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View Full Version : Tax Where do I need to pay taxes if I retire to Tenerife... the UK or Tenerife?



rfos2
13-06-2014, 16:10
??? If I take up residency in Tenerife do I have to pay income tax even though my only source of income is my uk pension or can I continue paying taxes due in the uk?

Ricman
13-06-2014, 16:32
One simple rule. If you are in Spain for more than 183 days a year you MUST become a Spanish tax resident & pay the relevant tax to the Hacienda, which will almost certainly be more than goes to HMRC. Plus of course all the other nasties e.g. Inheritance Tax that come with this new status. And it matters not where your income originates.

Once a member of this possibly illegal club you will need to fill in a tax form & pay another stash of tax to the Hacienda in 2 instalments, June & November, and then wait about a year for the Hacienda to fill in & officially stamp form FD9.

Next you will send this FD9 to HMRC & try for months to get someone in HMRC to deal with your case to hopefully repay the tax you gave to the Hacienda & give you the go ahead to have any monies paid to you gross so you can pay your taxes here forever.

Good luck.

Hepa
13-06-2014, 16:33
Once you reside in Spain for 183 days you are considered to be a tax resident, you will then have to make a tax return, declaring all income and all taxes paid in other countries. U.K. and Spain have a tax agreement and you will not usually have to pay tax twice. We have just completed ours for last year.

cressrt
13-06-2014, 16:52
Do not confuse registration that is required by law with tax residency and actual residency, the latter you do not need if you are an EU citizen
Due to the double tax agreement, you can choose to pay tax in the country of choice. However you will need to prove to the UK that you have paid in Spain for 2 years I believe before you can get a rebate form the UK. I changed to pay here and pay less than I would in the UK due to allowances etc., but you would need to take advise as to personal circumstances.

essexeddie
13-06-2014, 17:08
We looked at this but its a bit of a mine field. Unless you actually live here don't bother.

rfos2
13-06-2014, 17:23
thanks for the info, can I choose to pay my taxes in the uk then and not Tenerife?

cressrt
13-06-2014, 17:23
I agree, I've lived here for 8 years now and it made sense to change for me.

junglejim
13-06-2014, 17:32
This will confuse you even more !!

http://www.hmrc.gov.uk/international/rdr3.pdf

PaulAdvisor
24-06-2014, 19:55
Hi All

You will become resident for tax purposes in Spain if you spend more than 183 days in any one calendar year & you become liable whether or not you take out a formal residence permit. Be aware that these days do not have to be consecutive.

For the avoidance of doubt...you cannot choose where you pay your taxes. You can legitimately manipulate your days spent in either in the UK or Spain but please be assured that you cannot live in Spain and choose to be a tax resident in the UK in nearly all circumstances. The automatic exchange of information agreement commencing in Jan 2015 between the G5 countries (UK, France, Germany, Italy and Spain) will ensure that at some stage, the bank, investment, dividend and pension incomes of ex-pats will be passed to the tax office of where the potential offender lives. Scary stuff!

You may pay more or indeed less taxes in Spain depending on your income(s) and you could even qualify for two tax allowances. Remember that you would not have to pay non-resident taxes on your main home going forward & you will also receive more tax allowances on your or your partner's death if you are tax resident in the Canary Isles. Hope this helps.

essexeddie
24-06-2014, 20:36
That's of course the Spanish don't do a Cyprus and deduct 47% of your savings in return for worthless bonds. Even more scary.

PaulAdvisor
24-06-2014, 21:16
...A reason to not keep monies in a Spanish bank for some maybe - but a more certain reason here in the Canary Isles is that they are always liable to Spanish succession tax on death meaning after small allowances, the residual estate is liable to taxes between 7.65% to 34%. Even more if you are not married! Cash balances, property and cars included.

essexeddie
25-06-2014, 18:10
Wow, cars and cash, didn't know that. Glad I only have an old banger (car)

mike in chayofa
25-06-2014, 19:27
??? If I take up residency in Tenerife do I have to pay income tax even though my only source of income is my uk pension or can I continue paying taxes due in the uk?

As has been mentioned, if you live here for over 183 days, you have to pay taxes here.

There is good news and bad news about this.

The bad news is that generally speaking, you will pay more tax in Spain (currently starting at 24%)

Tax free allowances are lower too. Under 65 - 5.151 ...... Over 65 - 6069 ........ Over 75 - 7.191

The good news is that you can't be taxed on the same income twice. To get gross payments in the UK you will need to complete the attached form R105. Unfortunately the Spanish tax authority will probably be notidied of this. Whether you take the cahnce is a decision only you can make.

www.hmrc.gov.uk/forms/r105.pdf

The tax form for residents is modelo 100 and you have to declare your worldwide income. This includes the UK winter heating allowance, which the Spanish goverment will tax.

Best bet is to get proper advice about all this.

Take a look at forum member Diana's website

http://www.diana-mcglone.com/

If you have a property to sell and cash remaining, invest it in a UK account using a family member's address ..... ooooops did I really say that. If uou use a UK bank (or whatever)

mike in chayofa
25-06-2014, 19:35
Sorry - got cut off.

... with a Spanish address and get interest in the UK, the Spanish tax department will be notified, so you will need to declare this.

Alternatively, you can write/contact the UK tax authorities and explain that you are moving to Spain and they will probably issue you with a tax code that will negate you paying tax in the UK anyway. If this happens you will not need to fill in a R105, this is a better option if they will still do this. Technically speaking the UK tax department shouldn't issue a tax code to a non UK resident, but they did this for me several years ago.

essexeddie
26-06-2014, 17:52
In todays paper as from June 11th EU Banks are charging 0.1% to park your money in their banks. Called negative interest rates.
Getting a bit like the Cyprus deal.