tax only applies of one is tax resident in Spain. So unless the property in UK was not one home, how would Spanish tax apply.


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## Rabbitcat (Aug 31, 2014)

Ahhh, but Larry- say you moved in January

Yes you would be ok with UK taxman ( your only home - no CGT) but you would be tax resident in Spain in the same year your house was sold so possibly liable to the Spanish taxman ( I think...)


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## 90199 (Mar 21, 2010)

Repeat from another thread,

Spanish tax year starts 1st January and ends 31st of december. To be considered a tax resident you have to been habitually resident during that years for six months or 183 days. A tax declaration has to be made the following year, declaring all income.

So if you sell your house and take your lump sum in the U.K., to avoid Spanish tax, do not reside more than 182 days in Spain, in that year. Those days do not have to be consecutive.

Asking such questions on a forum like this will no doubt result in different answers, do consider professional advice, it might cost you but can save a lot of money.


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## alborino (Dec 13, 2014)

Hepa said:


> To be considered a tax resident you have to been habitually resident during that years for six months or 183 days.


But that is not a true statement. I know of a person who is in Spain for 2 months a year but he is Spanish tax resident


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## Rabbitcat (Aug 31, 2014)

Why is he tax resident Alborino, despite being there so little?


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## larryzx (Jul 2, 2014)

Hepa said:


> To be considered a tax resident you have to been habitually resident during that years for six months or 183 days..


That is one rule but if one's main home, “centre of vital interests” is in Spain, not being divorced or legally separated one’s spouse/ family live in Spain, that too means tax resident.


Maybe one of those applies to the person Alborino knows.


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## alborino (Dec 13, 2014)

Rabbitcat said:


> Why is he tax resident Alborino, despite being there so little?


In his case he has dependents in Spain. Correct Larry


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## Rabbitcat (Aug 31, 2014)

Ok then. So for the first time EVER on Spain Expat Forum are we ALL agreed, novices ( like myself) and more seasoned experts alike-

If selling up in UK and moving to Spain, to avoid having to pay CGT in Spain on a sale of your UK home you must not move until the following year


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## smitty5668 (Feb 25, 2015)

Rabbitcat said:


> Ok then. So for the first time EVER on Spain Expat Forum are we ALL agreed, novices ( like myself) and more seasoned experts alike-
> 
> If selling up in UK and moving to Spain, to avoid having to pay CGT in Spain on a sale of your UK home you must not move until the following year


i think this is the general feeling, just to be on the safe side.


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## Rabbitcat (Aug 31, 2014)

Though no one has answered my question as to how anyone in Spain knows which part of your lump sum in UK bank relates to the sale of your UK home


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## smitty5668 (Feb 25, 2015)

Rabbitcat said:


> Though no one has answered my question as to how anyone in Spain knows which part of your lump sum in UK bank relates to the sale of your UK home


from what i've gathered with spain the onus is on you to prove that it's not.:eyebrows:


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## alborino (Dec 13, 2014)

Rabbitcat said:


> Ok then. So for the first time EVER on Spain Expat Forum are we ALL agreed, novices ( like myself) and more seasoned experts alike-
> 
> If selling up in UK and moving to Spain, to avoid having to pay CGT in Spain on a sale of your UK home you must not move until the following year


If 'move' means the day you shout "I'm here amigos" on Spanish territory then Yup.

I sell 31/8 in the UK and will be in Spain for over 120 days in 2015 but never 90 consecutive. And I'll have a UK postal address and will tell everyone I have no intention of moving to Spain permanently. And then in mid January I will be converted on the road to Cadiz :eyebrows:

And if I buy a house in Spain in 2015 I'll register it as foreign owned and pay the tax.

ps Don't forget to bed and breakfast any shares you may have that are sitting on a profit  I only pick bad ones so not an issue for me  And take pension TFLSs. And don't forget the wife/hubby/cat/dog/toothbrush/etc.


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## Rabbitcat (Aug 31, 2014)

Alborino you have it sussed a lot better than myself!!!!

Whilst I too will still have a UK address, and am not definitely intending on staying permanently in Spain at time of moving ,for those like me, not 100% certain of the tax rules its prob best to not shift out until the following year after sale of UK house


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## Williams2 (Sep 15, 2013)

Relayer said:


> Hi all.
> 
> Many thanks in advance and apologies... as I fear this question has been asked a few times. I think I understand but just wanted to confirm.
> 
> *If I sell my UK home and use the profits to buy a place in Spain there is NO CGT to pay providing I purchase with in two years after selling. Can I also assume that would be the same if I was to buy in France?*


For those that count as Non Resident UK and Resident in Spain ( for tax ) is this
true ? that provided you use the whole proceeds of the sale ( or even maybe ? ) a
proportion of the proceeds of the sale of your former home in the UK to buy your
new main home in Spain. You can off set this against your CGT liability in Spain ?

Of course I know the usual caveats apply eg seek professional financial advice 
first, etc etc - but if this is true. It would good to hear of some anecdotal examples
where British Expats have taken advantage of this ruling, to rent first ( see whether
they like Spain first - then see whether they feel suited to their new region or
town in Spain ) before taking the plunge of buying their new family home in Spain,
once all the boxes are ticked.
Finally is it 2 years, as I thought it was 4 years ?


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## Lynn R (Feb 21, 2014)

Williams2 said:


> For those that count as Non Resident UK and Resident in Spain ( for tax ) is this
> true ? that provided you use the whole proceeds of the sale ( or even maybe ? ) a
> proportion of the proceeds of the sale of your former home in the UK to buy your
> new main home in Spain. You can off set this against your CGT liability in Spain ?
> ...


It is definitely two years (I know this article refers to plus valia, but in this context they mean capital gains not the plus valia payable to the Ayuntamiento, and further into the article they also refer to ganancias patrimoniales):-

Reinvertir el dinero de venta de un piso en nueva compra | Actualidad Inmobiliaria

Someone I know has just sold a house and had it confirmed by his financial advisor that if he bought a new one, either in Spain or in another EU country, and reinvested the whole of the sale proceeds after expenses, then he would not be liable to pay CGT. That being the case, I cannot see why it would not work the other way around, that if one sold a habitual residence in the UK and reinvested the proceeds in a Spanish property within 2 years one would not be liable for Spanish CGT. However, if the whole of the proceeds are not reinvested then CGT is still payable on the balance, so anyone selling an expensive house in the UK and buying a cheaper one in Spain, maybe to release capital, would still have a CGT liability.


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## extranjero (Nov 16, 2012)

The CGT is payable on the profit made, so if half was reinvested in a property, half the Cgt on the profit would be paid not on the balance, if I make myself clear.


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## Rabbitcat (Aug 31, 2014)

Frankly I think it is piss poor that if you fully satisfy the rules of the country you are residing in at the time of the sale and are selling your house there, that a second country makes a claim to tax from you, BUT that's the rules....don't likey, don't movey!!!!


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## alborino (Dec 13, 2014)

Lynn R said:


> .............. then he would not be liable to pay CGT


"At this time". The tax is deferred, not gone away - unless the rules have seriously changed


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## extranjero (Nov 16, 2012)

So make sure you get your UK pension lump sum the year before you move if you don't want the Spanish taxman getting a chunk!


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## Rabbitcat (Aug 31, 2014)

What lump sum!!!!


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## 90199 (Mar 21, 2010)

Like i wrote on my previous post,


"Asking such questions on a forum like this will no doubt result in different answers, do consider professional advice, it might cost you but can save a lot of money."


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## Rabbitcat (Aug 31, 2014)

I hear what you're saying Hepa but its good to get a feel for others thoughts, ideas views etc- plus even the " experts" don't always agree nor get it right


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## alborino (Dec 13, 2014)

Rabbitcat said:


> I hear what you're saying Hepa but its good to get a feel for others thoughts, ideas views etc- plus even the " experts" don't always agree nor get it right


Yes anyone would think you could stroll along to a spanish lawyer and get good advice. You cannot. You need to be very well prepared, have specific questions, know the options, have extreme patience, and a large bank balance. 

Recently visited an accountant/lawyer group in Madrid. 120 Euros as an introductory meet. A list of straight forward questions. Most were met with "we couldn't say". Even my spanish wife walked out in disgust and that takes a lot.

Near to Hepa in Tenerife Hacienda offered "you need to charge VAT" and "you do not need to charge VAT" three days apart. 

An abogado in northern Spain said quite openly "how much do you want to rip the townhall for?".

And recently "I suggest you go to Portugal and benefit from the better income tax rules prior to moving to Spain a year later". At least under the right circumstances that could make sense 

And on this forum look at the hassle Steve is having trying to buy a house and he is using so called professionals and seems a very intelligent guy 

It is no surprise why Spain is up to its neck in it. I'm afraid you have to look after yourself it you want to be legal and it not costing you a fortune


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## Rabbitcat (Aug 31, 2014)

Very sobering stuff Alborino.

As I said in an earlier post, at the end of the day we all have to make our own judgement calls on these matters and unfortunately its not always easy nor practical keeping to the letter of the rules


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## alborino (Dec 13, 2014)

Rabbitcat said:


> Very sobering stuff Alborino.
> 
> As I said in an earlier post, at the end of the day we all have to make our own judgement calls on these matters and unfortunately its not always easy nor practical keeping to the letter of the rules


Rabbitcat I'm getting depressed. Problem is I like to abide by the law but members of my spanish family think nothing of giving a doctor 5 liters of quality olive oil to get priority treatment. What hope is there for an honest brit competing with that? 

But now time to take a glass or two of spanish red and let rip with my flamenco guitar and then I'll feel back on top of the world.

Enjoy your weekend one and all


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## Rabbitcat (Aug 31, 2014)

I too am determined to be as compliant with the rules as possible . Unfortunately for some aspects ( foe example some of the 90 day stuff) of the regulations it's virtually impossible to comply, hence I suspect its why some regulations are enforced less than others


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## Duchess (Sep 28, 2009)

Can I clarify something please? We are looking into selling our UK home, buying a Spanish one and retiring to Spain. We do not intend to leave after 180 or however many days was mentioned earlier, nor to live anywhere else. Does that mean we'd pay tax on our home even if cash buyers?


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## Duchess (Sep 28, 2009)

PS would we also have to wait and not move in the same year?


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## Rabbitcat (Aug 31, 2014)

It's the CGT which is the problem.

If you are tax resident in Spain when you sell your UK home you will be liable to the Spanish taxman. So as not to become tax resident ( 183 days in Spain- Spanish tax year runs Jan to Dec)) you would be best moving after July 4. ( assuming you hadn't had any other visits there earlier that year)


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## extranjero (Nov 16, 2012)

Yes, but as you and I both know , if you intend to make Spain your home, you will be regarded as resident for the whole tax year, no matter which month of that year you move!
This is just going round and round!!


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## Duchess (Sep 28, 2009)

Rabbitcat said:


> It's the CGT which is the problem.
> 
> If you are tax resident in Spain when you sell your UK home you will be liable to the Spanish taxman. So as not to become tax resident ( 183 days in Spain- Spanish tax year runs Jan to Dec)) you would be best moving after July 4. ( assuming you hadn't had any other visits there earlier that year)


Sorry I don't understand. If we are retiring and have sold our UK home why would we be liable to pay Spanish tax if we're cash buyers?


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## Isobella (Oct 16, 2014)

I don't understand it either. I would seek advice from an international tax adviser before doing anything.


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## Rabbitcat (Aug 31, 2014)

Duchess said:


> Sorry I don't understand. If we are retiring and have sold our UK home why would we be liable to pay Spanish tax if we're cash buyers?



If you are tax resident in Spain you owe tax as per their system.

This kicks in after you have stayed in Spain over 183 days cumulatively in any calendar year

Therefore if you sold your home in UK, say in May 2015 -and moved out to live in Spain, you would after 183 days after arrival be tax resident in Spain for 2015. 

Your tax return in 2016 would be required to reflect the house sale.


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## 90199 (Mar 21, 2010)

Isobella said:


> I don't understand it either. I would seek advice from an international tax adviser before doing anything.


Where we live we are within walking distance to the Tax Office, so, we asked them.


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## Rabbitcat (Aug 31, 2014)

And what did they say Hepa?


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## 90199 (Mar 21, 2010)

Rabbitcat said:


> And what did they say Hepa?


Exactly what I posted earlier in the thread.


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## Rabbitcat (Aug 31, 2014)

Thanks Hepa- I am in dumb mode again!!!

And just to be clear was their advice that if you were considered as tax resident for that year, it was for ALL of that year- including any period before you became tax resident, OR only the period AFTER the 183 days- that is the bit I am not 100% sure on and which makes this confusing for me to explain


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## extranjero (Nov 16, 2012)

Duchess said:


> Can I clarify something please? We are looking into selling our UK home, buying a Spanish one and retiring to Spain. We do not intend to leave after 180 or however many days was mentioned earlier, nor to live anywhere else. Does that mean we'd pay tax on our home even if cash buyers?


You would be liable for capital gains tax, on the profit from the sale of your UK property
The Spanish tax year is from Jan -Dec so if you are retiring to Spain you would be regarded as tax resident for the whole year , even before you moved to Spain.this would meaning paying income tax on all your worldwide income, including ISAs , savings interest, pensions etc.
183 days is usually quoted as the time you spend in Spain to be considered tax resident, , but if you have the intention to live permanently in Spain, sold your house in UK, moved your belongings out here etc, it is pretty obvious you are intending to live here, whenever you moved.
The fact that you are a cash buyer is irrelevant


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## Rabbitcat (Aug 31, 2014)

That's exactly the point I needed clarified Extranjero., thanks

Once you become tax resident your liability is calculated for THE WHOLE YEAR- INCLUDING PRIOR TO YOU EVEN ARRIVING IN SPAIN

Bloody unfair, but that's the rules


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## Rabbitcat (Aug 31, 2014)

Just one other specific re tax and CGT which I have not seen mentioned.

Is there a specific question on your tax form asking where your savings/ lump sum/ money in bank- actually came from?

In other words if you arrive out and after your 183 days declare your UK bank account monies etc on your tax form- how exactly is it established that some was from sale of a property?


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> Just one other specific re tax and CGT which I have not seen mentioned.
> 
> Is there a specific question on your tax form asking where your savings/ lump sum/ money in bank- actually came from?
> 
> In other words if you arrive out and after your 183 days declare your UK bank account monies etc on your tax form- how exactly is it established that some was from sale of a property?


What do you mean, if you arrive out and after your 183 days declare your UK bank account .....

From your post immediately before this one, I thought you'd accepted the argument that if you move to Spain with the intention to remain here permanently you become tax resident automatically regardless of the number of days you have spent in Spain during the year of your arrival.

Which, incidentally, is not the way Hacienda interpreted the rules when I moved here (although it´s quite possible their interpretation may have changed since then). I moved to Spain at the end of November 2006 and went to the Hacienda office in May 2008 to make my first tax return (like Hepa, I live within walking distance of their office). Not only did they agree that 2007 was the first year I would have been required to submit a return for (not 2006 although I arrived in that year intending to stay), but also told me it wasn't necessary for me to make a return at all (but that's another story). So both Hepa and I were given the same advice by Hacienda themselves as to when you become tax resident, which they said was after you have been here for 183 days or more in the tax year. 

I wonder if any forum members have themselves experienced, or know of an actual case rather than a theoretical one, where Hacienda has interpreted the rules in the alternative way that is now being put forward from some quarters?


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## Lynn R (Feb 21, 2014)

By the way, anyone wishing to see what questions a Spanish tax return contains could have a look at the simulator from the Agencia Tributaria website, which allows you to have a trial run at filling one in to give you an idea of how much tax you would pay. The current one is, of course, for 2014 so the starting rate of tax will be 24.75% whereas for the following year it will be 20%.


https://www2.agenciatributaria.gob.es/es13/s/dacoda4rs00w


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## Rabbitcat (Aug 31, 2014)

Lynn it seems to be a case of ask 10 people get 12 different answers.

I am still finding my way on this and if I get some wrong, duh.

As regards the question how is it established that you even sold a house- anyone any thoughts


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## 90199 (Mar 21, 2010)

Rabbitcat said:


> Thanks Hepa- I am in dumb mode again!!!
> 
> And just to be clear was their advice that if you were considered as tax resident for that year, it was for ALL of that year- including any period before you became tax resident, OR only the period AFTER the 183 days- that is the bit I am not 100% sure on and which makes this confusing for me to explain


If we were residing in our house for over 6 months, between 1st of January and December 31st, then we should submit a tax return, for all that year, the following May. Under 6 months no tax return.

The tax office initially completed our returns for us, but recently we have used an accountant.


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## Rabbitcat (Aug 31, 2014)

Hepa said:


> If we were residing in our house for over 6 months, between 1st of January and December 31st, then we should submit a tax return, for ALL THAT YEAR the following May. Under 6 months no tax return.
> 
> QUOTE]
> 
> ...


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> Hepa said:
> 
> 
> > If we were residing in our house for over 6 months, between 1st of January and December 31st, then we should submit a tax return, for ALL THAT YEAR the following May. Under 6 months no tax return.
> ...


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## alborino (Dec 13, 2014)

Hepa said:


> If we were residing in our house for over 6 months, between 1st of January and December 31st, then we should submit a tax return, for all that year, the following May. Under 6 months no tax return.


So you are saying stay in Spain for 182 days, spend 89 days in the USA, 80 days in Brazil and 14 days in the UK and you wouldn't need to fill in a Spanish tax form?

Please could people stop repeatedly misquoting the 183 day rule. It is very simple. It says very clearly that if you are in Spain for *more than *183 days you will be liable to tax assessment.

It does not say if you are in Spain for *less than* 183 days you will *not *be liable to tax assessment.

Rabbicat when I moved money to Spain the bank retained it and asked for an explanation of where it had come from. This is part of money laundering prevention. Yes you could lie to the authorities but when the risks can so easily be removed for the vast majority why do that?

I'll get my coat.


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## Rabbitcat (Aug 31, 2014)

Lynn R said:


> Rabbitcat said:
> 
> 
> > ?Qué? This is what I said
> ...


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## Rabbitcat (Aug 31, 2014)

alborino said:


> So you are saying stay in Spain for 182 days, spend 89 days in the USA, 80 days in Brazil and 14 days in the UK and you wouldn't need to fill in a Spanish tax form?
> 
> Please could people stop repeatedly misquoting the 183 day rule. It is very simple. It says very clearly that if you are in Spain for *more than *183 days you will be liable to tax assessment.
> 
> ...


Thanks for that Alborino.

My money will still be in UK account- 

I may put a small amount in a Spanish acct for access for bills etc but my lump sum will remain in UK acct


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## xabiaxica (Jun 23, 2009)

alborino said:


> *So you are saying stay in Spain for 182 days, spend 89 days in the USA, 80 days in Brazil and 14 days in the UK and you wouldn't need to fill in a Spanish tax form?*
> 
> Please could people stop repeatedly misquoting the 183 day rule. It is very simple. It says very clearly that if you are in Spain for *more than *183 days you will be liable to tax assessment.
> 
> ...


*perhaps not*

this from Advoco, a well respected tax advice company Do you need to submit a Spanish tax return?



> For those moving to Spain from another country, the year of transition can throw up some questions about residency status. *For example, say you gave up a job working in London on 10th March 2012, spent a couple of months in Spain lining up a job for the Autumn, then went travelling round Africa between June and August before returning to Spain to rent a flat and start your job on 1st September. You submit a UK tax return for the year to 5th April 2012 then inform HMRC that you are no longer resident in the UK. Do you have to do a Spanish tax return for 2012?*
> *On the face of it you could be liable to submit a return because you spent the last 4 months of the year as well as part of March and all of April and May in Spain – more than 183 days. However the days you spent in Spain while you were still UK tax resident (i.e. up to 5 April) are not counted for the purposes of Spanish residency determination even though you were physically in Spain from 10th March. Totting up the days on this basis makes you resident in Spain for the last 4 months of the year, 25 days in April and all of May i.e. not quite 183 days.* In a further twist you could choose to submit a return on the basis that you intend to stay in Spain longer than 6 months. This would make sense if you are due a refund of tax deducted from your pay.



with respect, I'd be more likely to trust their information/opnion, than yours

my gestor also told me the same as Hepa & Lynn were told, btw

if you spent less than 183 days in Spain in say, 2014, then your first tax return would be for 2015 - so submitted in June 2016


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## Duchess (Sep 28, 2009)

*Delicate but important question*

If we sell our UK home and buy a Spanish one with the intention of retiring there permanently, does the Spanish government tax any of our profits from the sale, or any savings we have?

I understand about taxes for waste collection, and council tax but have heard that the above also happens, and that is why so many expats are leaving?

Or, is it that the ones who are leaving are working, owned their own business, or had rental homes in the UK? 

So my main question is if we buy a home in Spain as our only residence to retire to, and will live off UK and private pension of my OH initially, as I have a few more years to go before retirement, would the government tax us on anything apart from the above mentioned usual taxes we pay?

Sorry if this is confusing, and please don't use abbreviations/ tax terms!! :confused2:


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## Rabbitcat (Aug 31, 2014)

Interesting Xabia

What's your call on the liability question re after 183 days does it make you liable for the entire year- including the portion prior to the 183 days? Thanks


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## snikpoh (Nov 19, 2007)

You need to read all the threads about CGT (Capital Gains Tax).


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## xabiaxica (Jun 23, 2009)

Duchess said:


> If we sell our UK home and buy a Spanish one with the intention of retiring there permanently, does the Spanish government tax any of our profits from the sale, or any savings we have?
> 
> I understand about taxes for waste collection, and council tax but have heard that the above also happens, and that is why so many expats are leaving?
> 
> ...


I've moved your question to a current discussion about Capital gains tax - which is what you seem concerned about


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## Rabbitcat (Aug 31, 2014)

snikpoh said:


> You need to read all the threads about CGT (Capital Gains Tax).



Yes but this is more than CGT. Its a fundamental question re taxation liability overall. Basically, we are trying to establish is liability for the entire tax year, or only the period after one has become liable


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## xabiaxica (Jun 23, 2009)

Rabbitcat said:


> Interesting Xabia
> 
> What's your call on the liability question re after 183 days does it make you liable for the entire year- including the portion prior to the 183 days? Thanks


I'm not a tax expert & would never claim to be

but I do have sources which I trust & I also read the official Spanish websites

my point is, that it isn't cut & dried, and isn't as simple as counting days - but, that just because you were physically here more than the 183 days, it doesn't necesarily mean you are tax resident, if you were tax resident elsewhere for some of them

and that generally speaking, according to all sources I use, if you AREN'T here 183+ days, you usually AREN'T tax resident, except in certain specific circumstances such as supporting your family which is


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## Rabbitcat (Aug 31, 2014)

I get that bit Xabia re the 183 days and also that it can be less too.

What I am trying to ascertain is what period you become liable for- post liability OR the entire calendar year including the period prior to you becoming liable


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## Lynn R (Feb 21, 2014)

Duchess said:


> If we sell our UK home and buy a Spanish one with the intention of retiring there permanently, does the Spanish government tax any of our profits from the sale, or any savings we have?
> 
> I understand about taxes for waste collection, and council tax but have heard that the above also happens, and that is why so many expats are leaving?
> 
> ...


Once you become tax resident in Spain (and just exactly when that happens is a subject of some controversy as you will have seen from earlier posts in this thread) then you would definitely have to pay Spanish tax on any income you receive from savings (interest on bank or building society accounts for example, even if they are in ISAs in the UK - because that income is not tax free in Spain as it would be in the UK, and Spain is where you would be living so you would be subject to their taxation rules, not those of the UK). There are other things you would be liable to pay tax on which are tax free in the UK - lottery winnings, Premium Bond winnings, any inheritance you might receive from a relative in the UK, etc. 

With regard to any capital gain from the sale of your UK house, this is very much tied up in the question of when people believe you become tax resident in Spain. My own view, in line with what I was advised by the Spanish tax office when I moved here, is that provided you move to Spain after 1st July in a particular year, and have not spent any other time in Spain during the same year, you would have lived here for less than 183 days in that year and therefore would not become tax resident until the following year. Therefore your capital gain would have been received in a year when you would still have been UK tax resident and would not be taxable by Spain.

However, I am not an accountant nor a tax professional, and I do think you should seek advice from a reputable firm, although no doubt a fee would be involved.


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## extranjero (Nov 16, 2012)

Duchess said:


> If we sell our UK home and buy a Spanish one with the intention of retiring there permanently, does the Spanish government tax any of our profits from the sale, or any savings we have?
> 
> I understand about taxes for waste collection, and council tax but have heard that the above also happens, and that is why so many expats are leaving?
> 
> ...


You will pay income tax on all your income, wherever it comes from, pensions, savings interest,investments, rental etc.
If you get any pension lump sums, matured savings plans, premium bond or lottery winnings, you will pay tax on them in Spain, even if they are tax free in the UK, including ISAs.
Government pensions have to be taxed in the UK, but now have to be declared in Spain, to work out your tax base.
Research inheritance tax in Spain, as it is different to the UK.
Beneficiaries who are resident in Spain have to pay inheritance tax on the deceased's worldwide assets, and spouses are not exempt as in the UK.
The fact that the person has wills in Spain and UK, doesn't mean the beneficiary doesn't pay tax, as some think.
There are allowances, but they vary from region to region, and some regions have abolished them
There is a measly state allowance of just under 16 k euros.


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## Duchess (Sep 28, 2009)

Rabbitcat said:


> If you are tax resident in Spain you owe tax as per their system.
> 
> This kicks in after you have stayed in Spain over 183 days cumulatively in any calendar year
> 
> ...


I have looked into this from a retirement point of view and this is what was stated.

If you retire to Spain, have little savings and live off your UK and private (if applicable) pensions, and this is your main residence, you are TAX EXEMPT.

Can anyone who is retired and does not own a UK property confirm this is correct?


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## Rabbitcat (Aug 31, 2014)

Duchess I am only a novice in all this but I doubt this info VERY much


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## xabiaxica (Jun 23, 2009)

Duchess said:


> I have looked into this from a retirement point of view and this is what was stated.
> 
> If you retire to Spain, have little savings and live off your UK and private (if applicable) pensions, and this is your main residence, you are TAX EXEMPT.
> 
> Can anyone who is retired and does not own a UK property confirm this is correct?


if your total worldwide annual income is below the personal income tax threshold then yes, you would be - but you'd still need to submit a tax return

this gives the current thresholds A guide to Spanish income tax in 2015.



> Under 65 years old 5,550 Euros
> 65+ 6,700 Euros
> 75+ 8,100 Euros


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## extranjero (Nov 16, 2012)

Rabbitcat said:


> Duchess I am only a novice in all this but I doubt this info VERY much


Surely it all depends on whether your total income and savings go above the Spanish tax threshold,meh inch is lower than that of the UK.


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## Rabbitcat (Aug 31, 2014)

You are correct bearing in mind the addition of the private pension.

Generally though those allowances are so low its difficult to see how many could have a sufficient income which would qualify as" tax free"

It would be very difficult to live a year on solely €5500


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## extranjero (Nov 16, 2012)

You might do, if you had a government pension taxed in the UK, and a state pension under the limit in Spain, but I agree with you, most have savings interest and several pensions, so will pay tax .


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## Rabbitcat (Aug 31, 2014)

Extrajaneto-re the govt pension taxed in UK- because its Crown Pension is it basically ignored by the Spanish as it must be taxed at source in UK?


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> You are correct bearing in mind the addition of the private pension.
> 
> Generally though those allowances are so low its difficult to see how many could have a sufficient income which would qualify as" tax free"


I have entered my husband's income details for a "normal" year into the tax simulator (he gets a State Pension with some SSP, a small occupational pension and a small Local Government Pension which is entered in a separate box for income which is not taxable in Spain but has to be declared and may affect your marginal rate of tax. It showed a tax liability of €0.53.

The picture regarding my own taxation is not so rosy, however - in a "normal" year I am likely to pay double the amount of income tax I would have to pay in the UK (and next year I will have a 5-figure tax bill to pay as I received a pension lump sum this year and I have already been Spanish tax resident for several years - I knew that before I moved, however).

In the press coverage of the reform of the Spanish fiscal system which took place in the latter half of last year and applies to income received in 2015 onwards, it was stated several times that anyone with an income of below €12,000 would not pay income tax. How that comes about, when the personal allowances look so low, I really don't know.

http://ahorro.acierto.com/presupuestos/espanoles-ingresos-inferiores-12000-irpf


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## Rabbitcat (Aug 31, 2014)

Scarey stuff Lynn esp the double the UK amount.


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> Scarey stuff Lynn esp the double the UK amount.


Yes, but most of that is wiped out by the amount of additional Council Tax I would pay if I lived in the UK. On top of that, my heating bills are far less here (although many people say theirs are not, I can only form a judgement on my own personal situation), my public transport costs are far less, our food, eating out, alcohol, hairdressing bills (just been today and paid less than half of what I was paying in the UK over 8 years ago) are all cheaper.

You really have to look at the whole picture, not just income tax in isolation.

And you can't just cherry pick the good bits about living in Spain, you have to take the not so good along with them, if you want to stay on the right side of the law, that is. Which I do.


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## Rabbitcat (Aug 31, 2014)

Very true, the whole picture has to be considered including quality of life etc.


I have had a bash at that article you have posted but my translating tools are a bit naff. Is it basically predicting a change in the Income Tax allowances- would need a hell of a change to allow €12000 before tax is paid


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## Lynn R (Feb 21, 2014)

Rabbitcat said:


> Very true, the whole picture has to be considered including quality of life etc.
> 
> 
> I have had a bash at that article you have posted but my translating tools are a bit naff. Is it basically predicting a change in the Income Tax allowances- would need a hell of a change


No, I've never seen a change to the personal allowances quoted, which is why I find it hard to understand why people earning under €12,000 won't pay any tax.


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## extranjero (Nov 16, 2012)

Rabbitcat said:


> Extrajaneto-re the govt pension taxed in UK- because its Crown Pension is it basically ignored by the Spanish as it must be taxed at source in UK?


That's how it used to be, but now you have to declare it in Spain as they use it to work out your tax base. It's still taxed in UK
It's fairer as when your total income is taken into account eg cap of prescription charges.
Some people might find it a lot cheaper in Spain, but it is not as cheap as it used to be.
The UK tax allowance for income tax is much more generous.
In Spain, some peoples IBI, combined with community fees, isn't that much cheaper than council tax in the UK.
Factor in such hidden expenses like interpreter/ translation, accountant for your tax return and assets declaration, trips back to UK etc and costs mount up.
Of course if you are fluent in Spanish, and are confident to deal with tax yourself, live in the campo where IBI is ridiculously low, have low potencia electricity supply, never see your family then you might find it cheaper.
It's all about circumstances.


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## 90199 (Mar 21, 2010)

If anyone else mentions Capital Gains Tax or Income tax, please can they be deported to the far side of the Moon


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## Rabbitcat (Aug 31, 2014)

Thanks Extranjero. You and Lynn have given me great info so going to have a stab at estimating my liabilities. Feel free to jump all over me


I have govt Crown pension- must be taxed in Uk

My wife has no earnings

We will have a £250k lump sum invested in UK- best rate would pay us 1.5%, ie 3750 gross

We will be renters


That's our lot.

Going by the allowances given on this thread I reckon our liability would be zero, though must create the lump sum from house sale prior to moving

Are my calculations about right????

Got my tin hat on!!!!


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## alborino (Dec 13, 2014)

sorry that was in reply to Xabiachica but I now have more legal advice from Spain on this. I'll get back for those who could lose thousands later.

Advoco also say "_You may also be considered resident in Spain if you stay within the 183 day limit but other factors indicate it is your main base._"


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## extranjero (Nov 16, 2012)

sounds like you wouldn't be paying much, if any tax in Spain, so you must stop worrying now!


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## extranjero (Nov 16, 2012)

Hepa said:


> If anyone else mentions Capital Gains Tax or Income tax, please can they be deported to the far side of the Moon


Some people worry about this, and need info and reassurance. If you're happy with your lot , 
you don't have to read this thread!


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## Rabbitcat (Aug 31, 2014)

extranjero said:


> sounds like you wouldn't be paying much, if any tax in Spain, so you must stop worrying now!


So Extrajanero if I turned up in Spain with my £250k already in my UK bank account am I specifically asked on Spanish tax forms if any of it came from a UK house sale?


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## extranjero (Nov 16, 2012)

No, not specifically, but you'd have to enter lthe minute details of it on your assets declaration form, and of course the savings interest on your income tax form, depending on your tax residency status which we have discussed in depth before.
If you moved in the same year, that you sold your house , depending on whose advice you took, you'd have to declare your house sale for capital gains tax or roll over relief if you bought another property within 2 years, with the proceeds, or part of them.


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## Rabbitcat (Aug 31, 2014)

Thanks Extrajanero- feared it would need a sell one year, move the next- solution but was worth a try!!!

It's just the hassle of it. I mean if you sell up to move you really don't have much choice, but that's the rules.

Thanks again, much appreciated

If we ever meet up I owe you a few beers- on me tax free!!


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## extranjero (Nov 16, 2012)

I would say to you and the Duchess, why not consult some firm like Blevins Franks, who seem to be the most trusted Guru of all matters tax? 
Would cost a bit, but at least you would know what's what!


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## xabiaxica (Jun 23, 2009)

alborino said:


> sorry that was in reply to Xabiachica but I now have more legal advice from Spain on this. I'll get back for those who could lose thousands later.
> 
> Advoco also say "_You *may* also be considered resident in Spain if you stay within the 183 day limit but other factors indicate it is your main base._"


exactly - *may

* but it isn't cut & dried that you *will be


*as I said


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## 90199 (Mar 21, 2010)

extranjero said:


> Some people worry about this, and need info and reassurance. If you're happy with your lot ,
> you don't have to read this thread!


A bite!! better than carp fishing is this!! ha ha!!


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## alborino (Dec 13, 2014)

xabiachica said:


> exactly - *may
> 
> * but it isn't cut & dried that you *will be
> 
> ...


 ok so now we fully agree. If you sell your house and rush to Spain you *may* suffer consequences. In my case more than 40000 Euros. Maybe I'm a whimp but I think I will hedge my bets


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## 90199 (Mar 21, 2010)

extranjero said:


> I would say to you and the Duchess, why not consult some firm like Blevins Franks, who seem to be the most trusted Guru of all matters tax?
> Would cost a bit, but at least you would know what's what!


Didn't cost us


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## Duchess (Sep 28, 2009)

Extranjero and others thanks for your help.


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## extranjero (Nov 16, 2012)

Hepa said:


> Didn't cost us


But I imagine that after the free consultation, filling in and submitting. the actual tax forms would be more than the average accountant?


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## 90199 (Mar 21, 2010)

extranjero said:


> But I imagine that after the free consultation, filling in and submitting. the actual tax forms would be more than the average accountant?


We use an accountant, he is above average.


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## Rabbitcat (Aug 31, 2014)

With this complex but crucial subject I think we got there in the end.......sort of!!!!


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## Kezar001 (Mar 29, 2014)

A quick question just for clarity for me

I understand that with regard to UK pension paid it has to be taxed in the UK but has to be declared in Spain in calculating your liability to Spanish tax.

My question relates what constitutes UK pension is it 

UK state pension, 
NHS pension and say 
UK bank Additional voluntary contributions

Thanks


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## extranjero (Nov 16, 2012)

It's only government pensions that have to be taxed in the UK eg, Civil service , police , firemen, teachers, military. Now they have to be declared in Spain to work out your tax base, without actually being taxed in Spain.
All other pensions and worldwide income including savings interest( even on ISAs ) must be taxed in Spain


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## Kezar001 (Mar 29, 2014)

So a NHS pension would be classified as a government pension but additional avc's taken on outside the scheme would not?


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## extranjero (Nov 16, 2012)

My NHS pension ( nurse) is taxed in Spain, I did query the HMRC about this as you think it would be regarded as a government pension, but apparently it isn't, though perhaps other NHS pensions ere.
Perhaps someone will let us know.


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## Rabbitcat (Aug 31, 2014)

extranjero said:


> I would say to you and the Duchess, why not consult some firm like Blevins Franks, who seem to be the most trusted Guru of all matters tax?
> Would cost a bit, but at least you would know what's what!



Absolutely no intention of re opening this hot debate BUT I took extranjeros advice and emailed Blevins Franks.

Remember I am sitting here in UK and not ( yet) a client or customer .

Not only did they immediately acknowledge my query but asked for my UK mobile number .

About half an hour ago they rang me with a very polite, professional and courteous tax advisor explaining to me fully the answer to my basic query.

Let's not go over it all again but bottom line- as was stated by some of you ( I must stop being a doubting Rabbitcat!!!) - 

regardless of which month you become tax resident in Spain, you are liable for all relevant taxes for that entire Jan to Dec year- including CGT on sale of a UK house. In other words if you sold up in UK in Jan, but didn't even go to Spain until March, by Oct you would be tax resident and your Jan sale of UK house would be liable for taxation

When I get round to sorting our tax affairs I most certainly will be using this company and thanks Extranjero for the tip.


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