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We are planning on moving to Tenerife in a few years and are wondering about tax implications.
First we have a UK property which we would like to let out rather than sell. The UK tax allowance is much more generous than Spain's, can we still pay tax on this income in the UK via self assment even though we will not be uk residents? Would setting up a limited company that own the house help? This income will provide around 50% of our personal income.
We hope to have UK derived income from a couple of sources. Can I again set up a UK limited company and be a paid employee just paying normal Spanish income tax without the large NI autonomos bill?
Rob
I think you will need to speak to a proper accountant over here, as it is specialised advise you require, there are some people on this forum who will provide names to help you.
We are planning on moving to Tenerife in a few years and are wondering about tax implications.
First we have a UK property which we would like to let out rather than sell. The UK tax allowance is much more generous than Spain's, can we still pay tax on this income in the UK via self assment even though we will not be uk residents? Would setting up a limited company that own the house help? This income will provide around 50% of our personal income.
We hope to have UK derived income from a couple of sources. Can I again set up a UK limited company and be a paid employee just paying normal Spanish income tax without the large NI autonomos bill?
Rob
Hi Rob
I just read Your post , I'm in a very similar situation so I was wondering if you found any answer to your question ?
Thanks Luca
Ever so fresh to me! and as much, as I have delved in to the issue its very much clean cut:
On the date, you (applied) Granted Spanish Residency (takes ~ 3-9 month from living-moving over), everything becomes same as Tax declaration- same day. Spanish Law demands the same 3-6 moths)
Renting out we have considered, but ONLY cash in hand option and that HAD turned out way too risky, even to friends, that only way forward for us, was to sell, before we'd've moved.
As it comes to your declarations/changes both British and Spanish Tax Offices - they all require your Residency proof and dates and I believe there is no way as how to declare yourself Resident in two Countries at once.
There are plenty of English speaking Financial Advisors in Tenerife, but I didn't meet the one, that I could have trusted, as the ones, manages these things at home. IE it taken only few forms to sign and my advisor is able to sort everything, even, if I am abroad. In Spain ANY declarations, although managed by somebody else require your signature of approval.
I am in the same position, although we will be selling the shop and our house. Once debts are paid this will leave a reasonable sum (enough to live on for a good few years if people's estimates on here are accurate) plus I will also have a six figure pension that I will take as a 25% lump sum as allowed by HMRC and then drawdown each year the amount I deem necessary. I read somewhere that the limit in Spain for tax free was €7,000 annually. This is obviously not enough to live on so what is the tax rate above €7,000? My wife is a bit younger and will have her own pension a few years later. Neither of us will be drawing state pensions for a lot longer though.
Hope this isn't too complex a question and hopefully someone can point me in the right direction.
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I am in the same position, although we will be selling the shop and our house. Once debts are paid this will leave a reasonable sum (enough to live on for a good few years if people's estimates on here are accurate) plus I will also have a six figure pension that I will take as a 25% lump sum as allowed by HMRC and then drawdown each year the amount I deem necessary. I read somewhere that the limit in Spain for tax free was €7,000 annually. This is obviously not enough to live on so what is the tax rate above €7,000? My wife is a bit younger and will have her own pension a few years later. Neither of us will be drawing state pensions for a lot longer though.
Hope this isn't too complex a question and hopefully someone can point me in the right direction.
We where to release almost five figure sum... and considered such option, but THE last resident of THE last formed company was THE issue... AKA "offshore trading"
I mean, to declare some sort of business investment in Spain, from UK based company...
Just saying ;)
We are in a similar position to you , I think. We sold up in the U.K. and relocated permanently to Tenerife in November 2015. We are living off capital until our occupational pensions become payable in 6 and 10 years respectively. You may need to get advice in Spain ( if you are still here then!) before taking lump sums as they are tax free in the U.K. but as far as I can see, they are not in Spain. As you would be fiscal residents in Spain, Spanish tax laws would apply and the fact that HMRC allow a tax free lump sum in the UK does not mean it is tax free in Spain. I am clearly not any sort of expert and am not claiming to be one but thought I would just mention this.
When are you hoping to move and where are you looking to live?
If you live for more than 6 months in Tenerife you will be taxed on all income world wide in Spain. Initially you will have to notify the Spanish tax man of all your assets over 50.000 Euro, bank accounts, properties, gold etc. Then you have annual tax returns and you have to pay your taxes depending on your income, work, rent, pension etc.
Only difference, some of the taxes here are paid upfront, mostly quarterly and with your annual return, if you over paid you get a return.
Best is to get a Spanish accountant to set you up with the tax man, online and all the different forms you need to fill in. In future, if you only have a pension you might be able to do it on your own.
Good luck.
If you live for more than 6 months in Tenerife you will be taxed on all income world wide in Spain. Initially you will have to notify the Spanish tax man of all your assets over 50.000 Euro, bank accounts, properties, gold etc. Then you have annual tax returns and you have to pay your taxes depending on your income, work, rent, pension etc.
Only difference, some of the taxes here are paid upfront, mostly quarterly and with your annual return, if you over paid you get a return.
Best is to get a Spanish accountant to set you up with the tax man, online and all the different forms you need to fill in. In future, if you only have a pension you might be able to do it on your own.
Good luck.
Good advice. We have used Marcos Cabrera in Los Cristianos for over ten years and although they are not the cheapest, they are very good and I trust the advice they give me. They have helped me on many issues and they have extensive knowledge of the double taxation agreement.
We are looking to be there, Adeje or somewhere similar in 3-4 years, no later. Is capital treated as income, i.e. a six figure sum you live off? If I open an account in Tenerife with a large sum surely it doesn't get taxed apart from interest on the sum?
We are looking to be there, Adeje or somewhere similar in 3-4 years, no later. Is capital treated as income, i.e. a six figure sum you live off? If I open an account in Tenerife with a large sum surely it doesn't get taxed apart from interest on the sum?
Depends where your capital comes from, which tax year, life insurance, pension pot , house sale etc. One thing you will need is a paper trail where that money came from, otherwise they will try to get you for money laundering. Especially if you buy a car or apartment over here.
We are looking to be there, Adeje or somewhere similar in 3-4 years, no later. Is capital treated as income, i.e. a six figure sum you live off? If I open an account in Tenerife with a large sum surely it doesn't get taxed apart from interest on the sum?
As a non resident your tax liability would be in your Country of fiscal residence but bear in mind the implications of the UK leaving the EU. It is very likely that taxes on non-residents would become more punitive and I would not rule anything out in these circumstances. It may be better to leave your capital in the UK until the deal to leave is finalised (whenever that may be).
Just spending money, WITHOUT declaring own-self as RESIDENT, no problem!
If you by property, from UK paid taxed income (be it sale of the house)- no problem.
Any business money, you'd like to use- BIG problem.
As I understand your accepting the need to become a resident, transfer money over- you need to change RESIDENCY in both countries and income from abroad will be taxed in accordance to Spanish TAX scheme (which seemed equally, complicated and simple, at the same time difficult and very strict)
The business money will be in the general pot as it will be sold quite a while before we move and any CGT will have been paid here.
I am in the same position, although we will be selling the shop and our house. Once debts are paid this will leave a reasonable sum (enough to live on for a good few years if people's estimates on here are accurate) plus I will also have a six figure pension that I will take as a 25% lump sum as allowed by HMRC and then drawdown each year the amount I deem necessary. I read somewhere that the limit in Spain for tax free was €7,000 annually. This is obviously not enough to live on so what is the tax rate above €7,000? My wife is a bit younger and will have her own pension a few years later. Neither of us will be drawing state pensions for a lot longer though.
Hope this isn't too complex a question and hopefully someone can point me in the right direction.
Hi cheery ... you will find the tax rates and bands listed on this page http://www.diana-mcglone.com - lots of good information as well and the author, Goldenmaniac is a member on here (tho' haven't seen her posting recently)
Do take advice on the 25% drawdown before moving over just to be sure it would not be taxed here.
One complication after the initial move can be that the tax years do not overlap - Spain runs Jan to Dec. and you submit your returns by 30 June.
And to answer an earlier question about paying tax on UK rents - you must pay tax where it is earned - i.e. yes, pay by self assessment on the UK rental and then declare it in Spain along with the tax you have already paid in the UK which will be deducted from any tax due in Spain.
As to the declaration of tax residency, in the first year I ran into the problem of getting proof from the Spanish authorities that I was now tax resident in Spain and not Ireland so as not to have to suffer deductions on interest on a deposit in Ireland. I eventually got it after having to formally petition them and submit all my electricity bills !
Be prepared for lots of bureaucracy and hold on to all records.
Thanks for that. We are used to bureaucracy, we have run our own business here for quite a while and have boxes and boxes of paperwork for the last six years as required by HMRC. I don't mean a file, I mean boxes 3 feet square! I shall look into your link at length when I am more awake, it is now 06.09.
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