# Move to the Canary Islands



## wilsonan (Oct 17, 2014)

Hi All,

We have finally decided to make the move. Plan is to sell house in UK and buy two cheaper properties in the UK to rent out whilst we are away. I have many questions, mainly financial but do not want to bombard you all with them in one go. Could anyone in a similar position give me an idea on what my tax position would be in both UK and Canaries, considering our only income would be £13,000 from these rentals. Would we need to apply for residency even though we plan to visit UK every 3 months. I am aware that we would need to buy private health care, can you please let me know where from and an approximate cost. Any help would be gratefully appreciated. Regards Andy.


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## 90199 (Mar 21, 2010)

Hello Andy, I live on the island of El Hierro and have done for some time. 

If you habitually reside in the Canary Island for 90 days, you will need to apply for residencia, you will need proof of income/ savings and proof of healthcare, in return you will be entitled to discounted ferry and airfares throughout Spanish territories. The residencia is nothing to worry about so easy to do.

If you are in the Canaries for 183 days in the tax year, 1st of Jan to 31st of Dec, then you will have to make a tax declaration on all your income, however if you are paying taxes in the U.K., you will not be doubly taxed in Spain. We have an accountant and financial adviser, to complete this return for us, online.

Wish you luck with your move, photos on the below link of the Meridian Isle of El Hierro.


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## ddrysdale99 (Apr 3, 2014)

The cost of health insurance depends very much on your ages.
Try the links in the faqs.


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## StewartL (Sep 5, 2013)

Hi Andy.

We live on Gran Canaria and have two residential properties in the UK which we rent out.

I am going to make the assumption that you will be spending more than 182 days in Spain within the tax year to make you a Spanish tax resident.

The taxation will depend on whether the properties are owned by just yourself or in joint names. 

For the UK currently each individual is entitled to 9440.00 GBP personal tax allowance for this current financial year and 10,000 for 2014/15 tax year. Therefore if you both own the houses you would pay no tax on the rental income in the UK. (if the properties are only in your name then you would have to pay tax at 20% on anything over the personal tax allowance) You would need to apply to HMRC to have the rent paid to you Gross and not Net as a non resident landlord. HM Revenue & Customs: The Non-resident Landlord Scheme You will then be required to submit self assessment tax return to HMRC.
You need to be aware that at the moment there is a consultation taking place by HMRC as to whether non residents should be entitled to a personal tax allowance. Currently as I understand the government's perspective if the majority (this may be set at anything between 75 and 95%) of your income is generated in the UK then you will still be entitled to an allowance. https://www.gov.uk/government/consu...ents-entitlement-to-the-uk-personal-allowance However it is always possible that HMRC could rule to remove the personal allowance in which case you would pay UK tax on the total net income which is currently 20%.

Spain
Currently in Spain for residential lettings the tax treatment is very generous compared to the UK. Firstly there are more permitted deductibles from Gross income to net taxable income. Then for residential lettings only 40% of the net income is taxable. Taxation of rental properties in Spain
Personal allowance in Spain is allot less than the UK currently 5,151.00 Euros for those under 65. However that said with the generous tax treatment of rental income you should still have no income tax payable even if your net income in the UK is 13,000 GBP. 
Again if the houses are only in your name tax may be payable. That said unlike the UK Spain still provides a married couples tax allowance. Therefore if you are married or civil partnered you would be entitled to submit a joint tax return in Spain with a married couples allowance of 8,551.00 Euros. Spanish taxation of married couples
Therefore for Spain it looks like you should not have any tax to pay especially if the properties are in joint name.

I have made some assumption above and the information provided is to be used as a guide only. As always with financial matters you should obtain independent financial advice from a tax professional with working knowledge of both the UK and Spanish tax authorities. The adviser would need to be informed of your actual situation in order to provide a full in-depth response. 
How is the property owned? If in joint names in what percentage.
Are you married?
What other income do you have?
Your ages?

Your financial adviser at the same time should also review with you both other tax issues like;
1) Inheritance tax in both the UK and Spain. Not a topic most people like to think about but an important tax topic as the rules in Spain are vastly different to the UK.
2) Capital Gain tax. Again the rules in the UK and Spain are different so you need to ensure that both are reviewed.


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## wilsonan (Oct 17, 2014)

Hi and thank you all for taking the time to reply.

I appreciate all of your help, not as tax professionals but as people that have already experienced what we will be experiencing. 

Our circumstances are, both 42 years old, residing in canaries staying in long term rentals for 6 months on each island, both UK properties will be in my sole name, Only income would be £13k pa from rentals in UK. So am I right in thinking that I will retain my UK personal tax allowance even though I am a resident of Spain, therefore only having to pay UK tax on £3000. Subject to the consultation StewartL mentions. And should I not expect to have to pay any tax in Spain due to the dual taxation treaty? 

Is it possible that there are tax advisors in the UK who are familiar with both UK and Spanish laws or do you guys use one in each country?

Kind Regards


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## StewartL (Sep 5, 2013)

Hi Andy

"So am I right in thinking that I will retain my UK personal tax allowance even though I am a resident of Spain, therefore only having to pay UK tax on £3000. Subject to the consultation StewartL mentions." Yes you are correct. If the 13K is Gross income you will be able to deduct certain expenditure like management fees, landlord insurance, maintenance. 

"And should I not expect to have to pay any tax in Spain due to the dual taxation treaty?" My quick calculation would agree with this.


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## 90199 (Mar 21, 2010)

I pay tax on a Government pension in the U.K., I have to declare all my income to the Spanish they tax me on all the other income, with the exception of my Government pension, that is investments, premium bond winnings, and my U.K. OAP.

Even if you have no income in Spain you must still make a tax return. I no longer use a U.K. Investment advisor.


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## amespana (Nov 10, 2009)

On an income of £13000 and having to pay rent and private healthcare you are not going to have a lot left to live on.


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## wilsonan (Oct 17, 2014)

Thanks for your concern amespana, what I didn't mention is that we will also have cash pending employment or a return to the UK after 10 years if we do not like it.

Regards


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## amespana (Nov 10, 2009)

Do you mean you hope to get a job?


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## nikkisizer (Aug 20, 2011)

StewartL said:


> If the 13K is Gross income you will be able to deduct certain expenditure like management fees, landlord insurance, maintenance.


Hi Andy,

If the rental properties are furnished you will also be able to claim a wear and tear allowance as a tax deductible expense.


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## wilsonan (Oct 17, 2014)

Don't tell anyone but thinking of setting up businesses selling snow ploughs and opening a chain of tanning salons. Again, thanks for your concern amespana but done my research. Cheers.


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## 90199 (Mar 21, 2010)

wilsonan said:


> Don't tell anyone but thinking of setting up businesses selling snow ploughs and opening a chain of tanning salons. Again, thanks for your concern amespana but done my research. Cheers.


Why not a coal mine


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## wilsonan (Oct 17, 2014)

Hepa said:


> Why not a coal mine


No coal on Hierro Hepa, I'm not stupid  

Seriously though, my work can be done from anywhere should I choose. I just need time to chill out, enjoy the sun, warm seas, explore new areas and if I get bored work. 

Ps Hepa if I do get bored I will contact you and we can both mine for coal in Lanzarote, we'll make a killing, trust me.


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## AlanS (Jan 1, 2013)

StewartL said:


> Hi Andy.
> 
> We live on Gran Canaria and have two residential properties in the UK which we rent out.
> 
> ...


Stewart that reply would grace any ATT/CTA exam ;-)


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## StewartL (Sep 5, 2013)

AlanS said:


> Stewart that reply would grace any ATT/CTA exam ;-)


Thank you.


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## 90199 (Mar 21, 2010)

Which island attracts you at the moment ? Gran Canaria was our first choice, then we discovered El Hierro.

You shouldn't worry about boredom, I first came in 1962 to Las Palmas de G.C., we have visited every island except Lanzarote, never once been bored.


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## wilsonan (Oct 17, 2014)

Hi Hepa,

We have been to on several occasions each, Lanzarote, Gran Canaria, Tenerife and Fuerteventura. We plan to start 6 months on Lanzarote then move onto Fuerteventura, Gran Canaria and Tenerife, spending 6 months on each initially. That order has been planned because I believe we can take a car we plan to purchase, by ferry to each destination. Because we will purchase a car straight away, where we live on each island is not overly important but would like to be quite near the sea. We will start our venture in Playa Blanca Lanzarote because that is where we prefer from all of our visits. Never been to El Hierro, my impression was that because it was small and appears exclusive, was that it was expensive ?

We plan to explore every part of each island whilst there, but I mentioned boredom because I love my work and everyone who knows me tells me I will get bored without it. Don't get me wrong I love the islands, sun, beaches and lifestyle at the moment, but who knows what the future holds.

If we still want to be there after 2 years the plan is settle where the heart is.

Thanks to all for your contributions.


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## 90199 (Mar 21, 2010)

You can also take a car ferry to all three of the other islands, from Los Cristianos in Tenerife, all are a must and well worth a visit, La Palma is beautiful, La Gomera is also special, but the best kept secret is the Meridian Isle of El Hierro, isolated but not exclusive, not expensive either. Only four English residents and maybe one Scot, the massive tourism boom of the other islands, never found us, and because of this El Hierro retains its Canarian Culture and charm.

The link below takes you to our photos of the island.


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## maxd (Mar 22, 2009)

I cannot foresee the future but my crystal ball sees you finding a place you like within the first 12 months after a bit of travelling around and you will end up staying there. Moving on every 5 months seems like a bit of a chore.

I keep hearing about people liking Lanzarote, so we should go and visit but it is Tenerife for us due to the size and things to do.

You have made a good choice with these beautful Islands but be careful if you need the internet for work, it can vary vastly from 100mb to 0.5 mb.


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## wilsonan (Oct 17, 2014)

Hi,

El Hierro does look amazing as do the other smaller islands and we will definitely take a trip there when we settle in the Canaries. We plan to do a lot of travelling initially as there is so much, so near that you can get to with a car/ferry.

We are returning to Playa Blanca next week, when we will be making lots of enquiries with letting agents to gather as much info as possible.

I have heard that the EHIC card will cover our healthcare for the first 3 months of moving, we would then need private for 3 months and can then pay into the Spanish system after 6 months. Can anyone confirm my understanding of this please ?

I have also heard that quite a few letting agents try it on with rental deposit and try any way they can in paying them back to you. Has anyone got any bad experiences that we can look out for.

Kind Regards
Andy


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## wilsonan (Oct 17, 2014)

wilsonan said:


> Hi,
> 
> I have heard that the EHIC card will cover our healthcare for the first 3 months of moving, we would then need private for 3 months and can then pay into the Spanish system after 6 months. Can anyone confirm my understanding of this please ?
> 
> ...


Hi, I know all you islanders are probably busy enjoying the sunshine or think oh no not the same old questions again, but could someone who knows, please respond to these for me.

Kind Regards
Andy


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## StewartL (Sep 5, 2013)

Hi Andy

For health cover the UK issues EHIC will cover you until such time as you become a resident of Spain. Officially if you spend 90 or more consecutive days in Spain you need to register as resident. At this time the UK EHIC card in effect becomes void. Then you will need to either
1) take out private health cover.
2) pay into the Spanish Social Security system to obtain Spanish health coverage. The only ways I know currently to do this is either by being employees or self employed. There is a system being rolled out for those who have been resident for over 12 months to make voluntary contributions into the state health system but not aware this is yet available for the Canaries. 


In relation to agents / landlords finding reasons not to repay rental deposits then I only have one experience to date as just moved from my first to second rental. Two points came to light 
1) The landlord is deducting the electricity and water costs. During the rental period I paid the landlord for the actual invoices received at the property from the water and electricity companies. However we never saw so did not pay for electricity and was not in the property when the water bill for the last two month period would have been received. For the water cost the amount that the landlord is saying if for the last two months is more that we would have expected and also the electricity amount seems high compared with what our friends say theirs is. Therefore we have requested copies of the actual invoices to substantiate the amounts he is claiming. If I do not receive the invoices I will take action to reclaim the unsubstantiated deducted amounts.
2) He also tried to claim that there was some additional furniture in the property than there was and wanted to make a deduction for these. We had taken photos of all the rooms, equipment, furniture etc when we first moved in and when we left all date stamped which we used to rebut the assertion.


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## wilsonan (Oct 17, 2014)

StewartL said:


> For health cover the UK issues EHIC will cover you until such time as you become a resident of Spain. Officially if you spend 90 or more consecutive days in Spain you need to register as resident.


But how would they know that you have spent more than 90 consecutive days in spain and what if you travelled back to the UK every 89 days, could you still rely on EHIC?

Your experiences of the agent taking deductions from deposit for electricity and water is exactly the same as what I have been warned of. I guess that it would be best to adopt the worst case scenario situation and factor in the deposit as part of the rental cost and if you get it back, happy days. 


Thanks for responding.

Regards
Andy


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## StewartL (Sep 5, 2013)

wilsonan said:


> But how would they know that you have spent more than 90 consecutive days in spain and what if you travelled back to the UK every 89 days, could you still rely on EHIC?


As to how they would know.
1) for the UK the burden of proof is on the authorities to 
2) for Spain if the authorities believe you have stayed more than 90 consecutive days the burden is on you to prove you have not stayed more than 90 days.


As for the UK EHIC you are entitled to UK health cover if you are "ordinarily resident" in the UK. " “Ordinarily resident” is a common law concept interpreted by the House of Lords in 1982 as someone who is living lawfully in the United Kingdom voluntarily and for settled purposes as part of the regular order of their life for the time being, with an identifiable purpose for their residence here which has a sufficient degree of continuity to be properly described as settled. " [ARCHIVED CONTENT] Eligibility for free hospital treatment under the NHS : Department of Health - Health care Therefore if you are just flying back and forth and are not really settled in the UK I would say you would not meet the requirements and would not be able to legally rely on the UK EHIC. 
Again the question would be how would they prove this. If the authorities had the appetite to investigate they would start by reviewing boarder control movements as their primary source and then HMRC data from your tax returns to give them cause for progressing any investigation. 

Private health cover in Spain is not that expensive especially if you would be considering flying back and forth as an alternative. Typically for your age range you should be able to get coverage for about 600 Euros each.


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## snikpoh (Nov 19, 2007)

Another couple of points to note;

If your 'centre of economic interest' is in Spain (for example, your main residence is here), then you are deemed resident irrespective of the 90 days rule.

The EHIC does NOT cover you for every eventuality. Even the UK recommend that you have additional health cover to meet all possible eventualities. I certainly would not rely on the EHIC alone if I was in your position.


A point for others - you should always insist on seeing the bills and only pay what it states on them. At the end of the contract, there may well be unpaid charges that have not yet been billed. You should ask for a break down of these. As a landlord, I always shown how I have calculated these final charges.

Perhaps, more importantly, and legally, any deposit (fianza) SHOULD be held by the appropriate authority. Not many landlords do this but it is a way that you have more control over it and how it is spent.


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## wilsonan (Oct 17, 2014)

StewartL said:


> As to how they would know.
> 1) for the UK the burden of proof is on the authorities to
> 2) for Spain if the authorities believe you have stayed more than 90 consecutive days the burden is on you to prove you have not stayed more than 90 days.


We had planned to return to UK every 3 months anyway to visit friends and family, but snikpoh has reminded me of what I read elsewhere, about not relying on EHIC solely. Thanks.


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