# Expats in Spain face new tax reporting requirements



## redshoes (Jan 1, 2013)

I just read this article on the Forum News.

Does anybody know at what rate assets will taxed? I took early pension here so I'm taxed at a low rate. Are pensjonists in Spain taxed at a lower rate?
I plan to leave most of my assets in Norway, where I already pay tax on them, at least to begin with until I know what I'm doing. So if I was taxed as a resident in Spain I would be taxed twice on the same assets? Which doesn't seem fair. I'm quite happy to pay my fair share of tax, but of course I don't want to pay double taxes.

I wonder how the spanish government will find out about assets abroad?


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## xabiaxica (Jun 23, 2009)

redshoes said:


> I just read this article on the Forum News.
> 
> Does anybody know at what rate assets will taxed? I took early pension here so I'm taxed at a low rate. Are pensjonists in Spain taxed at a lower rate?
> I plan to leave most of my assets in Norway, where I already pay tax on them, at least to begin with until I know what I'm doing. So if I was taxed as a resident in Spain I would be taxed twice on the same assets? Which doesn't seem fair. I'm quite happy to pay my fair share of tax, but of course I don't want to pay double taxes.
> ...


how will they find out?


you're obliged to tell them - however if there's a tax treaty with the country concerned you won't pay more tax - you might even get a rebate if tax rates are lower here than in Norway!!


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## CapnBilly (Jun 7, 2011)

The new law is to ensure you are declaring all the income that the assets may generate. There are no new taxes that have to be paid. There is a double tax agreement between Spain and Norway, so any tax already paid in one country can be offset in the other. However, in general you cannot choose where you pay tax. If you are fiscally resident in Spain, you should declare and pay tax on your worldwide income. The fines if they discover you have undeclared assets are punitive.


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## Stravinsky (Aug 12, 2007)

OK, Ive gone into this at length

It is a reporting decree, that means that they want to know of your assets and investments abroad THAT ARE IN EXCESS OF €50k

That is individually Bank accounts and investments of €50k, and separately property of €50k

So if you have bank accounts and investments of €49k and a propertry of €150k then you only need to declare the property under this decree.

Thats how the gestor has been informed anyway, but as we know in Spain things change by the day!


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## CapnBilly (Jun 7, 2011)

That's exactly what the new law says, so unless they amend it, then it shouldn't change. LOL

The reporting form has not been issued yet, although there is a draft on the website, but it reads more like an IT specification. As far as I could tell it is compulsory to report electronically I.e online ( but I might be wrong on that - it was my reading of the rules). 

The first reporting date has been extended to 30th April


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## Stravinsky (Aug 12, 2007)

CapnBilly said:


> That's exactly what the new law says, so unless they amend it, then it shouldn't change. LOL


You're right
The law shouldn't change, but how the thousands of individuals interpreting it might


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## snikpoh (Nov 19, 2007)

CapnBilly said:


> That's exactly what the new law says, so unless they amend it, then it shouldn't change. LOL
> 
> The reporting form has not been issued yet, although there is a draft on the website, but it reads more like an IT specification. As far as I could tell it is compulsory to report electronically I.e online ( but I might be wrong on that - it was my reading of the rules).
> 
> The first reporting date has been extended to 30th April




or should that read latest?


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## donk (Jan 19, 2013)

Ive got a house worth 230k in UK which Im renting out - I dont mind paying the tax to Spanish tax authorities as long as Mr HMRC is happy with that. Does anyone know of a good English-speaking accountant in Benalmadena area whom I can engage to look after my tax affairs?


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## CapnBilly (Jun 7, 2011)

There was an interesting issue came up on another forum, when we were discussing gifts. Whenever I've read about gifts in Spain, I've always read about Inheritance and Gift tax together, and I mistakenly thought that the allowances were the same. i.e if you gave someone a gift of cash, then although they are liable for the tax, not you, they would at least receive an allowance. However, I have now discovered that this is not the case, and lifetime gifts have no allowance. This means if you give your partner €10k, it is taxable. Having said that, I'm pretty certain nobody declares, and if its only €10k (only -LOL), how would they know.

However, that got me thinking, and I realised that, unless I have misunderstood the situation, there is a ticking time bomb under the new rule, if you're not careful.

In the UK, there is no problem transferring assets between spouses. So, for example, as a lot of our income is in my name (private pension etc), we generally kept the majority of our assets in my wifes name, so got the benefit of the tax allowances to offset against interest. 

So, if a couple have say €50k in their own name in the UK, this would be declarable under the new rules. If one of the partners then transferred say €25k to the other – say you had a deposit maturing, and the others account can receive funds and gain better rate. At the end of the year, the total would still be €100k (as a couple), but split €25k/€75k. If my understanding is correct, then the one with €75k would need to declare the new figure (as its gone up more than €20k), and presumably, if they hadn’t declared any income, they could be asked where the cash was from, and at best end up paying gift tax on the amount transferred, and at worst lose the lot from being fined. In addition, the need to report kicks in when the initial balance reported goes up by €20k, so could be a transfer of just €5k a year, for 3/4 years. I think it would be okay if all the funds were in joint names.

I might be wrong, but that's my reading of this.


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## Stravinsky (Aug 12, 2007)

Values for arguments sake

If I have €49k in bank accounts and investments and I have a house worth €51k then I have to declare the house but not the investments

If "we" have €90 k between my wife and I in different names in investments and bank accounts and thats split €51k / €38k then the higher declares, the lower doesnt.

I'm not sure what you do when you have a property that is joint owned 50/50 and the value is for instance €95k


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## CapnBilly (Jun 7, 2011)

Stravinsky said:


> Values for arguments sake
> 
> If I have €49k in bank accounts and investments and I have a house worth €51k then I have to declare the house but not the investments


Agreed, but note investments e.g shares, are class 2 - I think.



Stravinsky said:


> If "we" have €90 k between my wife and I in different names in investments and bank accounts and thats split €51k / €38k then the higher declares, the lower doesnt.


Agreed assuming all are class 1 but if P1 (with €51k) transfers €13k to P2, then P2 has to declare cos its over €50k. 



Stravinsky said:


> I'm not sure what you do when you have a property that is joint owned 50/50 and the value is for insance €95k


I think (but I'm not 100% certain) that joint names is split 50/50.


Ooh, its all very complicated.


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## Stravinsky (Aug 12, 2007)

CapnBilly said:


> Agreed, but note investments e.g shares, are class 2 - I think.
> 
> 
> 
> ...


Lets face it mate ....... you and I both know that this will be a complete and utter nightmare because even when its been decided for sure, the individual tax offices wont understand it in the same way


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## CapnBilly (Jun 7, 2011)

Just reread the law again, and for property (and also the other classes)it says

No existirá obligación de informar sobre ningún inmueble o derecho sobre bien inmueble cuando los valores a que se refieren los apartados 2.d), 3 y 4 no superasen, conjuntamente, los 50.000 euros


which translates as

There will be no obligation to report on any property or interest in real property when the securities referred to in paragraphs 2.d), 3 and 4 did not exceed, jointly 50,000 euros

Think the key words here are 

no superasen, conjuntamente - did not exceed, jointly

Now, what on earth does that mean ?. 

Literally, it could be read as the reporting limit is €50k even when its held jointly.

Probably best to lie down in a darkened room, with a towel over your head


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## Stravinsky (Aug 12, 2007)

CapnBilly said:


> Probably best to lie down in a darkened room, with a towel over your head


I'm already doing it


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## baldilocks (Mar 7, 2010)

CapnBilly said:


> Just reread the law again, and for property (and also the other classes)it says
> 
> No existirá obligación de informar sobre ningún inmueble o derecho sobre bien inmueble cuando los valores a que se refieren los apartados 2.d), 3 y 4 no superasen, conjuntamente, los 50.000 euros
> 
> ...


I think you'' find that it means "taken altogether, do not exceed..." In other words if you take them all together, the value (of them all added together) does not exceed...


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## CapnBilly (Jun 7, 2011)

Thanks Baldi, thats very helpful, so it doesn't mean jointly, as in with someone else ?


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## CapnBilly (Jun 7, 2011)

The reporting model as been released now, with some information on reporting.

The biggest surprise (well to me anyway) anyway is that for deposits and property you have to report over €50,000 even in joint names. So if you have €60,000, it's not €30,000 each, you both report €60,000 and put your share.

The other key point, they are very specific about is unreported income -this is a translation, but you can get the gist.

In the event that the Model 720 is present on any of the reporting requirements on assets and rights located abroad, could we check whether they match income declared? What if income corresponding to undeclared could regulate?

Yes, you could check the property and rights declared corresponds to income subject to having been declared, and if it is found that stem from unreported income could be regularized in accordance with current regulations.


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## donk (Jan 19, 2013)

Hi CapnBilly - this is only for those people in Spain for more than 183 days though? - if you are there for less than this amount you dont have to register for tax or even declare? - am I correct with this assumption?


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## xabiaxica (Jun 23, 2009)

donk said:


> Hi CapnBilly - this is only for those people in Spain for more than 183 days though? - if you are there for less than this amount you dont have to register for tax or even declare? - am I correct with this assumption?


yes that's right, unless you own property here, in which case there is a non-resident tax on the property


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## donk (Jan 19, 2013)

...which I will by the end of the year hopefully! Is that property tax a % of the value like the UK council tax? If so could u tell me how much pls?


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## Overandout (Nov 10, 2012)

Well that's ruined my plans to not declare anything !

I was hoping that by dividing the value of the asset between the two "titulares" I would be able to avoid the obligation, but this is clearly not the case. We both have to declare the same account with our proportional share.

So now I am wondering: 

In my declaraciones de la renta I have habitually simply located the section where my interest accrued in my Spanish account was automatically entered and manually increased this amount by the amount of interest accrued in my UK accounts. That way I am declaring both the Spain and UK gained interests, but how do I now prove that the adjustment made to that amount corresponds to the UK account that I am forced to declare?

I am not very worried about the fact that I have gained a small amount of interest from the UK accounts because I have declared it, but I am worried that I perhaps haven't declared it the right way.


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## Stravinsky (Aug 12, 2007)

Overandout said:


> Well that's ruined my plans to not declare anything !
> 
> I was hoping that by dividing the value of the asset between the two "titulares" I would be able to avoid the obligation, but this is clearly not the case. We both have to declare the same account with our proportional share.
> 
> ...


Well ... add to that for instance that the way our finances are configured, we don't actually _need _to put in a tax return in Spain because we are below the limit. In fact I am still registered for tax in the UK (unlike my wife) because when I tried to change it, it was rejected because I didnt have a pension or income! So I haven't declared the pittance of an interest figure we get from the UK, and it's already taxed in the UK at source anyway.


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## mike kelly (Aug 12, 2009)

does this affect people who own property in Spain but are fiscally resident in another EU country?


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## xabiaxica (Jun 23, 2009)

mike kelly said:


> does this affect people who own property in Spain but are fiscally resident in another EU country?


no, although you are subject to non-resident taxes


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## gus-lopez (Jan 4, 2010)

Well having had a good look at it all & fortunately not needing to comply with any of it , it looks to me that eventually it will become a nightmare , especially if you even inadvertently forget to declare something ! They'll be looking to tuck you up.

I can understand the reasoning but if they want the property details it is only to ensure that when someone dies/inherits they can get there tax ! 
To actually list all & every bank account & remember that if , for instance, there is 60k in a joint account you have Both got to report the full amount & give the % which is yours !! & rely on them , I don't think so. 
To actually have to give full account numbers, IBAN & BIC is to me exceedingly worrying. 
I look at it this way. Would I knowingly, & of sound mind , give all that info over the internet ( which is the only way of doing it ) to some Russian tat-peddlers ?? Hmm, I don't think so & this lot are basically on par with them. None can be trusted to lie in bed straight !


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## CapnBilly (Jun 7, 2011)

gus-lopez said:


> Well having had a good look at it all & fortunately not needing to comply with any of it , it looks to me that eventually it will become a nightmare , especially if you even inadvertently forget to declare something ! They'll be looking to tuck you up.
> 
> I can understand the reasoning but if they want the property details it is only to ensure that when someone dies/inherits they can get there tax !!


Or, their capital gains when you sell it.!. 



gus-lopez said:


> To actually list all & every bank account & remember that if , for instance, there is 60k in a joint account you have Both got to report the full amount & give the % which is yours !! & rely on them , I don't think so.
> To actually have to give full account numbers, IBAN & BIC is to me exceedingly worrying.
> I look at it this way. Would I knowingly, & of sound mind , give all that info over the internet ( which is the only way of doing it ) to some Russian tat-peddlers ?? Hmm, I don't think so & this lot are basically on par with them. None can be trusted to lie in bed straight !


I agree Gus, the problem is, if you have to make a return, you have no choice, the penalties are draconian. I've seen posts where people say, just do as the Spanish do, ignore it, and do nothing. Personally I think that's bad advice, unless you have something to hide. The other problem is, if you have been reporting properly, they already have information about that they can use to check. Say you have €50k, you can more or less estimate the level of return, so if you have declared that properly, they can flag it up, through various algorithms, and if you haven't declared it, then, that's painful. On the other hand, if you haven't declared any income, and you declare the asset, then they'll be after you for the undeclared income. 

Seems to me that you can be caught between a rock and hard face.


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## Stravinsky (Aug 12, 2007)

I've been to see a well know tax gestor here today.

It appears that you can be a resident in Spain and NOT be a fiscal tax resident at the same time ... which makes logical sense when you think about it. In which case you wouldnt need to declare assets in the UK, and you woulnt have to pay non resident tax on your Spanish home


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## CapnBilly (Jun 7, 2011)

Stravinsky said:


> I've been to see a well know tax gestor here today.
> 
> It appears that you can be a resident in Spain and NOT be a fiscal tax resident at the same time ... which makes logical sense when you think about it. In which case you wouldnt need to declare assets in the UK, and you woulnt have to pay non resident tax on your Spanish home


Presumably that's on the basis that you're on the register because you're here more than 90 days, but not here 183 days, which has always been our understanding. Notwithstanding the points about spouse and family etc, which I think are valid. 

That's interesting about the non resident tax, although I have to say I personally think its worth paying that. I did that a few years ago, when I needed to be non-resident. However, what I did do (and I'm glad I did now), was register as non-resident by completing a modelo 30. I got a letter from them, and I had to go in and show them my passport, and they stamped my letter confirming I was non-resident. However, for my wife I had to get a certificate of fiscal residence from HMRC (I just wrote and said we were tax resident that year) which took a couple if weeks, took that in, and they stamped her letter. 

When we became resident again, I just submitted a new modelo 30.


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