# Another Tax Question



## Roy C (Sep 29, 2012)

When we move over next year, it'll be after June. We will register say in July as a resident. Then in 2017 after 183 days I'll register for tax purposes, so that'll be after June 2017 then in June 2018 I will fill out my tax form for 2017? Now, where do I pay my tax in the meantime? UK?

Also although the company pension is paid to me, would it be better to have our UK rent paid to my wife so we can get a couple's tax allowance which I hear is better than a single person's allowance?

Thanks
Roy


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## Lynn R (Feb 21, 2014)

Roy C said:


> When we move over next year, it'll be after June. We will register say in July as a resident. Then in 2017 after 183 days I'll register for tax purposes, so that'll be after June 2017 then in June 2018 I will fill out my tax form for 2017? Now, where do I pay my tax in the meantime? UK?
> 
> Also although the company pension is paid to me, would it be better to have our UK rent paid to my wife so we can get a couple's tax allowance which I hear is better than a single person's allowance?
> 
> ...


Sorry for not replying sooner, my internet was down for a day and a half -grrrr!

There is some information here about the taxation of married couples in Spain.

Spanish taxation of married couples

If you submit a joint return, you just get an additional €3400 personal allowance in addition to your own, which is applied to all your own joint income. It might be more beneficial for your wife to receive the rental income and for you to submit individual returns, so that both of you get a full individual personal allowance.

If you go to Hacienda for them to complete the return for you, they will show you the tax payable under both options so you can choose whether you want to submit a joint return or individual ones, and I am sure a gestor or accountant would do the same.


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## snikpoh (Nov 19, 2007)

I also didn't respond sooner but my logic was that I didn't have the full answer.

In answer to where and when to pay - you are correct, your first return will be due in June 2018 for the previous tax year. You will pay tax in UK for the year in which you leave - although only up to the date you leave (they allow partials in UK). Any time in-between the two dates is tax free - yeah!!!


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## Roy C (Sep 29, 2012)

Thanks Lynn and snikpoh, I like the sound of the tax free period, so July looks like a good month to move.


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## CapnBilly (Jun 7, 2011)

snikpoh said:


> I also didn't respond sooner but my logic was that I didn't have the full answer.
> 
> In answer to where and when to pay - you are correct, your first return will be due in June 2018 for the previous tax year. You will pay tax in UK for the year in which you leave - although only up to the date you leave (they allow partials in UK). Any time in-between the two dates is tax free - yeah!!!


I'm afraid that's not correct. Income which is received in the UK is always taxable in the UK. However, if you move to a country with a DTA ( double taxation agreement) then that determines where your income is taxed. 

HMRC will allow your income which is taxable in Spain to be paid gross, BUT only when you can provide a certificate of fiscal residence in Spain. You will only be able to obtain this from Spain once you have submitted a tax return.

As far as rental income is concerned it doesn't matter who the income is paid to, it's declarable proportionately in relation to the ownership of the property. This applies in both Spain and the UK.


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## snikpoh (Nov 19, 2007)

CapnBilly said:


> I'm afraid that's not correct. Income which is received in the UK is always taxable in the UK. However, if you move to a country with a DTA ( double taxation agreement) then that determines where your income is taxed.
> 
> HMRC will allow your income which is taxable in Spain to be paid gross, BUT only when you can provide a certificate of fiscal residence in Spain. You will only be able to obtain this from Spain once you have submitted a tax return.
> 
> As far as rental income is concerned it doesn't matter who the income is paid to, it's declarable proportionately in relation to the ownership of the property. This applies in both Spain and the UK.


I can't see anything that I said being false - can you please point out what was wrong.

Obviously there are caveats about UK taxable pensions, rental income etc. but I was trying to keep it simple based on what the OP asked.

Thanks.


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## CapnBilly (Jun 7, 2011)

snikpoh said:


> I can't see anything that I said being false - can you please point out what was wrong.
> 
> Obviously there are caveats about UK taxable pensions, rental income etc. but I was trying to keep it simple based on what the OP asked.
> 
> Thanks.


I was referring to this bit, as the OP says his income is a company pension, and rental income, both of which are taxable in the UK. 



snikpoh said:


> although only upto the date you leave. ....Any time in-between the two dates is tax free - yeah!!!


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## Chopera (Apr 22, 2013)

Sorry to take the thread off track a bit, but I have a theoretical question: 

Say I own some asset in the UK that is subject to CGT but I'm currently tax resident in Spain, I then sell it next year before April 6, and then I move back to the UK just after April the 6, who do I pay the CGT to?

As far as the UK is concerned, I sold it before the relevant tax year began (April 6 2016) for when I became a UK resident, and as far as Spain is concerned I sold it in the tax year when I became a UK resident (beginning Jan 1 2016).

I know tax will have to be paid somewhere - but where?


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## snikpoh (Nov 19, 2007)

Chopera said:


> Sorry to take the thread off track a bit, but I have a theoretical question:
> 
> Say I own some asset in the UK that is subject to CGT but I'm currently tax resident in Spain, I then sell it next year before April 6, and then I move back to the UK just after April the 6, who do I pay the CGT to?
> 
> ...


I think it's Spain because you are liable for the WHOLE year.


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## CapnBilly (Jun 7, 2011)

Chopera said:


> Sorry to take the thread off track a bit, but I have a theoretical question:
> 
> Say I own some asset in the UK that is subject to CGT but I'm currently tax resident in Spain, I then sell it next year before April 6, and then I move back to the UK just after April the 6, who do I pay the CGT to?
> 
> ...


If you sell it in 2015, then it is clearly taxable in Spain. If you sell it in 2016, say 1st April 2016, and then move back to the UK on the 1st May 2016, and become resident there, then it depends on a couple of things. 

If it is property, then it is taxable in the UK, whenever you sell it, either as a resident or non-resident. It is also taxable in Spain if you are a resident there. So, if you sell on 31st December 2015, it is taxable in the UK, AND in Spain, although you can offset any tax paid in the UK. If you sell on 1st April 2016 then it is taxable in the UK, but NOT in Spain.

If it is not property, and sold on 1st April 2016, then it would not be taxable in the UK, assuming you fail the statutory residence test for 2015/6.


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## Aranjuez (May 21, 2015)

Chopera - if the hypothetical asset was a residential property in the UK, the answer would be it is taxable in the UK subject to normal rules, exemptions, tax rates etc. The scope of UK CGT was extended as from April 2015 to include UK residential properties owned by non residents. If you were due to make a Spanish tax return for the period in which the property was disposed of, the disposal would need to be declared but double taxation considerations would kick in so tax wouldn't be paid twice on the same transaction.
Roy C - you can't be resident nowhere for tax purposes (unless you intend to roam the world on a large yacht and even then someone will try to get you!). It is quite a technical area hence I would want specialist advice on my own personal situation. But in practical terms if you leave the UK with a view to living permanently in another country, and if in all normal senses you actually do live in that other country from the time you leave the UK, then, you will not be liable to UK income tax from the date you leave other than some specific exceptions the main one being Crown pensions which always remain liable in the UK by dint of specific legislation. The other country, in this case Spain will want to tax you from day one, as in substance it is where you live, notwithstanding any day counting which they will regard as purely indicative. Not everyone will agree with this interpretation, but in my view the term tax free should be regarded as "tax deferral", rather than "not taxable", until you are sure of your own personal situation having laid down the factual basis.


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## Chopera (Apr 22, 2013)

Thanks for all the replies.

BTW My understanding is that the tax rules introduced in the UK last April regarding property are based on gains made from last April (rather than the purchase price). So if someone were to sell their property before next April, they wouldn't have to pay much UK tax unless the property had recently shot up in value.


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## Williams2 (Sep 15, 2013)

CapnBilly said:


> I'm afraid that's not correct. Income which is received in the UK is always taxable in the UK. However, if you move to a country with a DTA ( double taxation agreement) then that determines where your income is taxed.
> 
> *HMRC will allow your income which is taxable in Spain to be paid gross, BUT only when you can provide a certificate of fiscal residence in Spain. You will only be able to obtain this from Spain once you have submitted a tax return.*
> 
> As far as rental income is concerned it doesn't matter who the income is paid to, it's declarable proportionately in relation to the ownership of the property. This applies in both Spain and the UK.


According to HMRC the Spanish tax authorities have 2 forms of certificate of fiscal residence in Spain. 
HMRC says that it requires a copy of the one that specifically mentions the UK - Spain Double taxation
treaty. For the purpose of receiving your ( Non Govt. ) UK workplace pension as gross income.


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## Aranjuez (May 21, 2015)

I believe that the point about costs being rebased at April 2015 so that only any post April 2015 gain is potentially taxable is correct. Thanks for pointing that out, I hadn't researched it through that far when responding initially. Clearly then if the asset is a UK residential property and there was a disposal and return to the UK in the timeframe mentioned there would potentially be UK CGT on the post April 2015 gain and possibly also the Spanish equivalent on any pre April 2015 gain. Ostensibly, there would still be Spanish tax residence at the point the disposal was made. If the asset wasn't a UK residential property there couldn't be any UK CGT on a disposal made when not tax resident there but there could be the Spanish equivalent.


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## Roy C (Sep 29, 2012)

Aranjuez said:


> Roy C - you can't be resident nowhere for tax purposes (unless you intend to roam the world on a large yacht and even then someone will try to get you!). It is quite a technical area hence I would want specialist advice on my own personal situation. But in practical terms if you leave the UK with a view to living permanently in another country, and if in all normal senses you actually do live in that other country from the time you leave the UK, then, you will not be liable to UK income tax from the date you leave other than some specific exceptions the main one being Crown pensions which always remain liable in the UK by dint of specific legislation. The other country, in this case Spain will want to tax you from day one, as in substance it is where you live, notwithstanding any day counting which they will regard as purely indicative. Not everyone will agree with this interpretation, but in my view the term tax free should be regarded as "tax deferral", rather than "not taxable", until you are sure of your own personal situation having laid down the factual basis.


Thanks for the advice, another thing I was wondering about, I get a tax free pension lump sum sometime in the first six months of 2016 can the Spanish tax me on that when I move there in July 2016 or on the tax free part of my Voluntary Severance?


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## 90199 (Mar 21, 2010)

Roy C said:


> Thanks for the advice, another thing I was wondering about, I get a tax free pension lump sum sometime in the first six months of 2016 can the Spanish tax me on that when I move there in July 2016 or on the tax free part of my Voluntary Severance?


No, I believe not, because you will be under the 183 days for the year 2016, so won't be required to declare income for that year. Perhaps you should seek professional advice, I am not a tax expert.


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## Aranjuez (May 21, 2015)

Roy C said:


> Thanks for the advice, another thing I was wondering about, I get a tax free pension lump sum sometime in the first six months of 2016 can the Spanish tax me on that when I move there in July 2016 or on the tax free part of my Voluntary Severance?


In my opinion you need to tread very carefully with this and as already suggested I would think it vital that you obtain specialist advice, particularly if there are sizeable amounts involved as clearly you wouldn't want to lose a significant part of your anticipated retirement fund unexpectedly. I would not rely on the Spanish authority not being able to tax your lump sum just because you get it before coming to Spain and you are not here for more than 183 days in the Spanish tax year of arrival. There is plenty of resource available suggesting that the test of Spanish tax residence is not that simplistic. Couple that with the fact that Spanish tax law doesn't recognise the concept of part year residence and it's easy to see the risk that you could run. The best policy might be not to put down any markers of permanent residence in Spain prior to 1 January 2017. That wouldn't mean you couldn't spend time here in the meantime of course. Hope this helps to some extent.


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## Roy C (Sep 29, 2012)

Aranjuez said:


> In my opinion you need to tread very carefully with this and as already suggested I would think it vital that you obtain specialist advice, particularly if there are sizeable amounts involved as clearly you wouldn't want to lose a significant part of your anticipated retirement fund unexpectedly. I would not rely on the Spanish authority not being able to tax your lump sum just because you get it before coming to Spain and you are not here for more than 183 days in the Spanish tax year of arrival. There is plenty of resource available suggesting that the test of Spanish tax residence is not that simplistic. Couple that with the fact that Spanish tax law doesn't recognise the concept of part year residence and it's easy to see the risk that you could run. The best policy might be not to put down any markers of permanent residence in Spain prior to 1 January 2017. That wouldn't mean you couldn't spend time here in the meantime of course. Hope this helps to some extent.


Thanks Aranjuez that is really helpful and much appreciated.


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## Roy C (Sep 29, 2012)

Would an accountant over here be able to advise me or would I need to contact a Spanish accountant?


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## Aranjuez (May 21, 2015)

You would need somebody experienced in dealing with the Spanish tax authority, which would be unlikely to be someone based in the UK, unless you are talking big 10 mega charges firms. The problem is and in my personal experience it is not that easy to find someone in Spain who is used to dealing with this particular issue. They are still catching up to some extent, but very fast and we used to the UK system would regard some of the powers they have as intrusive. I would say save yourself a lot of time hassle and worry and defer your move in any substantive way until after 1 January 2017. Then you are not relying on opinion for which you may have paid a lot of money as to whether your lump sum etc is safe from the Spanish taxman, it becomes absolutely safe. Obviously I don't know your circumstances as to how urgently you need/want to move in July 2016, as I haven't read back through your 300+ earlier posts. But I would think it should not be that difficult to keep it demonstrably at holiday only level (by actually operating only at that level) for a period of 6 months or so after your retirement.


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## seasideman (Nov 8, 2015)

The tax system is a huge headache for me and I have found with many people it is a huge headache for them.

I have tried contacting experts in Spain to see about paying for information but not had any replies as yet.

Our situation is trying to understand as a self employed person what I would be paying each month and year. Read lots of information but nothing that gives me the details I need. Then I have to try and understand if we sell our house in a couple of years, do we have to pay tax on it, and during that time if we rent out the property, do we pay tax in Spain on that. Tried a UK tax expert but they were confused.


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## xabiaxica (Jun 23, 2009)

seasideman said:


> The tax system is a huge headache for me and I have found with many people it is a huge headache for them.
> 
> I have tried contacting experts in Spain to see about paying for information but not had any replies as yet.
> 
> Our situation is trying to understand as a self employed person what I would be paying each month and year. Read lots of information but nothing that gives me the details I need. Then I have to try and understand if we sell our house in a couple of years, do we have to pay tax on it, and during that time if we rent out the property, do we pay tax in Spain on that. Tried a UK tax expert but they were confused.


self-employment is straightforward enough

you pay a monthly social security payment, regardless of income , & then you pay income tax on top of that 

beyond that, no-one could give you more specific info without knowing exactly what you were doing & exactly what your income would be

this is the best guide around Guide to Spain's autonomo system


if you click around that website you'll probably find general answers to all tax questions

I'm self-employed & I reckon on the first 800€ a month of income is swallowed up in autónomo social security, income tax & gestor fees 

take a look at this http://verne.elpais.com/verne/2015/02/23/articulo/1424715787_352558.html?id_externo_rsoc=FB_CM


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## seasideman (Nov 8, 2015)

xabiachica said:


> self-employment is straightforward enough
> 
> you pay a monthly social security payment, regardless of income , & then you pay income tax on top of that
> 
> ...


I'm self-employed & I reckon on the first 800€ a month of income is swallowed up in autónomo social security, income tax & gestor fees 

Thank you for this. Going through it now, although tax is not what i am great at. I have an accountant who deals with everything but does not have a clue on the spanish system.

My situation would be, earning £1,600 a month, but all my customers will be in America. So trying to get my head around it. I don't want to earn more than that, as the whole point is to move to spain to spend more time with my wife who is taking early retirement.


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## xabiaxica (Jun 23, 2009)

seasideman said:


> I'm self-employed & I reckon on the first 800€ a month of income is swallowed up in autónomo social security, income tax & gestor fees
> 
> Thank you for this. Going through it now, although tax is not what i am great at. I have an accountant who deals with everything but does not have a clue on the spanish system.
> 
> My situation would be, earning £1,600 a month, but all my customers will be in America. So trying to get my head around it. I don't want to earn more than that, as the whole point is to move to spain to spend more time with my wife who is taking early retirement.


as you can see from the table, if you earn 2000€ a month ( not so far from your 1600GBP) you'll take home a bit more than 1000€

to take home about 1600GBP a month, or 2274€ at today's exchange rate, you'll need to be earning rather more than 3500€


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## Rabbitcat (Aug 31, 2014)

Bloody great to be taxed still at home ( Civ Serv Pension)


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## seasideman (Nov 8, 2015)

xabiachica said:


> as you can see from the table, if you earn 2000€ a month ( not so far from your 1600GBP) you'll take home a bit more than 1000€
> 
> to take home about 1600GBP a month, or 2274€ at today's exchange rate, you'll need to be earning rather more than 3500€


thank you for that


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## seasideman (Nov 8, 2015)

just a quick question. if none of my customers are in Spain, and they are in America, do i still have to pay IVA. Sorry, as i said tax is not my thing. I read somewhere, and that is all i seem to be doing at the moment, and learning spanish, that if you offer services outside of spain then you do not pay a certain charge, but cannot think what that was.


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## xabiaxica (Jun 23, 2009)

seasideman said:


> just a quick question. if none of my customers are in Spain, and they are in America, do i still have to pay IVA. Sorry, as i said tax is not my thing. I read somewhere, and that is all i seem to be doing at the moment, and learning spanish, that if you offer services outside of spain then you do not pay a certain charge, but cannot think what that was.


The cost of going freelance in Spain â€¢ Self Employed in Spain

the financials are a little out of date, but the diagram is correct


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## seasideman (Nov 8, 2015)

I wonder if i call myself amazon or costa then i dont have to pay any lol cannot believe how these big companies get away with it. shocking, more should be done


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## Pesky Wesky (May 10, 2009)

seasideman said:


> The tax system is a huge headache for me and I have found with many people it is a huge headache for them.
> 
> I have tried contacting experts in Spain to see about paying for information but not had any replies as yet.
> 
> Our situation is trying to understand as a self employed person what I would be paying each month and year. Read lots of information but nothing that gives me the details I need. Then I have to try and understand if we sell our house in a couple of years, do we have to pay tax on it, and during that time if we rent out the property, do we pay tax in Spain on that. Tried a UK tax expert but they were confused.


Go to the tax offices in Spain (hacienda) with a translator if necessary. They are the ones who are trained to give you the information you need and for *free*. 
https://www.agenciatributaria.gob.e...aciones/Delegaciones_y_Administraciones.shtml
Some of the website is in English.


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## Portugal-or-Spain? (Oct 25, 2015)

seasideman said:


> just a quick question. if none of my customers are in Spain, and they are in America, do i still have to pay IVA. Sorry, as i said tax is not my thing. I read somewhere, and that is all i seem to be doing at the moment, and learning spanish, that if you offer services outside of spain then you do not pay a certain charge, but cannot think what that was.


Products or services that you sell outside of the EU are free of IVA. But, if you are only working for one "customer", there may well be other complications.

If you sell a product or service to someone else in the EU, you have to charge them IVA. If you are selling services / products regularly to another EU member state, you are required to become registered for IVA also in that EU state.


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## Portugal-or-Spain? (Oct 25, 2015)

One small titbit. I recommend you maintain an address in Ireland (or the UK if that is where you are from), even if it is a service address (PO Box provider). I also recommend that you approach the Irish tax authority / HMRC and get them to confirm that you no longer are required to submit tax returns in your home state.


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## seasideman (Nov 8, 2015)

Portugal-or-Spain? said:


> One small titbit. I recommend you maintain an address in Ireland (or the UK if that is where you are from), even if it is a service address (PO Box provider). I also recommend that you approach the Irish tax authority / HMRC and get them to confirm that you no longer are required to submit tax returns in your home state.


Can you explain what you mean.


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