# The 720 - a success or not



## Stravinsky (Aug 12, 2007)

Bring on the tax evader comments, and remind me who said it wasn't designed to target foreign residents, only Spanish Nationals 

95% of residents with offshore assets don?t declare them. Surinenglish.com

To counteract that so few of those believed to have overseas assets declared them, the government, *according to Mr Mollinedo, will now focus its efforts more specifically on certain nationalitie*s.
*He says: “It’s forecast that the government will seek to focus more on foreign residents in Spain, especially those from the US and those from EU member states.”*
Spain has recently signed an intergovernmental agreement with the US, under its Foreign Account Tax Compliance Act (FATCA), for financial institutions to automatically exchange fiscal information from certain accounts.
Similarly, on 10th April this year, Spain, Germany, the UK, France and Italy agreed to a pilot information sharing scheme that is expected to be implemented more widely across Europe next year.
*Speaking to this newspaper in April, the GESTHA Secretary General robustly rejected claims that the new declaration obligations are a ‘fiscal attack’ on foreigners in Spain.*


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## gus-lopez (Jan 4, 2010)

No , I fully agree with you & always thought that it was the thin end of the wedge.


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## Stravinsky (Aug 12, 2007)

The article, and the official comments therein, do seem to give the impression that rather than it being a system to catch Spanish nationals and not expats, it is in essence the reverse!


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## thrax (Nov 13, 2008)

I read that the other day. Very interesting, but of course it is just a newspaper. Having read numerous articles about the legality of all of this I still wonder how Spain can claim tax on anything other than income, earned or otherwise. Both my parents and outlaws only pay tax on overseas assets if those assets result in income taken and deposited in a bank in Spain. Or some other financial institution, but in Spain. If interest is left to accrue then tax, as I understand it, cannot be paid as no income has been taken. We have discussed all of these issues with various accountant and gestor friends all of whom have a different take on what is and isn't correct.


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## Stravinsky (Aug 12, 2007)

thrax said:


> I read that the other day. Very interesting, but of course it is just a newspaper. Having read numerous articles about the legality of all of this I still wonder how Spain can claim tax on anything other than income, earned or otherwise. Both my parents and outlaws only pay tax on overseas assets if those assets result in income taken and deposited in a bank in Spain. Or some other financial institution, but in Spain. If interest is left to accrue then tax, as I understand it, cannot be paid as no income has been taken. We have discussed all of these issues with various accountant and gestor friends all of whom have a different take on what is and isn't correct.


It IS just a newspaper article ..... but it is quoting officials of GESTHA, an 8,000-strong collective of specialists within the Spanish tax office.


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## extranjero (Nov 16, 2012)

They do seem to be ging through declarations with a fine toothcomb;In the Costa Blanca News today someone wrote that she was fined for not declaring a small amount in a a bank account.


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## mrypg9 (Apr 26, 2008)

But...the point of 'pursuing' foreign residents is surely precisely because most of them have not complied?
The regulation itself applies to ALL residents of Spain. It's just the foreigners who seemingly think it doesn't apply to them. 
So it's only to be expected that Hacienda will focus on naughty foreigners.


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## extranjero (Nov 16, 2012)

What about all those who have never paid taxes in Spain,how will they catch them? The Hacienda isn't trying very hard. The tax evaders are putting 2 fingers up at those who are trying to be legal.
There is a foreigners register, and social security records. Using computers it should be a straightforward task to identify them.I can understand the resentment of those baring all their financial details to scrutiny, while these low lives brag about how cheap it is to live in Spain!


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## fergie (Oct 4, 2010)

I fully understand why Spain wants to focus on US and other EU 'residents', because for so many years many have moved to 'sunny Spain', with the idea they will reside here, be it as a temporary or permanent 'resider', and live cheaply, and for some, work cheaply to avoid taxes, "on the black", so to speak, not just British nationals-others as well. It doesn't take long when you live here to find out which 'workmen' in my case are dodging taxes, so avoid them, I try to use Spanish workmen when I can, and so far the jobs they have done have been first class,and it also gives me a chance to speak what little Spanish I have learned so far.
I have always insisted on an invoice for any work done, inclusive of IVA, and paid through the bank, which in my case is an International bank with bases in Spain.
Over the years prices in Spain are catching up with other EU countries, and so they should, Spain has a lot to offer, and should not be a haven for Sunshine and Sangria only. I am happy to live here and pay reasonable taxes, we are not millionaires, and hopefully see Spain get better for the Spanish people.
I can see why Spain might target 'foreigners' first, but eventually even the richer Spaniards will be sought out if they haven't paid what they should. Less dodgy dealings from anybody living here would be a great plus.


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## extranjero (Nov 16, 2012)

fergie said:


> I fully understand why Spain wants to focus on US and other EU 'residents', because for so many years many have moved to 'sunny Spain', with the idea they will reside here, be it as a temporary or permanent 'resider', and live cheaply, and for some, work cheaply to avoid taxes, "on the black", so to speak, not just British nationals-others as well. It doesn't take long when you live here to find out which 'workmen' in my case are dodging taxes, so avoid them, I try to use Spanish workmen when I can, and so far the jobs they have done have been first class,and it also gives me a chance to speak what little Spanish I have learned so far.
> I have always insisted on an invoice for any work done, inclusive of IVA, and paid through the bank, which in my case is an International bank with bases in Spain.
> Over the years prices in Spain are catching up with other EU countries, and so they should, Spain has a lot to offer, and should not be a haven for Sunshine and Sangria only. I am happy to live here and pay reasonable taxes, we are not millionaires, and hopefully see Spain get better for the Spanish people.
> I can see why Spain might target 'foreigners' first, but eventually even the richer Spaniards will be sought out if they haven't paid what they should. Less dodgy dealings from anybody living here would be a great plus.


That's fine as long as they chase the evaders, but they aren't -they are picking on mr and mrs averages hard earned savings to see if there is something, an inadvertent mistake for example, in order to fine them disproportionately.
The tax implications for people's finances when retiring here are little known till too late-I bet most would not move to Spain if they had known the effect on their savings plans etc.


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## NickZ (Jun 26, 2009)

mrypg9 said:


> But...the point of 'pursuing' foreign residents is surely precisely because most of them have not complied?
> .


No . It's because the data sharing agreements mean all they have to do is file a request for information. If the information doesn't match what has been submitted they then have you.


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## gus-lopez (Jan 4, 2010)

NickZ said:


> No . It's because the data sharing agreements mean all they have to do is file a request for information. If the information doesn't match what has been submitted they then have you.


That's ok assuming that the name on the account & the address tie up with the UK tax authorities. I contacted them last year & they had no idea who I was !
It took 1,1/2 hours & 3 phone calls before they found me. 
Queries regarding past business/personal tax payments were met with " There is no info that far back" ? Nor were there any addresses.
The only thing they could supply me with was a form stating that I had made no tax returns for the past 11 years , nor did I have any income, or any need to make one as I was a 'foreign resident' ?
Chatting with the man I suggested that it was a bit unusual & he replied that as I lived abroad & had no income emanating from the UK then they did not have the slightest interest.


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## NickZ (Jun 26, 2009)

The data sharing covers everything from bank accounts on. At least I think it does. 

Also you'd figure they would have one office that does nothing but handle requests from other EU governments.


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## fergie (Oct 4, 2010)

gus-lopez said:


> That's ok assuming that the name on the account & the address tie up with the UK tax authorities. I contacted them last year & they had no idea who I was !
> It took 1,1/2 hours & 3 phone calls before they found me.
> Queries regarding past business/personal tax payments were met with " There is no info that far back" ? Nor were there any addresses.
> The only thing they could supply me with was a form stating that I had made no tax returns for the past 11 years , nor did I have any income, or any need to make one as I was a 'foreign resident' ?
> Chatting with the man I suggested that it was a bit unusual & he replied that as I lived abroad & had no income emanating from the UK then they did not have the slightest interest.


When I went to live in Hk from 2007-2011, as a 'housewife', as my husband works there and still does, on a wind down basis, I was sent regular tax forms to fill in from the Uk to HK. I had not actually worked since 2004, as I had to give up my job early due to back injury after a fall downstairs. I just effectively retired early, I wasn't on any kind of benefit ever from the Uk. Then when I moved to Spain, more or less full time, to oversee work on our house, I was still commuting to Hk lane: due to my husband still working there, as he still does, I let the UK pensions/tax office know of my new address here in Spain, as I was nearly ready at that point to claim my state pension anyway. They (UK) send tax forms here, so I have never had a problem with them not knowing my whereabouts. Spanish tax authorities also also know of our address's, as we own 1 holiday home, since 2004, and this our main home, so our solicitor has always sorted out the taxes.


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## Campesina (Dec 17, 2011)

If you think it's bad now take a look at this:

EUROPA - Press Release - Fighting tax evasion

I'm glad I have no plans to become a resident.


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## 90199 (Mar 21, 2010)

I think the 720 was/is the most inaccurate assessment of assets.

I have a small percentage interest in properties in England and because my name appears jointly on the deeds I had to declare them, I was required to declare the full purchase price, not the value of my interest, crazy.

However, since the declaration, and at no personal gain, I have managed to dispose of my interest in one of the properties. This has diminished my declared assets by over 100,000€, absolutely bonkers, I had no where near that amount in the said property.

If the Spaniards are going to record financial details, then lets have it done accurately, not make an utter balls of it right from the outset. No wonder the country is in crisis, this lot couldn't organize a booze up in a brewery.


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## Campesina (Dec 17, 2011)

Wasn't there a box where you entered your quota of participation in each asset? The anomaly was that it did not then apply the percentage entered to the cumulative total.


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## 213979 (Apr 11, 2013)

Campesina said:


> If you think it's bad now take a look at this:
> 
> EUROPA - Press Release - Fighting tax evasion
> 
> I'm glad I have no plans to become a resident.


If there's free movement of people through the EU, I think this only makes sense.


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## Aron (Apr 30, 2013)

With respect to e everyone who is concerned, the HMRC in the UK are asking some people who have offshore accounts to declare them in the exact way that Spain have recently done. 
Spain brought out this Royal decree in November last year. It became law to declare assets for those that were lucky to have them. The whole of Europe, the taxman is going to become more thorough with people who bank offshore. All the worrying in the world won't change anything. If you declare all your income then you should have no problem.
Many expats I know have premium bonds. It is a safe investment in these troubled times. The majority of those expats holding those bonds don't realise they are taxable in Spain, they are only tax free in the UK. 
Is it a success, you'll not gauge that for years to come. Lionel Messi is under investigation for a tax issue, I have a feeling this is just a start.


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## Megsmum (Sep 9, 2012)

Aron said:


> With respect to e everyone who is concerned, the HMRC in the UK are asking some people who have offshore accounts to declare them in the exact way that Spain have recently done.
> Spain brought out this Royal decree in November last year. It became law to declare assets for those that were lucky to have them. The whole of Europe, the taxman is going to become more thorough with people who bank offshore. All the worrying in the world won't change anything. If you declare all your income then you should have no problem.
> Many expats I know have premium bonds. It is a safe investment in these troubled times. The majority of those expats holding those bonds don't realise they are taxable in Spain, they are only tax free in the UK.
> Is it a success, you'll not gauge that for years to come. Lionel Messi is under investigation for a tax issue, I have a feeling this is just a start.


Although not in Spain, YET, but will be by year end, I am not worried, its a concern, but not a worry, a concern that I must make sure I declare what I have, although to be honest, we wont have enough assets to worry about

When you say taxable in Spain - I Presume you mean any winnings gained not the initial investment?
x


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## mrypg9 (Apr 26, 2008)

extranjero said:


> That's fine as long as they chase the evaders, but they aren't -they are picking on mr and mrs averages hard earned savings to see if there is something, an inadvertent mistake for example, in order to fine them disproportionately.
> The tax implications for people's finances when retiring here are little known till too late-I bet most would not move to Spain if they had known the effect on their savings plans etc.


Could you please explain with proven examples just how Spain is 'picking on Mr and Mrs Average',whoever they may be?

And what precisely do you see as these 'tax implications' for retired peoples' finances?

We moved to Spain with capital accrued from sale of commercial properties. We pay all due taxes. 
Give me one good reason why people should be deterred from coming to Spain.

You are merely speculating on zero firm evidence.
.


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## extranjero (Nov 16, 2012)

mrypg9 said:


> Could you please explain with proven examples just how Spain is 'picking on Mr and Mrs Average',whoever they may be?
> 
> And what precisely do you see as these 'tax implications' for retired peoples' finances?
> 
> ...


Just read examples in such papers as Round Town News
Tax implications-how many expats are aware that what is tax free in UK isn't in Spain, so their insurances, savings plans,bonds that mature while resident in Spain,etc may end up with the taxman taking a large chunk of it , inheritance from UK will be eroded by tax.You may be tax savvy, but most aren't.


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## mrypg9 (Apr 26, 2008)

extranjero said:


> Just read examples in such papers as Round Town News
> Tax implications-how many expats are aware that what is tax free in UK isn't in Spain, so their insurances, savings plans,bonds that mature while resident in Spain,etc may end up with the taxman taking a large chunk of it , inheritance from UK will be eroded by tax.You may be tax savvy, but most aren't.


Would you describe the Round Town News as a journal of record, though?

And could you tell more about these non-exempt insurances, plans etc. which are tax-free in the UK but not in Spain?

I'm not particularly 'tax savvy' no more than any sensible person with savings.
But I do think it unwise to pass on alarmist 'information' about tax matters based on speculation, rumour and comment in immigrant local news rags. Besides, if you have any income or capital of any kind, you'd be daft not to be tax savvy at least to some extent!

This kind of speculation serves only to alarm potential retirees wishing to come to Spain since if they follow the rules, they have nothing to fear.. 

Those, who reside here and are fearful are free to go elsewhere. Those planning on coming should base decisions regarding tax affairs on information from those best qualified to give it.


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## extranjero (Nov 16, 2012)

mrypg9 said:


> Would you describe the Round Town News as a journal of record, though?
> 
> And could you tell more about these non-exempt insurances, plans etc. which are tax-free in the UK but not in Spain?
> 
> ...


So if you receive compensation from an action that started in Spain, or a matured insurance or savings plan or an inheritance, which would be tax free in UK, are you saying you wouldn't have to pay Tax in Spain?


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## mrypg9 (Apr 26, 2008)

extranjero said:


> So if you receive compensation from an action that started in Spain, or a matured insurance or savings plan or an inheritance, which would be tax free in UK, are you saying you wouldn't have to pay Tax in
> 
> Are you, though? Can you point to the tax rule that unequivocally states that? The whole point about people's tax affairs is that individual cases can vary so what may be a ruling fo one person may not be the same for another. That's why sensible people with any worthwhile assets use accountants.
> Not all of the financial instruments you cite are tax-free in the UK and the UK is certainly no tax paradise. I don't know if you have owned a limited company of any size in the UK but if so you'll be aware that everything you do to make a profit is taxed and then you'll be taxed on the profit! But that doesn't deter people from starting businesess and neither should immigrants be deterred from coming to Spain be deterred by speculation.
> ...


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## mrypg9 (Apr 26, 2008)

Campesina said:


> If you think it's bad now take a look at this:
> 
> EUROPA - Press Release - Fighting tax evasion
> 
> I'm glad I have no plans to become a resident.


GOOD! Tax evasion is a CRIME.
As an honest taxpayer I'm pleased about that.


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## extranjero (Nov 16, 2012)

mrypg9 said:


> extranjero said:
> 
> 
> > So if you receive compensation from an action that started in Spain, or a matured insurance or savings plan or an inheritance, which would be tax free in UK, are you saying you wouldn't have to pay Tax in
> ...


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## extranjero (Nov 16, 2012)

mrypg9 said:


> extranjero said:
> 
> 
> > So if you receive compensation from an action that started in Spain, or a matured insurance or savings plan or an inheritance, which would be tax free in UK, are you saying you wouldn't have to pay Tax in
> ...


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## Stravinsky (Aug 12, 2007)

mrypg9 said:


> Would you describe the Round Town News as a journal of record, though?
> 
> *And could you tell more about these non-exempt insurances, plans etc. which are tax-free in the UK but not in Spain?
> *
> ...


Pension lump sums, endowments when they reach realisation and the like
Best to plan and become a UK tax payer when something like that is about to happen, otherwise people will lose a chunk of it.

You're off about fear again  .... I have said many times, this has nothing to do with fear or panic (OR TAX EVASION!) its to do with being sensible. Its to do with making sure that no unforeseen circumstances tear away at your hard earned dosh. People who are holding off coming here are being sensible until they see the full state of play. People who adapt the blinkered la la la la la attitude and say everything is going to be fine in Spain also have _that_ option. If they do, and then some new tax comes out or wealth tax parameters are changed, well, thats their choice. 

The main difference is that those that hold off ultimately have the choice. Those that didnt and filled 720, dont any more! 

Some see the big picture ... some don't even bother looking.


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## extranjero (Nov 16, 2012)

Exactly -they will lose a chunk of it!
Tax seems to be the last thing on most people's minds when they move here, along with health matters.It doesn't occur to them that the Spanish tax man will be very greedy, so they wouldn't think of the timing of the maturity of their savings plans. It may be easier if you have run a business and areefamiliar with tax implications but many only know about PAYE and savings interest.
I think the Hacienda is very shortsighted not to realise that there are thousands of would be tax payers out here, into whom they have now put the fear of God , and are unlikley to start paying tax now;it really IS their loss!


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## Stravinsky (Aug 12, 2007)

extranjero said:


> Exactly -they will lose a chunk of it!
> Tax seems to be the last thing on most people's minds when they move here, along with health matters.It doesn't occur to them that the Spanish tax man will be very greedy, so they wouldn't think of the timing of the maturity of their savings plans. It may be easier if you have run a business and areefamiliar with tax implications but many only know about PAYE and savings interest.
> I think the Hacienda is very shortsighted not to realise that there are thousands of would be tax payers out here, into whom they have now put the fear of God , and are unlikley to start paying tax now;it really IS their loss!


Well, to be honest I understood about the tax system, so I always knew there would be an issue to decide one day.
Ive always paid taxes (yes, I'm an honest tax payer!) so I have no quarrel with the tax man taking his lump. Its when and if the goal posts change that things get sticky


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## fergie (Oct 4, 2010)

mrypg9 said:


> GOOD! Tax evasion is a CRIME.
> As an honest taxpayer I'm pleased about that.


Totally agree with you Mary, I didn't wear my 'rose tinted glasses' when we bought our first house in Spain in 2004. We had to employ a solicitor to pay our taxes etc for us, because for some time we lived in HK, our solicitor still works for us. We also realise that now having two properties here, that if we 'popped our clogs', our children might have to wait a little while to inherit anything we have property wise, they understand that, and the fact inheritance tax will be charged. 
If we make a large purchase we tell our kids we're spending some of your inheritance,'shrouds don't have pockets' they have got used to that, we never go crazy with money, we are not millionaires, we just have reasonable hard earned private pensions, our children are happy we live comfortably and replace household items with new when needed, plus still enjoy good holidays. We have helped our children financially in the past, and will still do if they are really stuck, they stand on their own two feet financially, as they were taught money doesn't grow on trees. Our daughter owns a med. sized profitable LTD company and employs over 200 people, so fully understands the implications of her accountant keeping 'good and honest books'.


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## extranjero (Nov 16, 2012)

Stravinsky said:


> Well, to be honest I understood about the tax system, so I always knew there would be an issue to decide one day.
> Ive always paid taxes (yes, I'm an honest tax payer!) so I have no quarrel with the tax man taking his lump. Its when and if the goal posts change that things get sticky


I don't mind the taxman taking his lump of income tax, but when its assets built over years that have maturity bonuses, or otherwise free inheritances then if I were in that position,I would mind, as all the benefits accrued would be wiped out.


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## CapnBilly (Jun 7, 2011)

extranjero said:


> I don't mind the taxman taking his lump of income tax, but when its assets built over years that have maturity bonuses, or otherwise free inheritances then if I were in that position,I would mind, as all the benefits accrued would be wiped out.


I agree with that, BUT, as Stravinsky says, you have to do something about it, i.e not be tax resident, or whatever. What you cannot do is continue to live in a country and ignore the laws (tax) because you don't like them, or you think they're unfair.


There's nothing wrong with tax avoidance. I have previously posted how I dealt with it for my circumstance, and I have contingency plans in place for potential future events.


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## Aron (Apr 30, 2013)

cambio said:


> Although not in Spain, YET, but will be by year end, I am not worried, its a concern, but not a worry, a concern that I must make sure I declare what I have, although to be honest, we wont have enough assets to worry about
> 
> When you say taxable in Spain - I Presume you mean any winnings gained not the initial investment?
> x


Yes, just the winnings. Most people win very little, but if they won a big one, there would be a heap of tax to pay!
.


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## gus-lopez (Jan 4, 2010)

20% on winnings.


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## Aron (Apr 30, 2013)

extranjero said:


> Exactly -they will lose a chunk of it!
> Tax seems to be the last thing on most people's minds when they move here, along with health matters.It doesn't occur to them that the Spanish tax man will be very greedy, so they wouldn't think of the timing of the maturity of their savings plans. It may be easier if you have run a business and areefamiliar with tax implications but many only know about PAYE and savings interest.
> I think the Hacienda is very shortsighted not to realise that there are thousands of would be tax payers out here, into whom they have now put the fear of God , and are unlikley to start paying tax now;it really IS their loss![/
> 
> ...


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## mrypg9 (Apr 26, 2008)

*The EU Savings Tax Directive ensures that Member States collect data on the savings of non-resident individuals, and automatically provide this data to the tax authorities where those individuals reside. This system has been in place since 2005. A proposal is on the table in Council to strengthen this Directive, and enlarge its scope. At the European Council in May 2013, Member States committed to adopting the revised Savings Directive before the end of the year. *

So it's not a cunning Spanish plan to rob poor old British immigrant pensioners, then...

The bottom line is this, as I see it: I agree with Fergie and Aron. Whatever we all may think, it is mere speculation that there will be any further tax hike on the overseas assets of anyone resident in Spain, whether Spanish or foreign.

If there were such a tax -and we have no reason to think there would be as for one thing it could be almost impossible to enforce then for most people here the extra cost would be minimal. Very few British immigrants are HNWIs, very many have no assets other than a modest piso in Spain and their pensions and some have no property, a modest income and not much in the bank.

In the unlikely event that extra taxes are imposed I would consider it a price worth paying in order to enjoy life here. 
I agree with you, Strav...people have the option to stay or go. I just don't think it's helpful to scare people away with a load of 'What ifs?'


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## Stravinsky (Aug 12, 2007)

mrypg9 said:


> *
> I agree with you, Strav...people have the option to stay or go. I just don't think it's helpful to scare people away with a load of 'What ifs?'*


*

But thats as opposed to lulling them into a possible false sense of security with a load of "what if not's" 

It would be nice to get a balanced viewpoint on this on the forums, but its clear that's never going to happen *


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## Megsmum (Sep 9, 2012)

I have read endless threads about tax in Spain, the overseas declaration etc etc.
I have also read the inference that any one who is going to become a resident , must be 2 bricks short of a full load.

Well. We have NOT been out off by any of this, we will pay tax , where tax is due. We also are aware, that things may change, because they do, the exchange rate may change, the euro may collapse, they might bring in a foreigners tax, i don't know, what I do know is, I am not going to spend the rest of my life worrying about what might happen. We will not have any assets as such anyway, certainly none that fit into the were doomed category. We have discussed the situation with our children, they are fully aware that , by the time we pop our clogs, there will not be much left for them to worry about paying inheritance tax on, they seem fine with that, they both earn way more than me anyway

There have been comments - sorry not sure who - that in the UK certain things are tax free, but surely the clue there is not the tax free bit but the "in the uk bit". Why should Spanish tax laws be the same as anywhere else . I am sure, at sometime in the future something, will happen to us in spain, that will cause concern, but life is far to short to worry about, what ifs, your a long time dead in this world


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## mrypg9 (Apr 26, 2008)

cambio said:


> I have read endless threads about tax in Spain, the overseas declaration etc etc.
> I have also read the inference that any one who is going to become a resident , must be 2 bricks short of a full load.
> 
> Well. We have NOT been out off by any of this, we will pay tax , where tax is due. We also are aware, that things may change, because they do, the exchange rate may change, the euro may collapse, they might bring in a foreigners tax, i don't know, what I do know is, I am not going to spend the rest of my life worrying about what might happen. We will not have any assets as such anyway, certainly none that fit into the were doomed category. We have discussed the situation with our children, they are fully aware that , by the time we pop our clogs, there will not be much left for them to worry about paying inheritance tax on, they seem fine with that, they both earn way more than me anyway
> ...



And that sums it up nicely


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