# How to prove no rent being charged?



## Jasmina (Sep 5, 2012)

Hi, we have reluctantly decided to resume our UK fiscal residency and are now tryingto get our heads round the ramifications :

1 we have a property here to which we will restrict our visits to fewer than 183 days pa

2 we have a cat which we will leave here as our place in UK is a top floor flat and she has only known the campo

3 we will use pet-sitter websites, as we have been doing with great success over the past few years, to care for the cat and our property. They pay us nothing except for electricity and gas. We get a cared for cat and less chance of domestic disasters or robberies.

4 as Iberdrola will pass on our bills to Hacienda et al, how can we convince Hacienda that that we are not outstaying our days nor are we illegally renting out the house?

Any suggestions would be most welcome (apart from " Take the cat with you".) we thought we might bureaufax them in advance, get sitters to sign a declaration, take a webshot of their posting saying they don't charge for their services.......


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## snikpoh (Nov 19, 2007)

Jasmina said:


> Hi, we have reluctantly decided to resume our UK fiscal residency and are now tryingto get our heads round the ramifications :
> 
> 1 we have a property here to which we will restrict our visits to fewer than 183 days pa
> 
> ...



That's why it's called IMPUTED rental - that is, even if you don't take rental for the property, you could have done. As a consequence, they will tax you as though you did.

If you are non-resident in Spain, yet have a property here, you will be charged rental tax no matter what.

In regards to proof that you are not here for more than 182 days, keep all ferry tickets, plane tickets etc.


By-the-way, I think your 'cat/house sitter' is on to a fantastic deal. I would be surprised if hacienda believed no money was changing hands for such a deal.

Presumably, as you are employing the services of your cat-sitter, they are full declared as autonomo and are paying taxes in Spain etc.


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## Jasmina (Sep 5, 2012)

snikpoh said:


> That's why it's called IMPUTED rental - that is, even if you don't take rental for the property, you could have done. As a consequence, they will tax you as though you did.
> 
> If you are non-resident in Spain, yet have a property here, you will be charged rental tax no matter what.
> 
> ...


I thought tax paid by non residents on imputed tax was at a lower rate than than on actual rental.

FYI there are several sites where you can find sitters on these terms though I'm not allowed to post them here, I guess. No rent is charged or paid so we are not employing them in any way. They do not need to get embroiled in the Spanish system as they are only here for a few weeks at a time.


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## snikpoh (Nov 19, 2007)

Jasmina said:


> I thought tax paid by non residents on imputed tax was at a lower rate than than on actual rental.
> 
> FYI there are several sites where you can find sitters on these terms though I'm not allowed to post them here, I guess. No rent is charged or paid so we are not employing them in any way. They do not need to get embroiled in the Spanish system as they are only here for a few weeks at a time.


No, last year and this year it's 24.75%

Tax base: 2% of the cadastral value of the property (found on the IBI receipt), or 1.1% if the cadastral value has been revised since 1st January 1994. Tax rate: 24% (temporarily increased to 24.75% for 2012 &2013). 

For example;
Cadastral value of property = 200,000 Euros
Base = 2,200 Euros
Tax = 24% x 2,200 Euros = 528 Euros (or 24.75% x €2,200 = €544.50 in 2012 & 2013)


Regarding cat sitters in general, as you are employing them to work at your property (all be it that they are actually employed by someone else), I think you need to have liability insurance in case any thing happens to them. You certainly are employing them - by the letter of the law any way.

As an example, I contacted a company to install guttering. The people who came were autonomo (as are most people in this type of work). Unfortunately one of the men fell off a ladder and broke his arm. It subsequently turned out that I was liable as he was, in effect, working for me on my property!

Regardless of whether they are employed or not, and going back to your original question, you will need to pay tax on the imputed rent as you are non-resident.


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## Jasmina (Sep 5, 2012)

snikpoh said:


> No, last year and this year it's 24.75%
> 
> Tax base: 2% of the cadastral value of the property (found on the IBI receipt), or 1.1% if the cadastral value has been revised since 1st January 1994. Tax rate: 24% (temporarily increased to 24.75% for 2012 &2013).
> 
> ...


Thanks for your posting. We're happy to pay non res property tax, imputed or not.
The sitters are not employed by anyone. They want to spend time in a country as cheaply as possible and agree to look after your place in return for staying rent free. As guests they are responsible for any injuries/ accidents that might befall them whilst staying at your property. It's a very widely used scheme, world wide.


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## NickZ (Jun 26, 2009)

Are you currently resident?

From what I see

1) You'll still have a home available to you in Spain

2) You're keeping personal effects including a pet in Spain

They could still claim you resident.

Instead of worrying about rent etc see if the UK tax agency will give you a certificate of residence. 

https://online.hmrc.gov.uk/shortfor...-name=&location=26&origin=http://www.hmrc.gov

That seems like the form you need to fill out.


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## snikpoh (Nov 19, 2007)

.... but you'd still have to pay the non-resident property tax if they do give you the certificate.

If they don't, as a Spanish resident, what tax liabilities might you have? This could be a cheaper option for you.


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## NickZ (Jun 26, 2009)

The same ones they've had up to now. No?

I'm just saying the simplest way to make the tax man happy is to have the right piece of paper . Far better then trying to count days etc and hoping that's enough to keep everybody happy.


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## Jasmina (Sep 5, 2012)

NickZ said:


> The same ones they've had up to now. No?
> 
> I'm just saying the simplest way to make the tax man happy is to have the right piece of paper . Far better then trying to count days etc and hoping that's enough to keep everybody happy.


The whole residency thing is a quagmire. The UK has just issued new guidelines which run to 55 pages......
We just need to reestablish UK residency early 2014. The whole 720 furore has focussed our minds on our situation vis a vis inheritance tax which I would face as a Spanish res but avoid almost completely as UK res. we've decided we just don't want to hand the Spanish govt a big chunk of family money to be wasted on another vanity project or to be fruadulently wasted. It's sad as we've loved living here and had expected to do so for sometime to come. From next year Spain will be our holiday home.


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## Goldeneye (Nov 12, 2011)

Jasmina said:


> The whole residency thing is a quagmire. The UK has just issued new guidelines which run to 55 pages......
> We just need to reestablish UK residency early 2014. The whole 720 furore has focussed our minds on our situation vis a vis inheritance tax which I would face as a Spanish res but avoid almost completely as UK res. we've decided we just don't want to hand the Spanish govt a big chunk of family money to be wasted on another vanity project or to be fruadulently wasted. It's sad as we've loved living here and had expected to do so for sometime to come. From next year Spain will be our holiday home.


That's a interesting point, so any inheritance from a family member living in UK (ie) parents would be taxed on the full amount? 
Isn't there a tax threshold like in the UK ?


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## NickZ (Jun 26, 2009)

Jasmina said:


> From next year Spain will be our holiday home.



I'll try again. To change residency you need to make a definitive break with your old country and establish a new one some place else. If you keep a home and personal items they could easily decide you haven't made a real break. 

The form I posted doesn't seem that complicated. If you fill that out and the UK gives you a residence certificate it won't matter how many days you spend in Spain or other issues.


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## Pesky Wesky (May 10, 2009)

Jasmina said:


> I thought tax paid by non residents on imputed tax was at a lower rate than than on actual rental.
> 
> FYI there are several sites where you can find sitters on these terms though I'm not allowed to post them here, I guess. No rent is charged or paid so we are not employing them in any way. They do not need to get embroiled in the Spanish system as they are only here for a few weeks at a time.


I think you can, especially if it's not just one company that you provide a link to. Some links have been given on the site before anyway.
The companies do exist, and I think you pay to register on the site and then no money is exchanged between house sitter and house owner. May seem strange to some, but meanwhile loads of people are "on to a good thing" and enjoying time in someone else's house!!


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## Goldeneye (Nov 12, 2011)

Pesky Wesky said:


> I think you can, especially if it's not just one company that you provide a link to. Some links have been given on the site before anyway.
> The companies do exist, and I think you pay to register on the site and then no money is exchanged between house sitter and house owner. May seem strange to some, but meanwhile loads of people are "on to a good thing" and enjoying time in someone else's house!!


It actually works out very well for both concerns; we own a high end 4,800sq ft house, for the past 4 years have used a house/pet sitter while we've been away.
Over the past 3 years she has spent 5 months at a time in our home. 
.
It's peace of mind knowing that our 3 cats are well taken care of and not having to be put in some strange cattery. 
.
The sitter can establish a relationship with the cats so they really don't miss us. Yes, so she gets to live 'rent free' but we feel a great weight lifted in that we are free to travel, It also enables me to continue working in a different City without going through the expense and upheaval of what would be just a temporary move.


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## Jasmina (Sep 5, 2012)

Goldeneye said:


> That's a interesting point, so any inheritance from a family member living in UK (ie) parents would be taxed on the full amount?
> Isn't there a tax threshold like in the UK ?


There is a threshold but it is very low. There's info re inheritance law in Spain on the expat forums. In essence I could end up losing 25% of any inheritance ....


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## Jasmina (Sep 5, 2012)

NickZ said:


> I'll try again. To change residency you need to make a definitive break with your old country and establish a new one some place else. If you keep a home and personal items they could easily decide you haven't made a real break.
> 
> The form I posted doesn't seem that complicated. If you fill that out and the UK gives you a residence certificate it won't matter how many days you spend in Spain or other issues.


Thanks for the link. We had already decided to do this. We have been fiscal residents here, BTW, whilst keeping property in Uk so it is possible.
Very interested in idea that a res cert from UK will mean we don't have to worry so much about counting days......


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## Pesky Wesky (May 10, 2009)

Goldeneye said:


> It actually works out very well for both concerns; we own a high end 4,800sq ft house, for the past 4 years have used a house/pet sitter while we've been away.
> Over the past 3 years she has spent 5 months at a time in our home.
> .
> It's peace of mind knowing that our 3 cats are well taken care of and not having to be put in some strange cattery.
> ...


A while ago someone posted about wanting to participate in this kind of set up and my initial response was yeah, right, but now I've seen the sites and it looks great!

PS Good signature


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## Goldeneye (Nov 12, 2011)

Jasmina said:


> There is a threshold but it is very low. There's info re inheritance law in Spain on the expat forums. In essence I could end up losing 25% of any inheritance ....


OK ~ this is off your original topic & may sound dumb, wouldn't any estate be taxed in that persons country of residence eg UK and not Spain.. What am I missing here? 
It's taxed again once you receive it?


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## snikpoh (Nov 19, 2007)

Goldeneye said:


> OK ~ this is off your original topic & may sound dumb, wouldn't any estate be taxed in that persons country of residence eg UK and not Spain.. What am I missing here?
> It's taxed again once you receive it?


If you are resident in Spain and inherit something in UK, then you are taxed here in Spain (and maybe in UK as well).


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## Jasmina (Sep 5, 2012)

snikpoh said:


> If you are resident in Spain and inherit something in UK, then you are taxed here in Spain (and maybe in UK as well).


In the UK the estate of the deceasedis taxed....after a certain,prettyhigh, allowance. In Spain the inheritor is taxed. Can't remember precisely but the allowance is less than 20k€
As these are 2 different types of taxes double taxation agreement does not apply


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## snikpoh (Nov 19, 2007)

Jasmina said:


> In the UK the estate of the deceasedis taxed....after a certain,prettyhigh, allowance. In Spain the inheritor is taxed. Can't remember precisely but the allowance is less than 20k€
> As these are 2 different types of taxes double taxation agreement does not apply


But in Spain, this is a regional tax so the rules vary. Allowances in Valencia region are about 99% (providing you meet the criteria).

I am also reliably informed that one CAN offset IHT against succession tax (again certain conditions may need to prevail).


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## Jasmina (Sep 5, 2012)

snikpoh said:


> But in Spain, this is a regional tax so the rules vary. Allowances in Valencia region are about 99% (providing you meet the criteria).
> 
> I am also reliably informed that one CAN offset IHT against succession tax (again certain conditions may need to prevail).


Does this apply to overseas assets inherited by spanish resident? I can't find any specific mention of this on the web.


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## bob_bob (Jan 5, 2011)

Jasmina said:


> In the UK the estate of the deceasedis taxed....after a certain,prettyhigh, allowance. In Spain the inheritor is taxed. Can't remember precisely but the allowance is less than 20k€
> As these are 2 different types of taxes double taxation agreement does not apply


UK Inheritance tax starts when you inherit over £325k / C$500k HM Revenue & Customs: Inheritance Tax - the basics


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## Jasmina (Sep 5, 2012)

bob_bob said:


> UK Inheritance tax starts when you inherit over £325k / C$500k HM Revenue & Customs: Inheritance Tax - the basics


Thanks, but what I want to know is whether Valencian inheritance tax allowances apply on an inheritance in another country. I guess we'll just ask our tax advisor, after the April 30 th rush has cleared from his office!


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