# Tax in Spain



## mr_madonna007 (Sep 17, 2012)

I'm looking to move to Spain next year.

I will be buying a property outright in Spain after selling my property in the UK. I'm doing lots of research about living in Spain, and making sure it's the right decision. 

I'm sure you've had many threads about "taxes in Spain". It seems difficult to pin point certain tax information.

I know the rules have just changed in Spain.

My question is, do you have to pay taxes if you live on your savings??

I know before you become a resident in Spain, you have to prove you can survive without sponging off the state.

Would I still have to submit tax return forms in may/june even though I'm not earning??

It seems to be difficult to get an answer for this.

I won't be using the state for anything..i.e unemployment benefit/medical benefits (I will have medical insurance as this is the requirements).

I will have a TEFL certificate, so could work as an English teacher. If I decide to do this, I will have to pay taxes.

Thanks.


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## snikpoh (Nov 19, 2007)

mr_madonna007 said:


> I'm looking to move to Spain next year.
> 
> I will be buying a property outright in Spain after selling my property in the UK. I'm doing lots of research about living in Spain, and making sure it's the right decision.
> 
> ...



Firstly, the rules regarding tax (as-far-as-I-am-aware) haven't changed recently.

Secondly, it's all really very simple.

If you live in Spain, then all world-wide income has to be declared and a tax form filled in! The benefits to doing this are primarily regarding IHT and succession tax but there are many others as well.



If you have paid tax elsewhere (state pension for example), then this can be offset against any tax in Spain.

If you are living off savings, then (presumably) you still have investment income in the form of interest and so need to declare this. If, like me, you have a portfolio of shares then you need to talk to a Spanish advisor about the best way to reduce any tax liabilities. When we moved, we changed to a Spanish compliant portfolio which saves us oodles of (potential) tax.


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## NickZ (Jun 26, 2009)

If the OP really means living off savings (aka no income at all ) then no taxes to pay. 

If the OP has interest or other investment income I think the reporting level is €1500 a year. So if you had interest below that level you don't need to file a tax form.


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## snikpoh (Nov 19, 2007)

NickZ said:


> If the OP really means living off savings (aka no income at all ) then no taxes to pay.
> 
> If the OP has interest or other investment income I think the reporting level is €1500 a year. So if you had interest below that level you don't need to file a tax form.


Yes, but for obvious reasons THE OP SHOULD!


The benefits are many and the negatives are none


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## annfoto (Aug 19, 2012)

mr_madonna007 said:


> I'm looking to move to Spain next year.
> 
> I will be buying a property outright in Spain after selling my property in the UK. I'm doing lots of research about living in Spain, and making sure it's the right decision.
> 
> ...


The rules in Spain change every year just as in the UK (i.e. the budget), the biggest change last year was the re-introduction of Wealth tax. It only affects the very wealthy, over €600,000 in investments in addition you get a further €300,000 to set against your house and it is double that if you are married.

You may get a tax rebate every year therefore it would probably be to your advantage to submit a tax return. 

You should advise any savings accounts you have in the UK that you are tax resident in Spain and ask that the interest is paid gross (no tax deducted) you should declare this interest on your Spanish tax return.

Any tax on interest deducted from cash in a Spanish bank account will be refunded if your total annual income is less than your personal allowance.

If you do decide to teach your income will be taxed if you earn more than your personal allowance.


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## xabiaxica (Jun 23, 2009)

annfoto said:


> The rules in Spain change every year just as in the UK (i.e. the budget), the biggest change last year was the re-introduction of Wealth tax. It only affects the very wealthy, over €600,000 in investments in addition you get a further €300,000 to set against your house and it is double that if you are married.
> 
> You may get a tax rebate every year therefore it would probably be to your advantage to submit a tax return.
> 
> ...


also, if teaching as self-employed, he'd need to register as such & pay NI of +/- 260€ a month.....or more depending how old he is


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## gus-lopez (Jan 4, 2010)

snikpoh said:


> Yes, but for obvious reasons THE OP SHOULD!
> 
> 
> The benefits are many and the negatives are none


Could you explain the benefits to me as you have great difficulty here in making a declaration if it is a nil one ! In fact it is nigh on impossible.


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## xabiaxica (Jun 23, 2009)

gus-lopez said:


> Could you explain the benefits to me as you have great difficulty here in making a declaration if it is a nil one ! In fact it is nigh on impossible.


but it IS possible..........

Stravinsky managed it


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## Stravinsky (Aug 12, 2007)

gus-lopez said:


> Could you explain the benefits to me as you have great difficulty here in making a declaration if it is a nil one ! In fact it is nigh on impossible.


You go to a gestor
You give him your details and figures
He inputs them
He sends it to Hacienda on line
You get a text from Hacienda with a code number
He enters the code on the form
Prints off the form
You take it to the bank and pay if due
End of story

Its online now, and it takes about 10 minutes and costs me €50 for both of us
Everyone has an official proof that you were in the tax system, even if not paying


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## snikpoh (Nov 19, 2007)

Stravinsky said:


> You go to a gestor yes
> You give him your details and figures yes
> He inputs them yes
> He sends it to Hacienda on line yes
> ...


Our process if quite similar - see above in red

another benefit (apart from death tax) is capital gains tax


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## gus-lopez (Jan 4, 2010)

snikpoh;900868
another benefit (apart from death tax) is capital gains tax[/QUOTE said:


> neither of which apply here, unfortunately !


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## snikpoh (Nov 19, 2007)

gus-lopez said:


> neither of which apply here, unfortunately !


... really, are you not planning to die then:confused2:

If you are not fiscally resident, then you don't get any of the deductions (and so have to pay loads more tax).


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## NickZ (Jun 26, 2009)

If you aren't fiscally resident you only pay tax on Spanish income. If the OP isn't working or earning anything then what is he paying tax on?

Even if he has Spanish dividend paying stocks the with holding on non Spanish residents is IIRC 21% versus at least 21% for Spanish residents with investment income below €6K or the higher level for those above.

Plus IIRC current rumours are the Spanish government is considering taxing capital gains for high earners at the normal income rate. At least if you believe the papers.


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## snikpoh (Nov 19, 2007)

NickZ said:


> If you aren't fiscally resident you only pay tax on Spanish income. If the OP isn't working or earning anything then what is he paying tax on?
> 
> Even if he has Spanish dividend paying stocks the with holding on non Spanish residents is IIRC 21% versus at least 21% for Spanish residents with investment income below €6K or the higher level for those above.
> 
> Plus IIRC current rumours are the Spanish government is considering taxing capital gains for high earners at the normal income rate. At least if you believe the papers.




Are you sure that you have this correct? You say - if you are NOT a Spanish tax payer, then you pay Spanish tax on Spanish income ...??!!

Another scenario that is very common with ex-pats - live in Spain, have money in UK gaining interest. This money MUST be declared in Spain and must have tax paid on it - irrespective of whether they pay tax on it in UK or not.

The way investment income is calculated in Spain (if it is held within an approved Spanish wrapper) is quite different to how you might think. For example, you only pay tax on a percentage of the money that is drawn from the portfolio. You do NOT pay tax on the entire gain.


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## gus-lopez (Jan 4, 2010)

snikpoh said:


> ... really, are you not planning to die then:confused2:
> 
> If you are not fiscally resident, then you don't get any of the deductions (and so have to pay loads more tax).


What deductions ? With CGT the allowances are equal whether resident or non-resident anything else being illegal under EU rules. 

The same with death duties in Murcia . There is no increased amount for resident, non-resident , spaniard or foreigner. It is the flat 16k & there is no relief between spouses.
If anything happens & you aren't a fiscally registered resident & should be you will be taxed to ensure that you pay the most to the spanish government.


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## NickZ (Jun 26, 2009)

snikpoh said:


> Are you sure that you have this correct? You say - if you are NOT a Spanish tax payer, then you pay Spanish tax on Spanish income ...??!!
> 
> Another scenario that is very common with ex-pats - live in Spain, have money in UK gaining interest. This money MUST be declared in Spain and must have tax paid on it - irrespective of whether they pay tax on it in UK or not.
> 
> The way investment income is calculated in Spain (if it is held within an approved Spanish wrapper) is quite different to how you might think. For example, you only pay tax on a percentage of the money that is drawn from the portfolio. You do NOT pay tax on the entire gain.


If you own Spanish dividend paying stocks the Spanish company will withhold a certain amount. This year it's 21% (IIRC) used to be less. If you receive interest from a Spanish source they should also be with holding some money.

http://www.santander.com/csgs/Stati...pdf&SSURIapptype=BlobServer#satellitefragment

That for example is the info from Santander to it's UK shareholders.
The second scenario is somebody fiscally resident in Spain. Two different cases.

Wrapper? Sounds like some sort of closed pension account?


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## snikpoh (Nov 19, 2007)

NickZ said:


> If you own Spanish dividend paying stocks the Spanish company will withhold a certain amount. This year it's 21% (IIRC) used to be less. If you receive interest from a Spanish source they should also be with holding some money.
> 
> http://www.santander.com/csgs/Stati...pdf&SSURIapptype=BlobServer#satellitefragment
> 
> ...



Yes we hold UK Santander shares as well so I am aware of tax deducted at 21%.


Wrappers are tax efficient vehicles for holding funds - see here wrappers


Please note that I am not an IFA nor am I associated with any financial company.


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