Declaring foreign bank accounts to the Spanish government

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This topic contains 35 replies, has 13 voices, and was last updated by Profile photo of Anonymous Anonymous 3 years, 9 months ago.

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  • #56129
    Profile photo of Chopera
    Chopera
    Participant

    I’ve been hearing/reading (sorry can’t find a link right now) that the Spanish government will require all Spaniards to supply them with foreign bank account details (in an attempt to crack down on tax avoidance). From what I have read this applies to all Spanish residents – i.e. expats as well. So basically it looks like I’m going to have to supply the Spanish government with my UK bank details or face a fine.

    Does anyone have any more information about this? Is anyone else aware of this?

  • #108554
    Profile photo of logan
    logan
    Participant

    Yes you are correct Chopera. The new law applies to all Spanish tax payers, corporate and private of whatever nationality. Agreement has been reached with the EU that all European banks will be forced into passing on personal details of foreign account holders to the Hacidenda.
    So much for confidentiality. 🙁 Sign of the times I’m afraid.

  • #108561
    Profile photo of Anonymous
    Anonymous
    Participant

    Do you know this for a fact logan? Can you link to supporting evidence?

    Thanks

  • #108562
    Profile photo of logan
    logan
    Participant

    http://elpais.com/elpais/2012/04/12/inenglish/1334254769_909705.html
    Although the article says ‘Spaniards’, I presume it actually includes any Spanish tax payer otherwise it could be deemed a racist law.
    This measure was approved by cabinet.
    A similar law exists in the US and France.

  • #108563
    Profile photo of Anonymous
    Anonymous
    Participant

    Where did you read about an agreement with banks outside Spain to inform Hacienda of Spanish residents with accounts? I hadn’t heard that.

    If this is just another law that never gets implemented then who cares. But if foreign banks have agreed to do something the chances are much higher that it will have an impact.

    If true, and implemented, that would be a serious problem for foreigners living in Spain, most of whom I bet have accounts back home that they haven’t told the Spanish tax man about.

    By the way, it seems that this doesn’t come into effect until next year.

  • #108564
    Profile photo of logan
    logan
    Participant

    There are a number of EU tax treaties which allow for that Mark and be sure under the current economic climate use of them will only increase. http://en.wikipedia.org/wiki/Tax_treaty

    I agree there is then the issue of how it’s implemented and the motivations behind it. I have a number of foreign bank accounts and I am often asked to sign documents permitting exchange of information to other EU states. I’m guessing that’s just to cover themselves legally should they be asked to do it.

    I can’t actually remember where I read it now but I do recall the EU implementing the agreement on bank information exchange. Perhaps it was the recent Fiscal Treaty.

    As in all things, when it comes to taxation governments have you by the round things. I leave these questions to the accountants. That’s why we pay them. I contacted mine recently on reading of this new Spanish law. As you said it’s not effective yet. 😉

  • #108567
    Profile photo of logan
    logan
    Participant

    It’s been irritating me that I could not remember where I read about cross boarder bank information exchange. There is an EU directive going back to 2003 which supports this. I realise it relates to savings income but personal bank identity would also presumably be exchanged.
    Swiss banks have recently been given a 7 year exemption.

    http://www.hmrc.gov.uk/esd-guidance/

    Currently if you are a Spanish or Eurozone tax payer you have to declare all your bank detailed information to the Hacienda/Revenue. That will in the future extend to overseas accounts. In addition cash bank transactions above €2.5K require a written explanation with supporting documents.

  • #108573
    Profile photo of Chopera
    Chopera
    Participant

    As with every fiscal law in Spain Hacienda do not have the resources to implement this law rigorously. There must be millions of people in Spain who have foreign bank accounts for perfectly valid reasons, with different systems for identifying account holders, etc. Cross referencing everyone would be a huge task.

    So I can see 3 ways they would use this law: 1) to go after the serious tax dodgers 2) To implement capital controls should Spain be forced out of the euro (although they could do that without this law) 3) To use it as an excuse to fine people first and ask questions later (they could just send out letters to everyone with an NIE telling them they’ve got to pay a fine and if they think there is an error they can call this number where their call “will be attended shortly”)

  • #110544
    Profile photo of Anonymous
    Anonymous
    Participant

    My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

  • #110844
    Profile photo of Anonymous
    Anonymous
    Participant

    My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

  • #110849
    Profile photo of logan
    logan
    Participant

    @ian_ok wrote:

    My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

    I take it you mean an overseas bank account not the actual interest? That advice makes no sense. You need to declare interest to Hacienda with a bank certificate (renta). So the bank details would be revealed.

  • #110549
    Profile photo of logan
    logan
    Participant

    @ian_ok wrote:

    My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

    I take it you mean an overseas bank account not the actual interest? That advice makes no sense. You need to declare interest to Hacienda with a bank certificate (renta). So the bank details would be revealed.

  • #110850
    Profile photo of Anonymous
    Anonymous
    Participant

    @logan wrote:

    @ian_ok wrote:
    My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

    I take it you mean an overseas bank account not the actual interest? That advice makes no sense. You need to declare interest to Hacienda with a bank certificate (renta). So the bank details would be revealed.

    No I mean the actual interest earned, not the amount in the bank accounts of overseas accounts.

    This link will give you more info, which states accounts of over 600k

    https://sedeelectronica.bde.es/sede/es/menu/ciudadanos/Presentacion_de_09ebec889272d21.html

  • #110550
    Profile photo of Anonymous
    Anonymous
    Participant

    @logan wrote:

    @ian_ok wrote:
    My Spanish business accountant tells me that unless your earn more than 1000 Euros in interest per person (2k if a couple) then you don’t need to declare it.

    I take it you mean an overseas bank account not the actual interest? That advice makes no sense. You need to declare interest to Hacienda with a bank certificate (renta). So the bank details would be revealed.

    No I mean the actual interest earned, not the amount in the bank accounts of overseas accounts.

    This link will give you more info, which states accounts of over 600k

    https://sedeelectronica.bde.es/sede/es/menu/ciudadanos/Presentacion_de_09ebec889272d21.html

  • #110852
    Profile photo of logan
    logan
    Participant

    Sorry Ian but you need to declare your worldwide income and interest earned is part of that, unless tax is deducted at source which defeats the object of an off shore account.

  • #110552
    Profile photo of logan
    logan
    Participant

    Sorry Ian but you need to declare your worldwide income and interest earned is part of that, unless tax is deducted at source which defeats the object of an off shore account.

  • #112918
    Profile photo of Anonymous
    Anonymous
    Participant

    Has anyone got any definite information about this please? The law seems to still be at a “project” stage, but presumably will soon be on the statute book. At present it appears that ANY account or VALUE held abroad by a person fiscally resident in Spain must be declared. For each item not declared the fine is 5000€ with a minimum of 10000€. So if you have a small amount in a Building Society, a post office savings account plus a small Life Insurance contract in the UK and you don’t declare them, that’s 15000€ if you’re found out. Also, there is no time limit on the taxman’s ability to discover these “hidden” assets, no matter how innocent they are. Rather threateningly, it is also stated that the tax man can go back as far as possible and apply maximum penal interest on any revenue not declared and may also consider that non declared amounts are undeclared income liable to Income Tax. It all sounds draconian enough to encourage a rush for the exit! Does any-one have any information on whether it’s law, are there limits under which a declaration is not necessary and when should the declaration be made?

  • #112929
    Profile photo of logan
    logan
    Participant

    I think you have summed the proposed tax laws up very well. The fact is that Spain is tightening up everywhere in an attempt to haul in revenue which the country desperately needs. France is doing the same thing.

    There is huge capital flight from both countries happening as a consequence of the risks associated with the eurozone crisis and higher taxation and governments want to know where it’s all gone. 🙁

    The real question is not the extent or scope of the new tax laws it’s the implementation and policing in practice which really matters. Spain is historically fairly hopeless at that, France is not. Money always leaves a trail.

    If you consider yourself as risk get some good advice from a Spanish tax accountant.

  • #112930
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    Anonymous
    Participant

    This is a big issue that affects hundreds of thousands of British residents in Spain. I’ll try and do an article on it soon.

    But I can say from my first conversations with lawyers that it might appear more dramatic that it really is. Some say that nothing has really changed, they are just making more noise about it than before because of the fiscal crisis. Some say the Spanish tax man will not be any more efficient than before. And let’s face it, la agencia tributaria doesn’t do a great job in Spain, let alone abroad. If they want to raise lots more money, the first place to clamp down is at home, not abroad. The black economy here is huge.

  • #112938
    Profile photo of Igurisu
    Igurisu
    Participant

    @mark wrote:

    And let’s face it, la agencia tributaria doesn’t do a great job in Spain, let alone abroad. If they want to raise lots more money, the first place to clamp down is at home, not abroad. The black economy here is huge.

    This may well be true, but maybe it would be better for the government and Rajoy’s popularity ratings if they focused more on overseas (and by definition ex pts)?

  • #112940
    Profile photo of Anonymous
    Anonymous
    Participant

    It would be far better if they encouraged foreigners to buy some of the properties they have deserted and made it less confiscatory to hold Spanish Property -like abolishing Inheritance Tax on all properties under 50000 to start-in Italy you have none of this problem. Enabling monies held in a Spanish account to be used to pay State Taxes when the owner dies. To enable a property to be left by a single person to a brother sister or even a civil partner on the same terms as to a spouse or sibling. At the moment they are simply saying we don’t want you so the property will go down until its cheap enough for the Spanish to buy it again.To let property on a guaranteed shorthold with fast repossession and a fair rate of tax not as much as 25%.To enable non residente to sell a property and reinvest it in another property without cgt -it being charged on the sale of the second property or subsequent property. This enables people to move within Spain without having to find more money apart from Impuestos de Compravent and increases the velocity of sales. Making an exchange of contracts between vendor and buyer compulsory as in UK before going to the Notary to clean out spiv estate agents and lawyers. Sorry a bit off topic but the Spanish would be better off by getting their building industry going again and getting a few more working again and this means to stop exploiting foreign buyers.

  • #112946
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    Anonymous
    Participant

    let me understand this, if the money in the bank already paid taxes, the only amount that the Spanish government may tax you is on the interest of this account if any, right
    ?????

  • #112962
    Profile photo of Anonymous
    Anonymous
    Participant

    Jaime, if I understand the attached article correctly, if Hacienda discover an undeclared asset abroad any time in the future, then they will be entitled to consider the full amount discovered as undeclared earnings and tax them accordingly. Thus you’d suffer tax on the full amount, whether it had been taxed abroad or not, plus late payment interest, plus the fine for non declaration. Pretty draconian!
    As Mark has pointed out, the implementation by Hacienda may not be perfect. The trouble is, if you’re the unlucky one (as were the Priors with their house) then the consequences could be devastating.

    http://www.carrillo-asesores.com/news/cuentasexterior.html

  • #113158
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    Anonymous
    Participant

    With the very low interest rates that people are getting on their savings accounts it makes you wonder why the Spanish government is so bothered about people keeping money in foreign bank accounts unless of course they suspect that the money was made in the black economy without declaring the earnings to the Spanish tax man. It is clearly an indication of how desperate the Spanish goernment is to get more revenue given that it is basically broke.

  • #113495
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    Anonymous
    Participant

    Latest news is you only have to declare bank accounts and assets abroad if they have a value of €50,000 or more. So if you have 2 bank accounts, both with just €49,000 each in them, total €98,000, you don’t have to declare either of them.

    But if you have a property worth €100,000 in the UK, for example, then you are obliged to declare that (if you are resident in Spain, of course)

    I don’t think this is law yet, but it is in a Government press release

  • #113499
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    Anonymous
    Participant

    Are you certain of you interpretation Mark? The linked document refers to “exceeding 50000€ for each TYPE of asset”, so perhaps a bank account is a “type of asset” and if you had two totalling 98000€ you’d be obliged to declare both of them, since for the TYPE of asset you hold in excess of 50000€.
    Plus the ludicrous “average value over the last quarter of the year” that has to be declared; how does one calculate THAT for assets held in shares??

  • #113506
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    Anonymous
    Participant

    @Clifford Chambers wrote:

    Are you certain of you interpretation Mark? The linked document refers to “exceeding 50000€ for each TYPE of asset”, so perhaps a bank account is a “type of asset” and if you had two totalling 98000€ you’d be obliged to declare both of them, since for the TYPE of asset you hold in excess of 50000€.
    Plus the ludicrous “average value over the last quarter of the year” that has to be declared; how does one calculate THAT for assets held in shares??

    Good point. I’m not certain about anything, ever. 😉 But it does now look like if you have a bank account back in the old country with a few hundred quid in it you now don’t need to declare it.

  • #113696
    Profile photo of Anonymous
    Anonymous
    Participant

    The article I published in the blog about this issue has generated a lot of comments. I’m realising that it’s a big, big issue for people thinking of retiring to Spain.

    Spain’s new reporting requirements for residents with overseas assets

  • #113697
    Profile photo of logan
    logan
    Participant

    So as I read it, if you keep €49,000 in a series of foreign bank accounts you need not report it. Or is that ‘morally wrong’?

  • #113739
    Profile photo of Anonymous
    Anonymous
    Participant

    I have a friend who has been living and working here for 15 years. She’s not “resident” in Spain, works online, and pays tax in the UK. She has private health insurance. Its illegal because she’s here for more than 187 days a year (or however long it is). But she has no incentive to enter the Spanish legal and administrative system. In fact I did that myself for about 7 years back in the 1990s until I married a local girl. Makes you wonder whether its an option to return fiscally to the UK and just stay here anyway. Do they ask for evidence you’ve not been here?

  • #113741
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    logan
    Participant

    Usually if the Hacienda find you have lived illegally in Spain they send you a back tax bill and it’s up to you to prove you have not. Which in your friends case would be difficult. Beware these penalties have recently been increased savagely.
    The parties over, live in Spain, pay tax in Spain or risk a great deal of money.

  • #115394
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    Anonymous
    Participant

    I’ve just completed the declaration on-line and found it a generally painless exercise…

    And having spoken to someone at Hacienda, they confirmed that it doesn’t affect how much tax I have to pay in Spain as I am paying tax at source (in the UK).

  • #115401
    Profile photo of katy
    katy
    Spectator

    @Richard_Valencia wrote:

    I’ve just completed the declaration on-line and found it a generally painless exercise…

    And having spoken to someone at Hacienda, they confirmed that it doesn’t affect how much tax I have to pay in Spain as I am paying tax at source (in the UK).

    Not strictly true, depends on an individuals tax affairs. Rates and bands are different in Spain. Even though the tax has been paid in the UK it needs to be decared to hacienda and the difference calculated. The tax paid in the UK is only set against it. If you have paid eg 5000 tax in the UK you may find when you decalre in Spain you owe hacienda an extra 400€ or so.

  • #115402
    Profile photo of katy
    katy
    Spectator

    @mark wrote:

    @Clifford Chambers wrote:
    Are you certain of you interpretation Mark? The linked document refers to “exceeding 50000€ for each TYPE of asset”, so perhaps a bank account is a “type of asset” and if you had two totalling 98000€ you’d be obliged to declare both of them, since for the TYPE of asset you hold in excess of 50000€.
    Plus the ludicrous “average value over the last quarter of the year” that has to be declared; how does one calculate THAT for assets held in shares??

    Good point. I’m not certain about anything, ever. 😉 But it does now look like if you have a bank account back in the old country with a few hundred quid in it you now don’t need to declare it.

    Seems that Hacienda aren’t clear about some things. Pension pots have to be declared too. If the combined assets are over 700,000 then wealth tax is due. Many will be pulled in if they have property in both countries and generous pension scheme.

  • #115404
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    Anonymous
    Participant

    @katy wrote:

    @Richard_Valencia wrote:
    I’ve just completed the declaration on-line and found it a generally painless exercise…

    And having spoken to someone at Hacienda, they confirmed that it doesn’t affect how much tax I have to pay in Spain as I am paying tax at source (in the UK).

    Not strictly true, depends on an individuals tax affairs. Rates and bands are different in Spain. Even though the tax has been paid in the UK it needs to be decared to hacienda and the difference calculated. The tax paid in the UK is only set against it. If you have paid eg 5000 tax in the UK you may find when you decalre in Spain you owe hacienda an extra 400€ or so.

    This is COMPLETELY truely! I spoke to Hacienda. They were very helpful. They looked at my income and confirmed that this does NOT affect how much tax I have to pay.

    If you notice in my post, I said “I”. I did not, at any point, say that this was true for anyone else.

  • #115475
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    Anonymous
    Participant

    Hacienda has now extended the deadline until the end of April. I would strongly advise people to take advice in this matter. The threatened penalties are simply too high.

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