# Hacienda Questions.



## Sirtravelot (Jul 20, 2011)

Hey everyone.

We've got some questions concerning the whole overseas declaration thing.

1. We'll have income coming in from rentals, but the income is not going to be high enough to be taxed in the UK. It is under the tax bracket. Would this income have to be taxed in Spain?

2. We will have to declare these rental houses, is this correct?

3. We've got money in Germany. This will have to be declared, is this correct?

4. Do you know if there's a double-tax agreement (which exists between Spain and the UK) between Germany and Spain? Is this a general EU thing, or just to specific countries?


Thanks guys. This Hacienda stuff does my head in. I don't trust it.


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## Goldeneye (Nov 12, 2011)

Here is a bookmark I have saved in my 'Moving to Spain' folder

Spanish income tax rates 2012 to 2014

Next one would apply to you but not me and I will be moving from Canada...

https://www.gov.uk/living-in-spain


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## extranjero (Nov 16, 2012)

Sirtravelot said:


> Hey everyone.
> 
> We've got some questions concerning the whole overseas declaration thing.
> 
> ...


Sounds like you will need to submit an assets 720 declaration, and income declaration.surprised the income from your rentals isn't high enough to be taxed in UK- it probably is in Spain.
Google for info on the assets form there's loads of info out there.
Will your son get disability allowance in Spain?
Will your G children get child benefit in Spain- have you checked with DWP ?
Are you a pensioner? What about health cover
What about the requirements for residency- finances etc
You have a lot of research to do, to find out about your specific needs


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## Goldeneye (Nov 12, 2011)

Sirtravelot said:


> 4. Do you know if there's a double-tax agreement (which exists between Spain and the UK) between Germany and Spain? Is this a general EU thing, or just to specific countries?.


Just 'Googled' Double taxation treaties for you .. and found this link..


The worldwide personal tax guide - XMLQS - EY - Global

Which says... Germany has entered into double tax treaties with the following countries. .. _Spain is on their list..._


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## Sirtravelot (Jul 20, 2011)

Goldeneye said:


> Just 'Googled' Double taxation treaties for you .. and found this link..
> 
> 
> The worldwide personal tax guide - XMLQS - EY - Global
> ...


Thank you!

From that website I find this.

Situation 5: I live in Spain but earn my living abroad



> If you are Spanish tax resident you are obliged to declare your worldwide earnings for tax. So even if you generate no income in Spain you will normally still have to submit a Spanish tax return to declare your foreign income. Spain has a 60.100€ tax exemption on foreign earnings which you may be able to use but only if you have paid tax on these earnings already. (This exemption applies to income earned for work carried out physically in the other country.) Adopting the “out of sight, out of reach” approach on the basis that the Spanish tax office will not learn of your overseas earnings is risky. If you are regularly bringing the earnings into Spain to spend then this may trigger an investigation, or if you accumulate cash abroad this may be picked up by the increasingly sophisticated information sharing arrangements between tax authorities.


But then below at number 10 it says



> If you rent out a property in the UK but are now resident in Spain, the rental income is still declarable in the UK and you will have to carry on completing UK tax returns. You are nevertheless also still required to declare the income in Spain, but there are generous tax allowances and tax you have paid in the UK will be taken into account.


So, I'm a little bit unsure still.


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## zenkarma (Feb 15, 2013)

Sirtravelot said:


> 1. We'll have income coming in from rentals, but the income is not going to be high enough to be taxed in the UK. It is under the tax bracket. Would this income have to be taxed in Spain?


It's possible. You'll only know by looking at the Spanish allowances, which are lower than UK ones. You need to tot up your total income and take away the Spanish allowances. Anything left over is taxed.



Sirtravelot said:


> 2. We will have to declare these rental houses, is this correct?


If the capital asset value of the properties is over €50,000 each they will have to be declared on the asset reporting form.



Sirtravelot said:


> 3. We've got money in Germany. This will have to be declared, is this correct?


As above. If the total amount is over €50,000 (it does depends on the type of asset class) it will need to be declared. Eg €50,000 in a German bank account will need to be declared. €30,000 in a bank account and €30,000 in a shares wouldn't.



Sirtravelot said:


> 4. Do you know if there's a double-tax agreement (which exists between Spain and the UK) between Germany and Spain? Is this a general EU thing, or just to specific countries?


There is a taxation treaty between the UK and Spain, I have no idea about Germany and Spain. This means any taxes paid in the UK can be offset against any tax liability in Spain. In practice this means you can claim it back.

In respect of the above, 'declared' does not mean 'taxed'.


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## zenkarma (Feb 15, 2013)

Sirtravelot said:


> So, I'm a little bit unsure still.


What are you unsure about?

If you are a fiscal tax resident in Spain you have to declare your worldwide income. That means any income you receive including earned and unearned income (from house rentals) has to be declared.

If that income is above your taxation allowances you will be taxed on it.


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## Aron (Apr 30, 2013)

Sirtravelot said:


> Hey everyone.
> 
> We've got some questions concerning the whole overseas declaration thing.
> 
> ...


If you are a fiscal resident in Spain, you will need to go through the asset declaration if the property you own is over £50k. That being the case you will need a good gestor to go through all your yearly tax requirements. The gestor is the one to ask these questions.


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## Alcalaina (Aug 6, 2010)

It's not complicated really! If your income from rentals etc is below the tax threshold in the UK then it will probably be below the threshold here too, but you still have to declare it. The declaration is called IRPF and is done in May-June for the previous calendar year.

If your property is worth more than €50k you have to declare it as an overseas asset. Likewise your savings in Germany. This is completely separate from the tax declaration, it doesn't mean you will be taxed on its value. The process is done via an online form called Modelo 720, in March.


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## extranjero (Nov 16, 2012)

Alcalaina said:


> It's not complicated really! If your income from rentals etc is below the tax threshold in the UK then it will probably be below the threshold here too, but you still have to declare it. The declaration is called IRPF and is done in May-June for the previous calendar year.
> 
> If your property is worth more than €50k you have to declare it as an overseas asset. Likewise your savings in Germany. This is completely separate from the tax declaration, it doesn't mean you will be taxed on its value. The process is done via an online form called Modelo 720, in March.


I would be surprised if the income from several properties was below the tax threshold-must be very low rents!


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## Alcalaina (Aug 6, 2010)

extranjero said:


> I would be surprised if the income from several properties was below the tax threshold-must be very low rents!


Or maybe the income is shared amongst several people.


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## Aron (Apr 30, 2013)

extranjero said:


> I would be surprised if the income from several properties was below the tax threshold-must be very low rents!


I agree with that. Anyone letting out property has to make a good return on the investment. The person asking the question mentioned property in plural, so I would guess that not only would they need to complete the asset declaration, but consult a good accountant as well, more especially with funds from Germany are included.


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## Sirtravelot (Jul 20, 2011)

Alcalaina said:


> Or maybe the income is shared amongst several people.



Bingo.


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## Aron (Apr 30, 2013)

Sirtravelot said:


> Bingo.


Yep, if you won a big bingo prize in the UK and you were Spanish fiscal residents, then the winnings would be taxable,exactly the same as other tax free winnings such as premium bonds!


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## el pescador (Mar 14, 2013)

Aron said:


> Yep, if you won a big bingo prize in the UK and you were Spanish fiscal residents, then the winnings would be taxable,exactly the same as other tax free winnings such as premium bonds!


:rofl:

True sort of.
Gambling profits are taxable but there is an allowance of about 2.5K.
And yes you can deduct losses against that.


A question to those who rent.

Just read this 

*Housing deductions
Spain has some generous deductions for housing costs. The main ones are:

- the cost of buying, renovating or extending your main residence

- the costs of financing your house (mortgage)

- rent of your main residence if you earn less than 24.020€

The amount of the deduction can be a fairly complicated calculation but in general a maximum of 9.015€ mortgage costs can be offset against income at a rate of 15% and a similar amount of rent at 10.05%. Each autonomous community can add other deductions (e.g. Andalucia allows under 35 year olds to claim more for their rent than the national allowance).*

Am i right or wrong (most likely) in thinking that the rent you pay on your main residence can reduce your tax bill ?


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