# Spanish income tax and non-payment



## geopilot5200 (May 23, 2009)

I've been living in Spain as a resident for 8-9 years now. I've always worked outside of Spain, I've never worked in Spain. 

I have completed a UK self-assessment tax form every year as HMRC insisted on sending them to me, obviously not paying any tax to HMRC as I was non-resident in the UK. From what I've read on the internet it appears clear that I should probably have been making a declaration and paying tax in Spain throughout all this time. As the tax system is "voluntary" and I've never worked in Spain I have never been part of the tax system, so the tax man has never come looking for me.

What should I do? How do I go about resolving my position regarding tax declaration? How do I minimise what might be a large tax bill? What might the penalties be? How far back will Hacienda investigate?

Thanks!


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## SteveHall (Oct 17, 2008)

Get yourself to a gestor for professional advice. You said you were a "resident". As a "resident you have a tax obligation even if it is zero. From what you have said you should clearly have been declaring (and paying) for that period and I am amazed that you think that you should not have to pay in either country. 

My understanding is that they can go back seven years but I have also read that as opposed to assessing any years previous to those seven that they simply issue a fine based on the years that they had the right to investigate.


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## Xose (Dec 10, 2008)

geopilot5200 said:


> I've been living in Spain as a resident for 8-9 years now. I've always worked outside of Spain, I've never worked in Spain.
> 
> I have completed a UK self-assessment tax form every year as HMRC insisted on sending them to me, obviously not paying any tax to HMRC as I was non-resident in the UK. From what I've read on the internet it appears clear that I should probably have been making a declaration and paying tax in Spain throughout all this time. As the tax system is "voluntary" and I've never worked in Spain I have never been part of the tax system, so the tax man has never come looking for me.
> 
> ...


As Steve says, get yourself a Gestor quickly. The tax year declaration period in Spain ends in June.

Be ready with information like, where were you physically when you were carrying out this work. You say never worked in Spain, but liability issues get complex regarding what it is you did, for whom and from where.

You say no payment to HMRC as you are not UK resident, but if you were there for 6 months, even as a resident in Spain, doing a contract let's say, is the PAYE element not applied to be returned with the P85?

You will need clarity on all of these points (and more I suspect) and the results will then dictate your liability in Spain.

Then there's the dodgy route, tempting but I wouldn't recomend it unless all activities have stopped and then you can keep your fingers crossed. This is the old chestnut where your payments are actually received abroad and you only ever do inter bank transfers to your account in Spain. This, IMO is also risky because the time is near (if not already here) where large sums raise questions and banks to revenue services now have international lines of comunications and declarations that not too long ago didn't exist. If you want to sleep easy, do not take this route. Also, IMO, non declaration is one thing and false declaration is quite another. NEVER declare hoping that the above "not know cause it ain't here" applies. If they ever do find out, they can then add avoidence and you really don't want that. Like in the UK, no knowledge is not a valid defence.

One last thing. Also like the UK, go to them before they come to you.

Good luck.

Xose


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## geopilot5200 (May 23, 2009)

Xose said:


> As Steve says, get yourself a Gestor quickly. The tax year declaration period in Spain ends in June.
> 
> Be ready with information like, where were you physically when you were carrying out this work. You say never worked in Spain, but liability issues get complex regarding what it is you did, for whom and from where.
> 
> ...


Thanks for the advice. 

None of the work has taken place in the UK, mainly in Dubai for which I have a residency visa. However, I have the Spanish residency card and my wife and kids live full-time in Spain so there is no real doubt as to my true residency.

I see that Spain and the UAE have a dual taxation agreement from about 2006. I don't know what investigative powers the Spanish authorities have to determine (a) what I am paid, (b) what I have in the bank. I tend to keep money in Spain to an absolute minimum.

Several years ago I did have occasion to go to the local Hacienda office to get some information/paperwork, I explained my particular set of circumstances and the ladies reply was "donde no hay tela, no se puede cortar..." more or less saying if nobody know about it what's the problem? Maybe not the official line...

Once again, thanks for the advice, I'll probably feel better getting this off my back and then see how I can become "tax efficient" after.

Thanks.


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## Stravinsky (Aug 12, 2007)

geopilot5200 said:


> Thanks for the advice.
> 
> None of the work has taken place in the UK, mainly in Dubai for which I have a residency visa. However, I have the Spanish residency card and my wife and kids live full-time in Spain so there is no real doubt as to my true residency.
> 
> ...


If theres a reciprocal agreement then you wont pay twice. If the Spanish tax was higher then you would have to pay that proportion, although it may be a little complicated sorting it


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## Xose (Dec 10, 2008)

I think the problem might be what's tax free there ain't here - as we know too well from UK tax free lump sums, policies that don't attract tax there etc.


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## Stravinsky (Aug 12, 2007)

Xose said:


> I think the problem might be what's tax free there ain't here - as we know too well from UK tax free lump sums, policies that don't attract tax there etc.


Oh for sure, thats why I say it could be complicated ..... but it IS sure to reduce the tax burden in some way


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