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Spanish non-disclosure no-nos

PUBLISHED: January 24, 2013 at 1:00 pm  •  LAST EDITED: January 24, 2013 at 1:00 pm
Business & Finance  •  17 Comments


Spanish non-disclosure no-nos

• Richard Alexander


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THE potential cost of non-disclosure of overseas assets by expats who are officially resident in Spain could be more than the value of the assets themselves.

Under new rules which took effect on January 1, any assets held overseas with a value of €50,000 or more need to be declared by March 31 2013 to avoid the risk of receiving a heavy fine.

For example, an undisclosed investment of €200,000 would be taxed at 52% (€104,000).

But the penalty could be up to an eye-watering 150% of the tax, a further €156,000, which would not only wipe out your investment but leave you owing the tax office a further €60,000.

On that basis non-disclosure is simply not worth the risk.

If you have several different offshore bank accounts all with a balance under the €50,000 threshold, be warned.

If collectively the balances exceed that figure, you are required to disclose account numbers and details of the balances as of December 31 2012, or the average balance over the last three months of the year if that figure is higher.

The different asset classes that the new legislation applies to are: cash on deposit, real estate, stocks & shares and collective investments.

If you are named as the beneficiary to any trusts, these amounts will also need to be declared as the Spanish legal system does not recognise trusts as having a legal status of their own.

The Spanish tax authorities are clamping down on non-disclosure of worldwide assets by tax residents and so there is no time to delay in dealing with the matter.

You should speak to your tax adviser in Spain to ensure that you are fully compliant with these requirements.

These new requirements should also focus your attention on whether your investments are held in the most appropriate way.

For example, if you have money on deposit, which you do not need on a regular basis for capital or income, then the interest you earn as a Spanish tax resident should be declared and tax paid on it.

However, by investing in a smarter way, you can avoid the need to pay any tax until such time as you need to draw down some of the money.

This is not complicated financial planning but simply using some tried and tested tax compliant methods, which are designed to defer tax until you make a withdrawal.

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Reader Comments »



Matilda

February 1st, 2013 1:01 pm

Why don’t the spanish start with taxing their own, people who have never paid any tax? I’m off.

Fred

February 1st, 2013 10:05 pm

Another reason to buy a nice little place in the Cotswalds. Honestly, living in Spain now is a hassle and you’ll be jumping through hoops forever if you live here.

ad

February 1st, 2013 10:34 pm

Europe ….& the world is a smaller place..Than it was and authorities are in touch with each other…. BEWARE…!
I recall being summoned to Hacienda some years ago about IVA / VAT for an offshore client…. I denied etc… the Spanish hacienda man quietly angled his computer screen at me and showed me that the information was clearly visible for me to see …the site he was linked to was… HM Customs & Excice….believe me there is nowhere to run these days-or at least it is getting harder and harder….

Bill Stewart

March 15th, 2013 7:22 pm

The deadline for 2012 declarations is 30 April 2013, as this is the first year of the new legislation.

Matilda:- The new law applies to all residents including Spanish citizens, but just you run back home to jolly old Blighty. Same goes for Fred!

Fred

March 15th, 2013 8:18 pm

My accountant has done all my declarations, but thanks for thinking of me Bill. These new laws clearly signal that Spain will soon be bringing in a new wealth tax. Should go down lovely with all the expats and drive even more people away from Spain. Just what they need.

Stuart Crawford

March 16th, 2013 9:51 am

All those who are moaning about the new regs. obviously know nothing about taxation in other EU countries or deliberately are’nt mentioning it because it destroys their argument.

AFAIK only Belgium and Spain don’t tax capital gains – my info comes from a Belgian who used to work at the European Commission and his wife who works in risk management in a big Euro bank.

So Spain is at last coming into line, it can’t be long before the virtually bankrupt Belgium joins as well.

As to the comments about ‘chasing business away’ this is complete rubbish. I used to live in the Netherlands (79/81 and a standing joke was ‘who has the longest arms in the whole world’ answer – the Dutch taxman who quite rightly taxes worldwide income and profits. The Netherlands happens to be one of the richest countries in the world, which destroys this stupid argument Same goes for Norway which did’nt squander it’s oil and gas wealth but created a sovereign wealth fund that all the Norwegian people share – yes I know this is anathema to Thatcherite scum.

Now all that has to happen is to ‘wipe out’ all the tax havens which will leave the venal tax dodgers nowhere left to turn.

To put this into focus if all the tax dodging was stopped dead in the UK the tax take would be £45-50 billion more each year. The difference to life in Spain with all tax loopholes closed down would be immeasurably better for all but this would need a sea-change in mentality – same goes for the UK.

Dodgy Rodge

March 26th, 2013 6:17 pm

My spanish lawyer says this is all rubbish. You have to be a tax resident in Spain to pay tax here. If you pay tax elsewhere, you don’t pay spanish taxes end of story.

Bill Stewart

March 26th, 2013 6:49 pm

Dodgy Rodge. Where does it say otherwise ?

Stuart Crawford

March 27th, 2013 3:37 pm

Dodgy Rodge,
your Spanish Lawyer did’nt mention – Double Taxation Agreements.

If the country you make profits in does’nt have such an agreement you are liable for tax – end of.

Would you really trust anything a Spanish lawyer says?

almeida

March 28th, 2013 9:56 pm

I would be most interested to hear from anyone who has managed to download this new worldwide assets declaration form, if so how did you do it?

Scott

April 4th, 2013 4:27 pm

Hello. I own a property in Spain but am still a tax paying resident of the UK as this is where I domicile. We only use the Spanish house for vacation.
Does this disclosure rule apply??
Many thanks.

Fred

April 4th, 2013 5:28 pm

Scott, only Spanish residents (nationals and foreigners) need to declare any such assets.

pg

April 4th, 2013 9:52 pm

WITH YOU ALMEIDA ! WE CANT GET THE 720 EITHER TRY AS WE MIGHT TO DOWNLOAD IT, AND A VISIT TO THE TAX OFFICES DONT HELP!

almeida

April 5th, 2013 10:06 am

If I had known then what I know now I would never have moved to this corrupt bureaucratic shambles.
My advice to anybody thinking of buying here. Dont!
The very worst decision I have made in my life.
I just cannot think what those poor people who have legal but not legal! Houses, (which now I understand are having electricity and water cut off) are going through, a total bloody nightmare.
Spain can do no wrong in respect of this EU fiasco, great friends, so any help from that department will be non existent.
If I could sell my hovel I would be on the next plane out of here, and not too worried which way it was going.

M in Spain

April 5th, 2013 12:10 pm

First of all, the ‘Property Road Show’, now the ‘Global Road Show’.

Last paragraph:
“We don’t like the macroeconomic risk and we don’t like the regulatory risk,” said Tom Murley, head of renewable energy at private equity fund HgCapital. “We will not put another penny in Spain.”

“http://www.reuters.com/article/2013/04/04/spain-investment-idUSL5N0CR4IF20130404″

I say that, we don’t like the ‘illegal homes’ and the building licences that have been ‘revoked’, unfortunately, we have already invested!

Ian

April 26th, 2013 12:40 pm

If you are in Spain for over 91 days, not consecutive, you are a resident, but non tax paying. However, you still need to register at the police station. If you are living in Spain for more than 182 days, then you are a resident and could be liable to pay your taxes in Spain. You may very well be a UK taxpayer, but that needs to be declared through your gestoria . You can only pay tax once because of the double taxation treaty.
There is a lot of stress in the expat community. Much of that stress is caused by disinformation on the Internet. I have visited expat sites and people are interpreting their own opinions which may be incorrect. Like Mark Twain said, don’t read medical books, you could from a misprint!

Fred

April 26th, 2013 1:46 pm

Went down to my town hall today for a chat with the mayor. He did not even know what a modulo 720 was lol. In Spain everything is on the grapevine and boca a boca. It’s almost as if Spain wants people to fall foul of these laws.




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