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Spanish non-disclosure no-nos
January 24, 2013
• LAST EDITED:
January 24, 2013
Business & Finance • 17 Comments
• 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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