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Goldenmaniac
07-01-2013, 18:12
Very informative email from Blevin's Franks



As many of you may have read, the Spanish authorities have been looking at people not paying tax, and, having offered a large carrot (the recent tax amnesty which ended on 30th November), they are now preparing a big stick. Under a new law, introduced as part of Spain's new anti-fraud law, all Spanish residents will be obliged to report all bank accounts and assets situated outside Spain as at 31st December each year.

There are several reported aims of this law. It is designed primarily to ensure that people do not hide their assets; to increase penalties for tax fraud and to help the Spanish authorities increase and improve tax collection. It also eliminates the application of the statute of limitations regarding undeclared assets, so, instead of being able to go back just four years to review unpaid tax, there will now be no limit.

This is simply a requirement to report – it is not a tax form, and in no way does it affect the efficacy of your tax planning through Blevins Franks. As Spanish residents, you are obliged to report your worldwide income, gains and wealth (if they do not fall within any exemptions) to the Spanish tax authorities. If you complete a wealth
tax return, this additional reporting is more of an inconvenience than anything else, as it simply duplicates the offshore assets from the wealth tax return.



Who does it affect?

Any Spanish resident who owns any of the assets listed below, or who is a beneficiary of a trust, as well as Spanish residents who are an authorised signatory of such an account, or where the assets are held by a fiduciary.

So, what do you need to do?

If you are tax resident in Spain and fall into the above categories and hold the assets listed below, you will have to declare all the assets you own outside the country. A new official form will be released shortly for this purpose.

This year you can file your report for 31st December 2012 in March or April, with a final deadline of 30th April.



In future years reporting must be done by the end of the first trimester each year, so by 31st March, and you will be able to submit your report anytime in January, February or March.


What do you need to declare?



If you own any of the following assets outside Spain, valued at €50,000 or more per asset class, you need to declare them.


Accounts held with financial institutions

All types of immovable property (real estate) and rights over such property

Shares and securities



Life insurance policies


Temporary or lifetime income generated from the lending of money, rights or other assets (including immovables) to foreign entities.

If the total value of your assets in each class is less than €50,000, you are not obliged to report. For example, if you have four bank accounts worth €10,000 each, you do not have to report, but if you have one bank account with €55,000 deposited or six bank accounts worth €10,000 each, you do have to report.

Once you have reported the assets the first time, you do not need to report them again each year provided the value of all your reportable assets has not increased by €20,000 or more. Where their value has increased by more than €20,000, you will need to report them again by the next annual deadline. This only applies to this reporting form – if you fall within wealth tax, you need to report accurate values each year on the wealth tax return.

So, if you have a Private Client Portfolio or Trust with Blevins Franks, you need to declare this asset on the reporting form. If you are one of a group of beneficiaries, please contact your Blevins Franks Partner to discuss this with them.

What values do I use?

The value to be reported for accounts with financial institutions, shares, securities, life insurance policies and other assets is that at 31st December.

In the case of accounts with financial institutions, you also need to report the average balance over the last three months of the year. This category includes all types of bank accounts and deposits, including credit accounts, in all currencies, regardless of whether you have the right to withdraw the funds or not.

For immovable property, the value is the cost of acquisition. You also need to provide information on the type of property, its location and date of acquisition.

What happens if I do not report?


If you fail to report any assets as required by the new law, penalties will be imposed if the omission is discovered. No-one should try to hide assets. Spanish residents are obliged to declare their worldwide income and assets, and there is a high level of exchange of information between countries these days. The penalties for failing to report are very high.

You would have to pay all of the following:


Income tax at the income tax scale rates even if the income would
normally be taxed under the savings income regime. The top rate
of these is over 50% compared to 27% under the savings income
regime.



Plus late payment interest for the last four years.


Plus penalties, which can be as high as 150% of the total tax due on
the asset.



Plus a fine of €5,000 per each piece of unreported data, with a
minimum fine of €10,000.


The undeclared income arising from the asset will be deemed to arise in the last tax year which is not statute barred – four years in most cases. This effectively abolishes the statute of limitations.



Summary


So, overall, this is likely to be inconvenient, especially if you do make a Spanish wealth tax declaration as you are simply repeating part of that declaration, but at the end of the day, that is all it is – further paperwork. This does not change what you have, or how it is taxed in Spain, and certainly does not change how beneficial your Blevins Franks tax planning is for you nor the importance of investing in a tax efficient way, something that we specialise in advising clients on.

Please do not hesitate to contact us if you would like further information, or to discuss your investments.




The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.

source:http://s5.newzapp.co.uk/gtp.aspx?LID=OSwzMzgwODg4NTUsMw==

universal
08-01-2013, 17:03
So, having alienated and bankrupted 90% of the ex-pat business community who have attempted to do things by the book in Spain, Hacienda are now having a bash at the non-business ex-pat community.
For retired people, who have worked and paid taxes in their respective countries of origin, it is a bit of a blow when the Spanish tax authorities demand to know all assets held abroad when these will already have been taxed at source.
So far as the heavy handed tactics are concerned, with disconcerting threats of huge amounts in fines, this just demonstrates once more that the administration are completely out of touch with the situation in the real world and have absolutely no idea which way to turn next in order to try and recoup some of the trillions of euros which have been misappropriated by politicians, funcionarios and financiers over the years of the “vacas gordas”.

Goldenmaniac
08-01-2013, 17:35
So, having alienated and bankrupted 90% of the ex-pat business community who have attempted to do things by the book in Spain, Hacienda are now having a bash at the non-business ex-pat community.
For retired people, who have worked and paid taxes in their respective countries of origin, it is a bit of a blow when the Spanish tax authorities demand to know all assets held abroad when these will already have been taxed at source.
So far as the heavy handed tactics are concerned, with disconcerting threats of huge amounts in fines, this just demonstrates once more that the administration are completely out of touch with the situation in the real world and have absolutely no idea which way to turn next in order to try and recoup some of the trillions of euros which have been misappropriated by politicians, funcionarios and financiers over the years of the “vacas gordas”.
Whilst I appreciate the sentiment - if the fiscal resident in Spain has done things correctly in their home country (ie advised that they have moved permanently to Spain) then they will not be being taxed at source in their country of origin - except in certain cases like Functionary's pensions and certain investments, and if they are being taxed there then under double impositions treaties they can not be taxed in Spain again for the same thing so a reclaim is either made from the UK or the double imposition rule kicks in on the declaracion de la renta here.
The difficulties will arise for those who have tried to hide assets from both countries I guess :(

universal
08-01-2013, 18:32
It was not so much the potential tax on investments but the taxes that have already been paid on income in order to obtain the investments originally, as with real estate or shares for example. What additional tax will be payable on these assets and where are they going with "Life Insurance" (Assurance) declaration? Do you have to declare what your beneficiaries will receive in the event of your demise and if so do you have to pay tax on this - and if not why do they want to know?

Goldenmaniac
08-01-2013, 19:31
It was not so much the potential tax on investments but the taxes that have already been paid on income in order to obtain the investments originally, as with real estate or shares for example. What additional tax will be payable on these assets and where are they going with "Life Insurance" (Assurance) declaration? Do you have to declare what your beneficiaries will receive in the event of your demise and if so do you have to pay tax on this - and if not why do they want to know?

Ah right sorry - yes dividends are taxable subject to current regulations - as they are anywhere, and yes 2nd homes of Spanish Fiscal residents, where ever the property(ies) are situated attract deemed income tax here in Spain (unless they are let out for gain in which case under international agreements the tax on that income is payable in the country where the property is located) and yes beneficiaries do have to declare what they receive from the deceased and part of the calculation for inheritance tax is affected by a pre existing wealth value. Why? well the same reason the UK tax office asks their fiscal residents to declare if you they have a property abroad - all of Europe is looking to stamp out tax fraud for the reasons you yourself mentioned above

patrick2976
12-03-2013, 20:32
If anyone has a Spanish compliant portfolio bond with SEB Ireland we have just had it confirmed that there is no requirement to declare under modelo 720 as the life office already includes the bond in their own reporting to Hacienda.
Here is the Q&A from Agencia Tributaria....

Si el obligado tributario sujeto a estas obligaciones de información de bienes y derechos en el extranjero es tomador de un seguro de vida contratado con una entidad aseguradora extranjera que opera en España en régimen de libre prestación de servicios, ¿existe obligación de presentar declaración informativa, Modelo 720, sobre dicho seguro de vida si se cumplen el resto de requisitos para estar obligado a declarar?

Respecto de los seguros de vida que el tomador haya contratado con entidades aseguradoras extranjeras que operen en España en régimen de libre presentación de servicios, no existe obligación de informar sobre los mismos en virtud del artículo 42 ter.3 del Reglamento General aprobado por el Real Decreto 1065/2007, de 27 de julio, siempre que, en cumplimiento de lo establecido en el artículo 39.3.a) del citado Reglamento General, el representante de dichas entidades aseguradoras proporcione a la Administración tributaria la información prevista en el mismo.

hughesandra1
04-04-2013, 11:16
Has anyone successfully completed model 720 as I now understand a "key" has to be obtained from Hacienda to complete the online form ??

patrick2976
04-04-2013, 13:38
You can find a links to the Hacienda pages you need here;
http://finance-spain.com/TaxNewsSpain.html

Goldenmaniac
04-04-2013, 14:48
Has anyone successfully completed model 720 as I now understand a "key" has to be obtained from Hacienda to complete the online form ??

I think this may have been covered elsewhere but anyway - You can only present on line there is no way to present in paper format.
In order to present on line you have to have a digital certificate this can be obtained from various sources see here : http://www.agenciatributaria.es/AEAT.internet/Inicio_es_ES/_Configuracion_/_top_/Ayuda/Certificado_electronico/Como_obtener_un_certificado_electronico/Entidades_emisoras_de_certificados_electronicos_/Entidades_emisoras_de_certificados_electronicos_.s html

One of the easiest is http://www.cert.fnmt.es/ who ever you chose you make application for the electronic (digital) certificate and then attend at one of the authentification points (ie Adeje town hall) to confirm your identity in person, once that is done the digital certificate is live and can be installed on your computer. You can then use it to authenticate presentations to the AEAT like the modelo 720.

If you do not want or can not get a digitial certificate for yourself, then you will need to authorise a representative who does have a digital certificate to act on your behalf, that could be an accountant (contable) or other trusted individual, there is a form for you to sign to say that you have given the representative power to receive your info etc.

If you think you need to present the 720 declaration do something sooner rather than later - even if you go for your own digital certificate it will still take a couple of days to sort out and new representative authorisations take 5 working days to process at the Hacienda. registered accountants will be able to do it quicker.

limmylimoux
08-04-2013, 09:52
We are hoping to move to Tenerife this year. We are both UK pensioners. If we leave the money from the sale of our house in an English bank plus ISA's and other savings and private pension that we have, then become residents of Spain, will we be taxed twice, in UK and in Spain.

We want everything to be legal but don't quite understand who we will pay tax to. Does anyone know the rate of tax in Spain. Help appreciated thanks.

KirstyJay
08-04-2013, 14:01
We are hoping to move to Tenerife this year. We are both UK pensioners. If we leave the money from the sale of our house in an English bank plus ISA's and other savings and private pension that we have, then become residents of Spain, will we be taxed twice, in UK and in Spain.

We want everything to be legal but don't quite understand who we will pay tax to. Does anyone know the rate of tax in Spain. Help appreciated thanks.I've merged your thread with an existing one that was only about 3 threads below yours. Have a read through some of the earlier replies and there is quite a lot of existing information that may help you, then if you have further questions you can post them below in this thread. :)

Balcony
10-04-2013, 15:31
I would suggest that if you visit Tenerife that you make an appointment with an accountant and get proper advice. A firm like Marcos Cabrera SL in Los Cristianos can do that. You will need to pay for that advice, but it will save a lot of hassle.

When you move to Tenerife as a resident, or even just own a property as non-residents then appoint an accountant to take care of the paperwork. It saves a lot of worry.

limmylimoux
10-04-2013, 18:10
Thanks for that, I will do that. I would expect to pay, but it will be worth it to save the worry and hassle. Is there anyone you recommend.

patrick2976
12-04-2013, 14:54
Until you have live in Spain for at least 183 you can remain UK tax residents. After that you will be spanish residents and have to pay tax here.

- - - - - - - - - - merged double post - - - - - - - - - -

Here is something from an accountant I know. Hope it helps.
http://pat-macdonald-finance-spain.blogspot.com.es/2013/04/help-and-information-with-modelo-720.html

princessmonika
12-04-2013, 19:14
no -- article 9.1.a of the individual income tax[leg35/2006 ] says that you are a tax resident, if you spend more than 183 days in spain- UNLESS YOU PROVE ,YOUR ARE TAX RESIDENT IN AN OTHER COUNTRY --

patrick2976
12-04-2013, 22:43
no -- article 9.1.a of the individual income tax[leg35/2006 ] says that you are a tax resident, if you spend more than 183 days in spain- UNLESS YOU PROVE ,YOUR ARE TAX RESIDENT IN AN OTHER COUNTRY --

For most people the 183 rule will apply unless you have 'significant interests' in another country. This was in answer to a post where the writer explained they WERE PENSIONERS AND HAD SOLD THEIR HOUSE IN THE UK to move to Spain (as you seem to like caps). Therefore (under normal circumstances but not without exception) the 183 day rule will apply (presuming, as pensioners, they are going to live together in Spain, they don't have work interests in the UK anymore and no dependent children there).

atlantico
13-04-2013, 13:45
So, what do you need to do?

If you are tax resident in Spain and fall into the above categories and hold the assets listed below, you will have to declare all the assets you own outside the country. A new official form will be released shortly for this purpose.

is there a difference between being a Spanish Resident and being Fiscally Resident. I mean, do they both go hand in hand or are they separate ? A retired person living in Spain more than 183 days will have to become a resident, but can they still elect to be fiscally residing in UK and pay UK taxes, hence not have to report their assets ?

Goldenmaniac
14-04-2013, 11:13
Have a look here
http://www.hmrc.gov.uk/international/residence.htm
and here for Spain (in English)
http://www.agenciatributaria.es/AEAT.internet/Inicio_en_GB/English/Non_residents/Non_resident_Income_Tax/Non_resident_Income_Tax/Residency_issues/Dual_residence.shtml

Clearly as has been said on many occasions the 183 day rule is a good rule of thumb guideline, but yes Atlantico it is possible to be resident for immigration purposes ( green paper) and not fiscally resident. Although the particular case did say they had sold up in the UK.

In my opinion initially the SPANISH tax office will be looking at people who have already indicated their fiscal residence status ie modelo 30 or PAYE/Declaracion de la renta type situation who are definitely required to submit the asset reporting form.

They will then, I suspect, take a look at those with green residence certificates who are not fiscally resident and start asking for proof of country of fiscal residence.

I have been advising some of my clients to revoke their green residence certificates (and revert to non-residents bank accounts if appropriate) IF they simply obtained them (before currently applicable more stringent application rules) to get discount into Loro Parque and on the Ferries etc but are quite definitely NOT fiscally resident in Spain.

Currently there is no real link between the two, although a few people have had non-residents accounts frozen by the bank until they sort things out, because they have subsequently obtained a green residence certificate (and vice versa in some cases)
but in my personal opinion this will be another hot topic in the years to come as there is a chance to get revenue from fines etc.

Tenerife Blade
26-04-2013, 17:52
If someone has in excess of €50,000 in a UK account, I know they have to declare it, but do they also have to declare it for tax purposes, (declaration de las renta) even if they are paying tax on any interest earned, back in the UK.

Goldenmaniac
26-04-2013, 18:08
If someone has in excess of €50,000 in a UK account, I know they have to declare it, but do they also have to declare it for tax purposes, (declaration de las renta) even if they are paying tax on any interest earned, back in the UK.
They should not be paying tax on it in the UK they should have presented their P85(see gov.uk) and reclaim any overpaid tax in the UK under double impositions rules.
If they are fiscally resident here and do a declaración de la renta here then they pay tax here on ALL their income from whatever source (with the one exception of what is called a functionary's pension - Forces, local government, teacher etc which is taxed in the originating country)