# Moving to costa del sol



## ozangel (Apr 16, 2014)

Myself and my husband are hoping to move to costa del sol, my husband would be commuting to work in the uk weekly so will be paying tax in the uk, whilst i stay in Spain,my question is do we both have to become residents in Spain?


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## xabiaxica (Jun 23, 2009)

ozangel said:


> Myself and my husband are hoping to move to costa del sol, my husband would be commuting to work in the uk weekly so will be paying tax in the uk, whilst i stay in Spain,my question is do we both have to become residents in Spain?


:welcome:

you would have to register as resident at/by 90 days of being here - & also sign on the padrón when you move here

your husband, if he never spends 90 consecutive days here, wouldn't - however, as he would be financially supporting you, Spain would consider him to be tax resident & he'd have to declare his world-wide income to the tax office here


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## ozangel (Apr 16, 2014)

Does that mean he would pay tax in both countries?


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## brocher (Mar 21, 2011)

ozangel said:


> Does that mean he would pay tax in both countries?


There is a tax treaty between the two countries so he would not have to pay tax on the same money twice., but he would have to make a declaration of all world wide income in Spain. If he hasn't paid enough tax according to Spanish allowances, he'll have to pay the differece. If he'd paid too much he'd be refunded, but that is unlikely if you have a look at the allowances for both countries.


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## ozangel (Apr 16, 2014)

Ok thanks for information.


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## angil (Sep 24, 2012)

brocher said:


> There is a tax treaty between the two countries so he would not have to pay tax on the same money twice., but he would have to make a declaration of all world wide income in Spain. If he hasn't paid enough tax according to Spanish allowances, he'll have to pay the differece. If he'd paid too much he'd be refunded, but that is unlikely if you have a look at the allowances for both countries.


Brocher do you have any links to show these 'Spanish allowances'? re; double taxation? Thanks so much.

I can find no info that states if you don't pay ENOUGH tax on your worldwide income elsewhere, Spain can tax you some more. I understood double taxation as being; you can't be taxed on the same income twice.


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## baldilocks (Mar 7, 2010)

angil said:


> Brocher do you have any links to show these 'Spanish allowances'? re; double taxation? Thanks so much.
> 
> I can find no info that states if you don't pay ENOUGH tax on your worldwide income elsewhere, Spain can tax you some more. I understood double taxation as being; you can't be taxed on the same income twice.


What it means is that Spain will tax you on your world-wide income after deducting any tax you may have paid in another country on that same income.


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## ozangel (Apr 16, 2014)

So does that mean if you have money from a house sale in uk spain will tax you ?


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## xabiaxica (Jun 23, 2009)

ozangel said:


> So does that mean if you have money from a house sale in uk spain will tax you ?


yes, if you are tax resident in Spain when you sell it


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## ozangel (Apr 16, 2014)

No sold it a couple of years ago whilst in uk


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## xabiaxica (Jun 23, 2009)

ozangel said:


> No sold it a couple of years ago whilst in uk


no then

but any income generated while you/your OH is tax resident here IS declarable


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## ozangel (Apr 16, 2014)

Ok thanks very much for you help


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## Lynn R (Feb 21, 2014)

ozangel said:


> No sold it a couple of years ago whilst in uk


Then, if you have invested the proceeds of the sale, you would just have to declare any interest received on your Spanish tax return.

Also, if you have assets of over €50,000 in any one asset class (ie bank accounts, shares, property, etc) then you would need to submit a Modelo 720 listing all such assets as well as an annual tax return. 

Information about Spanish tax allowances and rates can be found here:-


Spanish income tax rates 2012 to 2014


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## extranjero (Nov 16, 2012)

xabiachica said:


> yes, if you are tax resident in Spain when you sell it


Correct me if I'm wrong, but from a previous, long thread on this, I seem to remember that if you spend more than 183 days in a year in Spain , you are considered tax resident for the whole year, which means that, if you sold your house in UK, before you moved to Spain, ie before you became resident, then you would be taxed on the profit in Spain.


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## xabiaxica (Jun 23, 2009)

extranjero said:


> Correct me if I'm wrong, but from a previous, long thread on this, I seem to remember that if you spend more than 183 days in a year in Spain , you are considered tax resident for the whole year, which means that, if you sold your house in UK, before you moved to Spain, ie before you became resident, then you would be taxed on the profit in Spain.


well yes - so if you sell the house a few weeks before you move here & become tax resident in Spain that tax year - then you'd be liable to declare the sale

however, the OP sold 2 years ago & they aren't here (yet) so it doesn't apply to them

as Lynn says though, if the proceeds have been invested they would be liable to declare any income from those investments

and of course any assets over the threshold for the 720


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## ozangel (Apr 16, 2014)

Not invested just left it in bank


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## jojo (Sep 20, 2007)

ozangel said:


> Not invested just left it in bank



If its earning interest, then its invested. 

Jo xxx


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## extranjero (Nov 16, 2012)

ozangel said:


> Not invested just left it in bank


You will still have to declare it on the assets declaration form if your bank or building society accounts come to 50 k or more. Don't forget to convert your £ s to euros, as it may tilt you over the threshold for declaring.
Any savings interest in UK has to be declared on your annual income tax return, regardless of how much you have.
There's no escape!


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## extranjero (Nov 16, 2012)

xabiachica said:


> well yes - so if you sell the house a few weeks before you move here & become tax resident in Spain that tax year - then you'd be liable to declare the sale
> 
> however, the OP sold 2 years ago & they aren't here (yet) so it doesn't apply to them
> 
> ...


Your post makes it look as if you are only taxed if you sell the house AFTER you've Moved here, and become a tax resident, which isn't what I said.


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## xabiaxica (Jun 23, 2009)

extranjero said:


> Your post makes it look as if you are only taxed if you sell the house AFTER you've Moved here, and become a tax resident, which isn't what I said.


 really?? I said



> if you sell the house a few weeks before you move here & become tax resident in Spain that tax year - then you'd be liable to declare the sale


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## extranjero (Nov 16, 2012)

xabiachica said:


> really?? I said


I'm referring to your post at 03.06 today


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## jojo (Sep 20, 2007)

ozangel said:


> Myself and my husband are hoping to move to costa del sol, my husband would be commuting to work in the uk weekly so will be paying tax in the uk, whilst i stay in Spain,my question is do we both have to become residents in Spain?


When we did this, I became the resident in Spain and my husband was a visitor. Apparently I should have paid tax on any money he gave me, but altho I filled in a tax form, I didnt (I probably wasnt given enough). My husband, because we had a home in the UK and he worked and paid tax etc there, he didnt pay in Spain - Apparently, that shouldnt have been right, but we had a jestoria and my husbands UK accountant sort it out for us and that was the conclusion. We could also claim for UK child allowance and healthcare in Spain (via S1) because he was paying NI in the UK and it was a reciprocal agreement.

But, my husband couldnt and didnt spend more than 182 days in spain in any one year

Jo xxx


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## xabiaxica (Jun 23, 2009)

extranjero said:


> I'm referring to your post at 03.06 today


OK - so I said 'if you're tax resident when you sell it', which perhaps wasn't as clear as it could be - but even so, doesn't apply to the OP because they sold 2 years ago 

if anyone reads enough of the forum they'll soon read about all the tax rules - we don't need to go into the nitty gritty on every thread unless/until it's clear that it applies to the member asking the questions


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## angil (Sep 24, 2012)

jojo said:


> When we did this, I became the resident in Spain and my husband was a visitor. Apparently I should have paid tax on any money he gave me, but altho I filled in a tax form, I didnt (I probably wasnt given enough). My husband, because we had a home in the UK and he worked and paid tax etc there, he didnt pay in Spain - Apparently, that shouldnt have been right, but we had a jestoria and my husbands UK accountant sort it out for us and that was the conclusion. We could also claim for UK child allowance and healthcare in Spain (via S1) because he was paying NI in the UK and it was a reciprocal agreement.
> 
> But, my husband couldnt and didnt spend more than 182 days in spain in any one year
> 
> Jo xxx


But your husband would have become an automatic fiscal resident in Spain if YOU & your children were there for more the 183 days?? Or is this a very new rule??
As such, whether he was being taxed in the UK or not, should have put in a tax return in Spain??
Regardless if he was actually paying in the UK or not?? 
Sorry for the ?? but they are genuine questions. Also sorry to the OP for butting in. 
Trying to get our head around lots of things at the mo'!!


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## xabiaxica (Jun 23, 2009)

angil said:


> But your husband would have become an automatic fiscal resident in Spain if YOU & your children were there for more the 183 days?? Or is this a very new rule??
> As such, whether he was being tax in the UK or not, should have put in a tax return in Spain??
> Regardless if he was actually paying in the UK or not??
> Sorry for the ?? but they are genuine questions. Also sorry to the OP for butting in.
> Trying to get our head around lots of things at the mo'!!


no, it's not a new rule - it's been like that for a very long time

as jojo says - they were badly - wrongly - advised by a gestor


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## angil (Sep 24, 2012)

xabiachica said:


> no, it's not a new rule - it's been like that for a very long time
> 
> as jojo says - they were badly - wrongly - advised by a gestor


I am sorry but Jojo does not make it clear that her just applying for residency & her husband only being Spain for 182 days was the ill advised bit!

It just confused me!

Anyone coming here should be made fully aware that after the 183rd day of the spouses stay, regardless where in the World their other half may be, they will both be deemed fiscal residents for tax purposes and MUST submit a return to the Spanish tax authority. Regardless of whether you are paying taxes elsewhere??

More ?? just in case I am confused again!


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## ozangel (Apr 16, 2014)

Omg this sounds confusing lol, im not great at these rules


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## xabiaxica (Jun 23, 2009)

angil said:


> I am sorry but Jojo does not make it clear that her just applying for residency & her husband only being Spain for 182 days was the ill advised bit!
> 
> It just confused me!
> 
> ...


her husband didn't have to reguster as resident, but yes, he should have submitted tax returns because he was resident by default, financially supporting his family here in Spain

the gestor they consulted told them, wrongly , that he didn't need to, because he was working & paying tax in the UK - so he didn't


jojo did work at some point during the time she lived here - but she'd be the first to tell you that she certainly didn't earn enough to support the family here


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## ozangel (Apr 16, 2014)

So would it be better if i went back to uk for a couple of weeks every 3 months, and not become a resident,?


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## xabiaxica (Jun 23, 2009)

ozangel said:


> So would it be better if i went back to uk for a couple of weeks every 3 months, and not become a resident,?


not unless you stayed away for more than half the year, every year


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## angil (Sep 24, 2012)

Nothing to do with registering as a resident. It is the fact he would have been automatically deemed a tax resident (whether he registered or not) on the 183rd day of her stay in Spain!

Thats by the by. I was just wondering (hoping!) I had missed something.

The most important point here for the OP is the 183 day rule with regards fiscal residency.

& whether they both decide to actually register as residents or not; if one of them spends more than 183 days in Spain they will automatically be classed as tax residents.


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## angil (Sep 24, 2012)

The 183 days per year do not have to run consecutively! Its 183 days in one tax year Jan - Dec in Spain.


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## xabiaxica (Jun 23, 2009)

angil said:


> Nothing to do with registering as a resident. It is the fact he would have been automatically deemed a tax resident (whether he registered or not) on the 183rd day of her stay in Spain!
> 
> Thats by the by. I was just wondering (hoping!) I had missed something.
> 
> ...


precisely

unfortunately jojo's gestor didn't tell them that

fortunately - for them - hacienda didn't find out & they've been back in the UK several years now


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## ozangel (Apr 16, 2014)

So if i am not working in Spain and my husband commutes to work in UK and pays tax in Uk , what does that mean in paying tax in Spain ,sorry im all new to this as always had tax and insurance taken out of my pay before i got it, so dont really understand tax forms or anything,


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## xabiaxica (Jun 23, 2009)

ozangel said:


> So if i am not working in Spain and my husband commutes to work in UK and pays tax in Uk , what does that mean in paying tax in Spain ,sorry im all new to this as always had tax and insurance taken out of my pay before i got it, so dont really understand tax forms or anything,


he'd continue to pay tax & NI in the UK - but because he'd be supporting you financially he'd also be tax resident in Spain & have to submit a tax return - as would you

which doesn't necessarily mean _paying _any extra - but it might


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## jojo (Sep 20, 2007)

xabiachica said:


> precisely
> 
> unfortunately jojo's gestor didn't tell them that
> 
> fortunately - for them - hacienda didn't find out & they've been back in the UK several years now


I've asked my husband about this as he dealt with it all - it was a few years ago now, but at the time, according to OH (and he isnt one to ever bend rules and he said that it probably would have been cheaper to have been taken in Spain, but was advised against it!?). He was told that the best way to do it was for me, the Spanish resident to pay Spanish taxes (he paid me under the threshold  ) and for him, the UK resident/visitor to Spain to pay his in the UK - We had a house in the UK, he spent most of his time there and his business and employees were there. Because there was a reciprocal agreement between the two countries re healthcare, we used the S1 to enable the family to be covered in Spain - However, husband wasnt - he had to use the EHIC card!?

I'll ask him more when he wakes up lol!!!

Jo xxx


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## xabiaxica (Jun 23, 2009)

jojo said:


> I've asked my husband about this, as he dealt with it all - it was a few years ago now, but at the time, according to OH (and he isnt one to ever bend rules and he said that it probably would have been cheaper to have been taken in Spain, but was advised against it!?). He was told that the best way to do it was for me, the Spanish resident to pay Spanish taxes (he paid me under the threshold  ) and for him, the UK resident/visitor to Spain to pay his in the UK - We had a house in the UK and his business and employees were there. Because there was a reciprocal agreement between the two countries re healthcare, we used the S1 to enable the family to be covered in Spain - However, husband wasnt - he had to use the EHIC card!?
> 
> I'll ask him more when he wakes up lol!!!
> 
> Jo xxx


:confused2:

so he employed you from the UK as an employee in Spain? So you were registered as working here? In which case you would have qualified for healthcare here without the S1s

or were you registered as working in the UK & paying tax & NI there? 

either way you had to tax returns - as did he

he wouldn't have been able to choose where to pay tax - he would have had to have paid it in the UK since he was a UK resident & the business & the work took place there

if you weren't earning enough to support the family - & he was paying school fees etc (which if he was 'paying you under the threshold', he'd have had to, surely? ) then he should have been doing tax returns in Spain - & yes, he might well have got tax rebates if income tax was lower here

all rather confusing & it really does sound like you were very badly advised - but it's years ago & doesn't matter any more what you/he did/didn't do

*
it's very clear - if someone is financially supporting a family which lives in Spain they ARE tax resident by default & have to do tax returns in Spain*


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## jojo (Sep 20, 2007)

xabiachica said:


> :confused2:
> 
> so he employed you from the UK as an employee in Spain? So you were registered as working here? In which case you would have qualified for healthcare here without the S1s
> 
> all very confusing & it really does sound like you were very badly advised


No, I wasnt an employee, altho maybe thats how the taxman in Spain saw it, but they were obviously satisfied I wasnt earning enough to pay anything - otherwise they would have asked for it!

I've gotta be honest, my OH seems to understand it all very well - at the time he had an accountant who worked with an international law firm, his own accountant and the Gestor in Spain - all advising him and he is dismissive of the idea he was misinformed in any way and that we didnt do things in the correct fashion. Afterall, our original plan was to set up a sister company to his own in Spain and therefore the "wheels were put in motion" for this to happen - legally!

Jo xxx


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## xabiaxica (Jun 23, 2009)

jojo said:


> No, I wasnt an employee, altho maybe thats how the taxman in Spain saw it, but they were obviously satisfied I wasnt earning enough to pay anything - otherwise they would have asked for it!
> 
> I've gotta be honest, my OH seems to understand it all very well - at the time he had an accountant who worked with an international law firm, his own accountant and the Gestor in Spain - all advising him and he is dismissive of the idea he was misinformed in any way and that we didnt do things in the correct fashion. Afterall, our original plan was to set up a sister company to his own in Spain and therefore the "wheels were put in motion" for this to happen - legally!
> 
> Jo xxx


so he put money into an account for you every month which you used to pay the bills?


he/you_ were_ badly advised - he _was _supporting the family & _should have _submitted tax returns

but as I said - it's years ago now & hardly matters any more


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## snikpoh (Nov 19, 2007)

angil said:


> Nothing to do with registering as a resident. It is the fact he would have been automatically deemed a tax resident (whether he registered or not) on the 183rd day of her stay in Spain!
> 
> Thats by the by. I was just wondering (hoping!) I had missed something.
> 
> ...


I've been biting my tongue but now feel I have to correct this blatant error.

If you are physically in Spain for more than 182 days in a calendar year (not necessarily continuously), then you are deemed tax resident.
If you work outside of Spain but your family live in Spain (*for any length of time*), then you are ALL deemed tax resident. The 183 day rule does NOT come into it!

So, regarding point 2, if your family are living in Spain, then you are all deemed tax resident. The phrase here is that your 'centre of economic interest' is in Spain.


Caveat - well that's how I interpret the law and how it's always been explained to me.


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## xabiaxica (Jun 23, 2009)

snikpoh said:


> I've been biting my tongue but now feel I have to correct this blatant error.
> 
> If you are physically in Spain for more than 182 days in a calendar year (not necessarily continuously), then you are deemed tax resident.
> If you work outside of Spain but your family live in Spain (*for any length of time*), then you are ALL deemed tax resident. The 183 day rule does NOT come into it!
> ...



I thought that was what she said :confused2:


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## jojo (Sep 20, 2007)

xabiachica said:


> so he put money into an account for you every month which you used to pay the bills?
> 
> 
> he/you_ were_ badly advised - he _was _supporting the family & _should have _submitted tax returns
> ...


He, as a UK tax resident paid tax on it in the UK and I, as the Spanish resident submitted the tax returns to Spain who obviously felt it wasnt enough to tax. 

But you're right, it was a few years ago now - I'm sure the rules have changed??!

Jo xxx


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## snikpoh (Nov 19, 2007)

xabiachica said:


> I thought that was what she said :confused2:


Really??? 



angil said:


> Nothing to do with registering as a resident. It is the fact he would have been automatically deemed a tax resident (whether he registered or not) on the 183rd day of *her* stay in Spain!



183 days of her stay in Spain is irrelevant - surely?


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## xabiaxica (Jun 23, 2009)

jojo said:


> He, as a UK tax resident paid tax on it in the UK and I, as the Spanish resident submitted the tax returns to Spain who obviously felt it wasnt enough to tax.
> 
> But you're right, it was a few years ago now - I'm sure the rules have changed??!
> 
> Jo xxx


they haven't changed

he was tax resident by default - that's the bottom line


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## xabiaxica (Jun 23, 2009)

snikpoh said:


> Really???
> 
> 
> 
> ...


by the time she (the physical resident) has been in Spain 183 days in a tax year, she is tax resident & therefore so is her OH who is financially supporting the family 

if she was here less than 182 days in the tax year she wouldn't be tax resident - so neither would her OH

unless I'm missing something :confused2:


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## snikpoh (Nov 19, 2007)

xabiachica said:


> by the time she (the physical resident) has been in Spain 183 days in a tax year, she is tax resident & therefore so is her OH who is financially supporting the family
> 
> if she was here less than 182 days in the tax year she wouldn't be tax resident - so neither would her OH
> 
> unless I'm missing something :confused2:


I think we'll have to choose to differ.

Example scenario;

I work in UK but my family have sold up, bought property and live permanently in Spain.
I believe that from day one we are all considered tax resident in Spain as I am supporting their life there.


I think this link is quite helpful but not entirely 'specific' enough; http://www.spanishpropertyinsight.com/tax-and-pensions/spanish-tax-residence/


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## xabiaxica (Jun 23, 2009)

snikpoh said:


> I think we'll have to choose to differ.
> 
> Example scenario;
> 
> ...


yeah.... but if the family doesn't actually stay long enough to become tax resident, no-one would be doing a tax return in Spain & hacienda wouldn't expect one


eg. if they arrived 180 days before the end of the tax year 2014, they wouldn't be tax resident that year & wouldn't have to do a tax return the following June 2015

assuming they stayed - their first tax return would be June 2016, for tax year 2015


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## jojo (Sep 20, 2007)

xabiachica said:


> by the time she (the physical resident) has been in Spain 183 days in a tax year, she is tax resident & therefore so is her OH who is financially supporting the family
> 
> if she was here less than 182 days in the tax year she wouldn't be tax resident - so neither would her OH
> 
> unless I'm missing something :confused2:



My husband has just said on this issue - Have you ever tried to go to the UK Inland revenue and tell them that, "yes I have a house and life in the UK, yes I own a business in the UK, I'm in the UK for at least 200 days a year, but actually, I have a wife and kids in Spain, so I have to pay tax in Spain, so I cant pay it here anymore???" The answer from them was that there is a reciprocal tax agreement and you could nominate where you pay it, altho as a UK company it makes sense to pay it in the UK. Also, it depends on which tax - income tax (not easy for the owner of an unlimited company)? VAT? Wealth tax? Employee tax?? Business tax? Can Spain assess a UK business (the answer to that is no, not until a company is registered in Spain)????? Money spent in Spain is subject to IVA - which is tax, so its being paid to Spain that way. In the end, common sense and correct professional guidance is required.

But my income was declared to Spain

Jo xxx


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## xabiaxica (Jun 23, 2009)

jojo said:


> My husband has just said on this issue - Have you ever tried to go to the UK Inland revenue and tell them that, "yes I have a house and life in the UK, yes I own a business in the UK, I'm in the UK for at least 200 days a year, but actually, I have a wife and kids in Spain, so I have to pay tax in Spain, so I cant pay it here anymore???" The answer from them was that there is a reciprocal tax agreement and you could nominate where you pay it, altho as a UK company it makes sense to pay it in the UK. Also, it depends on which tax - income tax (not easy on an unlimited company)? VAT? Wealth tax? Employee tax?? Business tax? Can Spain assess a UK business (the answer to that is no, not until a company is registered in Spain)????? Money spent in Spain is subject to IVA - which is tax, so its being paid to Spain that way. In the end, common sense and correct professional guidance is required.
> 
> But my income was declared to Spain
> 
> Jo xxx


it's nothing to do with the UK - he still had to carry on as normal with the UK tax office - & _submit a tax return in Spain as well

_all the reciprocal agreement means is that any tax paid in one country is taken into account by the other - it doesn't cancel the requirement to submit a return

so if that's the question he asked - it explains the answer he was given


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## jojo (Sep 20, 2007)

xabiachica said:


> it's nothing to do with the UK - he still had to carry on as normal with the UK tax office - & _submit a tax return in Spain as well
> 
> _all the reciprocal agreement means is that any tax paid in one country is taken into account by the other - it doesn't cancel the requirement to submit a return
> 
> so if that's the question he asked - it explains the answer he was given


As a visitor to Spain, according to the professionals he was advised by, he wasnt required to fill in a tax return. As a Spanish resident I was and did! 

Unfortunately it has everything to do with the UK tax office when the company and its owner live in the UK. 

My OH has no idea how it is now, but he's fairly sure that this is straight forward and if it isnt and the rules have changed, then Spain is doing itself a great mis service. Altho if someone is employed by the UK and is on PAYE, then filling in a Spanish tax return should mean that no tax is paid to Spain - as its paid in the UK?? The UK tax office wont let go of their income without a fight lol



Jo xxx


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## xabiaxica (Jun 23, 2009)

jojo said:


> As a visitor to Spain, according to the professionals he was advised by, he wasnt required to fill in a tax return. As a Spanish resident I was and did!
> 
> Unfortunately it has everything to do with the UK tax office when the company and its owner live in the UK.
> 
> ...


we're going round in circles 

the UK would still get its tax & NI - so it really is nothing to do with them - nothing changes as far as they are concerned - they don't lose a single penny

the fact that a tax return is also submitted in Spain won't change that

any tax already paid in the UK would have been deducted from any potential tax bill in Spain

He WAS required to submit a tax return because he was financially supporting the family which DID live in Spain


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## snikpoh (Nov 19, 2007)

JoJo - check out Mrs Smith in the previous link I gave. It might help clarify things.



> the UK/Spain Double Tax Treaty (“DTT”) overrules the Spanish residence determination. She cannot be tax resident in both countries under the DTT, and the DTT tie breaker rules will probably find her to be UK resident despite her spending nine months in Spain.


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## Lynn R (Feb 21, 2014)

jojo said:


> Altho if someone is employed by the UK and is on PAYE, then filling in a Spanish tax return should mean that no tax is paid to Spain - as its paid in the UK?? The UK tax office wont let go of their income without a fight lol
> 
> 
> 
> Jo xxx


If someone employed on PAYE in the UK but based in Spain for more than 183 days a year submits a Spanish tax return (as they should), it is possible that due to different personal allowances and rates of tax, they might be liable to pay some additional tax to Spain even after the tax already paid to HMRC is taken into account. This does not mean that the UK tax office is letting go of their income, how could it? They get to keep what has already been paid to them.

This is how a dual taxation treaty works -you don't get to choose which country you pay tax to on the basis of which is most beneficial to you. If you have income generated and taxed in one country but your main residence is in another, then the tax paid in the first country is offset against, not substituted for, the tax due in the second.


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## xabiaxica (Jun 23, 2009)

Lynn R said:


> If someone employed on PAYE in the UK but based in Spain for more than 183 days a year submits a Spanish tax return (as they should), it is possible that due to different personal allowances and rates of tax, they might be liable to pay some additional tax to Spain even after the tax already paid to HMRC is taken into account. This does not mean that the UK tax office is letting go of their income, how could it? They get to keep what has already been paid to them.
> 
> This is how a dual taxation treaty works -you don't get to choose which country you pay tax to on the basis of which is most beneficial to you. If you have income generated and taxed in one country but your main residence is in another, then the tax paid in the first country is offset against, not substituted for, the tax due in the second.


& if that tax payer is financially supporting a family resident in Spain, then as far as Spain is concerned they also have to submit a tax return in Spain - because Spain considers them to be tax resident by default


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## Lynn R (Feb 21, 2014)

xabiachica said:


> & if that tax payer is financially supporting a family resident in Spain, then as far as Spain is concerned they also have to submit a tax return in Spain - because Spain considers them to be tax resident by default


I'm sure you're right - although to be fair people are often given erroneous information by professionals who are paid to advise them. 

I have to say, too, that I don't understand the argument often made by people who don't see why they should pay any tax to Spain on income generated elsewhere, that they pay IVA on everything they buy so that's OK as they are paying some tax.
Don't they realise that the people who DO declare all their worldwide income have to pay the IVA on top of the tax due on their income?


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## Claire la richarde (Jul 6, 2009)

snikpoh said:


> JoJo - check out Mrs Smith in the previous link I gave. It might help clarify things.


In Mrs Smith's case, though, her children live in the UK, and she is going to Spain for a specified period i.e. 9 months.

A parent and children settling in Spain, purchasing a house or taking up a lease for a year or longer, with the children going to school there, might well be regarded differently, even if the other parent works and pays taxes in the UK.

This is the EU's word on the subject.

"How do I know which is my country of residence, or where my centre of interest is? 

Frequently Asked Questions - Employment, Social Affairs & Inclusion - European Commission

Your country of residence is the place where you "habitually reside" in other words, where your "centre of interest" is.

Frequently Asked Questions - Employment, Social Affairs & Inclusion - European Commission

Normally, the determination of your place of residence is a national decision. A list of criteria is provided to help social security institutions assess which country is to be considered your place of residence in the case of diverging views between two or more countries. These include: the duration of your presence on the territory of the countries concerned; your family status and ties; your housing situation and how permanent it is; the place where you pursue professional or non-profit activities; the characteristics of your professional activity; where you reside for taxation purposes; in the case of students, the source of your income.

In any case, the decision on which country is to be considered your place of residence will be made by the social security institutions and not by you."

The Agencia Tributaria says
"Unless there is evidence to the contrary, an individual shall be deemed to be a resident of Spain if, in accordance with the aforementioned criteria, his or her legally non-separated spouse and dependent minor children have their principal
residence in Spain."

http://www.agenciatributaria.es/AEA...sidentes/Folletos_divulgativos/irnringles.pdf


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## baldilocks (Mar 7, 2010)

Lynn R said:


> I'm sure you're right - although to be fair people are often given erroneous information by professionals who are paid to advise them.
> 
> I have to say, too, that I don't understand the argument often made by people who don't see why they should pay any tax to Spain on income generated elsewhere, that they pay IVA on everything they buy so that's OK as they are paying some tax.
> Don't they realise that the people who DO declare all their worldwide income have to pay the IVA on top of the tax due on their income?


but IVA has nothing to do with income - it is a tax on expenditure


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## xabiaxica (Jun 23, 2009)

Lynn R said:


> I'm sure you're right - although to be fair people are often given erroneous information by professionals who are paid to advise them.
> 
> I have to say, too, that I don't understand the argument often made by people who don't see why they should pay any tax to Spain on income generated elsewhere, that they pay IVA on everything they buy so that's OK as they are paying some tax.
> Don't they realise that the people who DO declare all their worldwide income have to pay the IVA on top of the tax due on their income?


that's what I'm saying - bad advice was given - & thankfully didn't bite them on the bum!

yeah - I'm with you on the IVA thing too - the old 'I'm spending money so Spain (or wherever) should be grateful that I'm here & why should I bother registering?' etc etc

you can't choose which rules to follow - if you live in a country you need to follow the rules of that country

there was a discussion on a local fb group yesterday - someone asked where is the best place to take their teen for their first driving practice with mum or dad

a few of us mentioned that it's actually illegal to do that - then some chipped in & started suggesting where they could go & that 'it's a stupid law anyway'

I had to unfollow the thread - I was getting really peed off!


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## Lynn R (Feb 21, 2014)

baldilocks said:


> but IVA has nothing to do with income - it is a tax on expenditure


Yes, but people often put forward the argument that they are spending money in Spain and paying tax here via the IVA they pay on that expenditure, therefore they shouldn't be expected to pay income tax as well if their income comes from another country and they've already paid tax there. As Jojo said

"Money spent in Spain is subject to IVA - which is tax, so its being paid to Spain that way. "

I don't think that's a valid argument, is all.


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## jojo (Sep 20, 2007)

xabiachica said:


> no, it's not a new rule - it's been like that for a very long time
> 
> as jojo says - they were badly - wrongly - advised by a gestor


The gestor was only doing what the international account told him to do! Seriously, this was the 'correct at the time' advice

Jo xx


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## xabiaxica (Jun 23, 2009)

jojo said:


> The gestor was only doing what the international account told him to do! Seriously, this was the 'correct at the time' advice
> 
> Jo xx


it wasn't 'correct at the time'

it's just what you were told


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## jojo (Sep 20, 2007)

xabiachica said:


> it wasn't 'correct at the time'
> 
> it's just what you were told


Advice should be sought by experts - not the forum!

Jo xx


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## baldilocks (Mar 7, 2010)

jojo said:


> Advice should be sought by experts - not the forum!
> 
> Jo xx


???


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## baldilocks (Mar 7, 2010)

While looking for an answer for another thread I came across this interesting website:
Country comparison 2014 | countryeconomy.com


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## xabiaxica (Jun 23, 2009)

the thing is - not all 'experts' actually know what they're talking about

I know of several people living here full time whose 'experts' have told them not to register as resident & to submit non-resident tax returns

which was fine until the police turned up at their door wanting to know why they were on the padrón & not registered as resident & doing resident tax returns....

another 'expert', despite knowing that the client was registered as resident in Spain & had lived here full time for years, submitted non-resident tax returns on their behalf, year after year - the client had no clue until there was a problem


and if there had been a death then they'd have been hammered for non-resident tax on the property

one gestor here tells EVERYONE that they HAVE TO get a Spanish driving licence - & we know that that isn't true

when my husband died I changed gestor - I had discovered that the one he had been using was rather 'dodgy'

I visited 3 before I selected one - the first two were adamant that I had to charge IVA on teaching - when I knew for sure that I don't

I chose the one who at least checked before advising me that I was correct

experts can't be expected to know everything - but should know at least where to find the info & be willing to check & ask the right questions


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## jojo (Sep 20, 2007)

xabiachica said:


> the thing is - not all 'experts' actually know what they're talking about


 so do we on the forum suggest that rather than use an expert, people read the forum, cos we know more and must be right????

No, we should advise the use of experts!

Jo


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## Lynn R (Feb 21, 2014)

jojo said:


> so do we on the forum suggest that rather than use an expert, people read the forum, cos we know more and must be right????
> 
> No, we should advise the use of experts!
> 
> Jo


You would think, wouldn't you, that Hacienda would be the "expert of experts" when it comes to matters pertaining to the submission of tax returns. The year after I became tax resident in Spain, I made an appointment to go to our local Hacienda office and have them complete a tax return for me online, gratis, which you can do. I knew there wouldn't be any tax to pay as we were just living on savings. 

The lady I saw, although very pleasant, was adamant that they didn't require a tax return from me until I start to receive my pension - although every piece of information I've ever read says that everyone who moves here needs to submit a return at least in the first year it is due, even if it is a zero one. I did ask if they would make some kind of note of that as I didn't want any problems to arise in the future, and so far I've never heard another word from them, so when I do go along to make a tax return in 2017 I'm hoping they won't want to know where I've been in the meantime!


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## snikpoh (Nov 19, 2007)

Lynn R said:


> You would think, wouldn't you, that Hacienda would be the "expert of experts" when it comes to matters pertaining to the submission of tax returns. The year after I became tax resident in Spain, I made an appointment to go to our local Hacienda office and have them complete a tax return for me online, gratis, which you can do. I knew there wouldn't be any tax to pay as we were just living on savings.
> 
> The lady I saw, although very pleasant, was adamant that they didn't require a tax return from me until I start to receive my pension - although every piece of information I've ever read says that everyone who moves here needs to submit a return at least in the first year it is due, even if it is a zero one. I did ask if they would make some kind of note of that as I didn't want any problems to arise in the future, and so far I've never heard another word from them, so when I do go along to make a tax return in 2017 I'm hoping they won't want to know where I've been in the meantime!



The problem is that the likes of 'hacienda' are not just one person - they are a collection of people.

As such, these individual people may not know everything or may not be prepared to find out for you.

As I know only too well, I have been given the wrong advise by our local INSS office - by one particular individual. Try as I might, I keep being referred to her and no one else will discuss the case. As a consequence, I can't get state health care for myself or my family - including the children!

Now, we all know the rules as do the INSS but this (expert) individual will not listen and keeps giving the wrong advice. This does not make the INSS wrong though!


Many, many times, there are people on this forum who have either been through the situation being discussed or have a vested interest and so have done lots of research. In these cases, the advise given is often better than some of the MIS-information given by the so-called 'experts'.


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## Aron (Apr 30, 2013)

An expert is often someone who possess's more data than judgement!


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## angil (Sep 24, 2012)

snikpoh said:


> I've been biting my tongue but now feel I have to correct this blatant error.
> 
> If you are physically in Spain for more than 182 days in a calendar year (not necessarily continuously), then you are deemed tax resident.
> If you work outside of Spain but your family live in Spain (*for any length of time*), then you are ALL deemed tax resident. The 183 day rule does NOT come into it!
> ...


On this particular post this is the 'error' you felt compelled to correct??!!

No one is deemed a tax resident until the 183 rd day of their stay in Spain (with or without family in tow)! That's why you can come on your hols for 5 1/2 months without incurring the wrath of the tax man!

Who's to say me and my kids were 'living' here from day 1 whilst hubby was working elsewhere?? We may just be on an extended vacation. We may have chosen to leave on the 181st day. That is our prerogative.

& that is why the 183 rd day thing comes into play regardless. 

& that is why regardless of whether you choose to register as a resident or not on the 183 rd day you will be automatically become a fiscal resident! & you must make a declaration to the Spanish tax man.


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## angil (Sep 24, 2012)

snikpoh said:


> JoJo - check out Mrs Smith in the previous link I gave. It might help clarify things.


That website you posted before with the very contrived Mrs Smith scenario (& it didn't state how long Mr Davis family had been in Spain either!) may just have given me a little bit of hope;

http://www.spanishpropertyinsight.com/tax-and-pensions/how-you-become-a-tax-resident-in-spain/

I think I have found a loophole! that may work in our favour!

Either that or the website is a load of rubbish as I have never read this clause before; "unless you have habitual residence in another country".

Hubby is off to see our Spanish accountant tomorrow. We'll see what he says.

But if this turns out to be correct. I owe you at least a nice cup of green tea!!!


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## xabiaxica (Jun 23, 2009)

angil said:


> That website you posted before with the very contrived Mrs Smith scenario (& it didn't state how long Mr Davis family had been in Spain either!) may just have given me a little bit of hope;
> 
> http://www.spanishpropertyinsight.com/tax-and-pensions/how-you-become-a-tax-resident-in-spain/
> 
> ...


that's a property website - this is an accountancy firm & very respected 

Do you need to submit a Spanish tax return?

however - if you DO find that your OH isn't liable to submit a tax return in Spain we'd be delighted to hear it! 



tbh I'd be surprised though - I know people who have left Spain because they had found out that the breadwinner was tax resident here, even though they only made brief visits - especially those who earned 'tax free' somewhere without a tax treaty with Spain


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## jojo (Sep 20, 2007)

angil said:


> That website you posted before with the very contrived Mrs Smith scenario (& it didn't state how long Mr Davis family had been in Spain either!) may just have given me a little bit of hope;
> 
> http://www.spanishpropertyinsight.com/tax-and-pensions/how-you-become-a-tax-resident-in-spain/
> 
> ...


That link (as does xabiachicas) would certainly show why, in our case, my husband was advised he could be a UK tax resident. Thats where his home, life, his businesses, finances, his hobbies (playing in a band at least once a week) - even our older children were. He was more than capable of proving that he "showed habitual residence in another country for more than 183 days in the year". That said, he didnt actually care where he paid his taxes. 

And as for me, we had many "heated discussions" about the fact that we hardly saw him in Spain, but our initial plan was to start up a sister company to his existing one, with a chap who already ran a similar company in Spain (hence alot of Spanish and English legal involvement), But due to the recession, that was put on hold and again due to the recession, he had to spend more time in the Uk than planned to make sure that the UK business survived the troubles.

But this clause from the link is the most important to those who need advice* "It is always best before making the move to Spain to take professional tax advice from a specialist who knows both UK and Spanish tax legislation."*

Jo xxx


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## angil (Sep 24, 2012)

jojo said:


> That link would certainly show why, in our case, my husband was advised he could be a UK tax resident. Thats where his home, life, his businesses, finances, his hobbies (playing in a band at least once a week) - even our older children were. He was more than capable of proving that he "showed habitual residence in another country for more than 183 days in the year". That said, he didnt actually care where he paid his taxes.
> 
> And as for me, we had many "heated discussions" about the fact that we hardly saw him in Spain, but our initial plan was to start up a sister company to his existing one, with a chap who already ran a similar company in Spain (hence alot of Spanish and English legal involvement), But due to the recession, that was put on hold and again due to the recession, he had to spend more time in the Uk than planned to make sure that the UK business survived the troubles.
> 
> ...


Hubby is returning to the mother ship (ie. Korea!) indefinitely. I'll see him at Christmas for a week, that'll be nice! 
Korea has a double taxation treaty with Spain, it is not a tax haven. 
He most certainly will be habitually resident in another country ie. Korea in a nice little apt nxt to the shipyard! 
& he will have been out of Spain almost permanently next tax year.
The website link you gave me (Xabiachica) is one of 'hundreds' I have trawled through in the past trying to find an answer.
Surely it can't be right that I don't see my husband for the best part of a year, whilst he works and pays taxes overseas & send his returns to the HMRC, & I live in Spain paying over the odds for everything from schooling, to healthcare to rent & utilities & STILL have to cough up approx 40% of that worldwide income to the Spanish tax man??! 
Lets see what Paco (professional advice!) has to say and I will certainly post any relevant information here.
I thought of you Jo when I read that clause. Had you not posted what you did earlier I may have dismissed it. But it does actually tally with what you were advised! Talk about going around in circles!


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