"Regulations are a burden wherever you go"

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This topic contains 25 replies, has 10 voices, and was last updated by Profile photo of zenkarma zenkarma 3 years, 8 months ago.

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  • #57343
    Profile photo of DBMarcos99
    DBMarcos99
    Participant

    An interesting interview from new Spanish website TheLocal. I’m sure that man seems familiar… 😉

    http://www.thelocal.es/jobs/?site=tles&AID=the-job-situation-in-spain-is-complicated-at-the-moment#.UT5KKleK3xc

  • #116081
    Profile photo of Anonymous
    Anonymous
    Participant

    There are regulations & regulations. The forum is full of comments from users about the regulations. In the case of Spain they are not thought through and they stem from Political, idealogical dogma. Further the wheel to lubricate the regulations does not work.

    Mark, has been too long in Spain and perhaps his judgement & view on this and other subjects are clouded.

  • #116083
    Profile photo of Anonymous
    Anonymous
    Participant

    Ha! I wasn’t expecting them to publish it so quickly. I only did the interview a few hours ago.

    Nor was I expecting that headline. I only mentioned that in passing.

    That said, my personal experience of regulations in Spain has been no worse than anywhere else. I some respects, it’s been better than the UK. However, I’ve heard lots of horror stories, especially down south. The trick is to stay away from trouble 😉

    But like I say at the end of the interview, the new reporting requirements (for assets held abroad) are a problem. In fact, they are going to be a disaster. This is one Spanish regulation that is going to cause mayhem for the expat community.

    I also think It will kill off any recovery in sales for foreigners planning to retire here. It stands to reason that European pensioners will not retire to Spain and buy property here if they have to put their worldwide assets within the grasp of the Spanish taxman. They will stay away or live here in rented accommodation without declaring their residency. Either way, they won’t help mop up the property glut. As a result, I believe that Spain will lose billions of Euros of potential investment, not to mention all the wealth and jobs that come from people retiring here and spending their money in the local economy.

    I am not wrong about this. Mark my words. 🙁

  • #116087
    Profile photo of Anonymous
    Anonymous
    Participant

    I totally agree with you Mark on the disaster that are the new reporting requirements of overseas assets. From the little I have read, the regulations are poorly drafted (“galimatías” : gibberish, is the word used on some Spanish blogs) and the declaration can only be made online. Until you get everything right in the declaration then the form cannot be submitted online. If you fail to submit the form, you may end up with a 10000€ fine plus the undeclared assets being taxed as income. The form itself is extremely poorly designed. Some may think this is deliberate, as it forces people into the arms of paid professional help, thus forcing expats to spend money pointlessly in Spain, which generates income tax and vat for the authorities.
    The form also requires some ridiculous information such as average values of assets for the final quarter of 2012. How is one supposed to calculate THAT? Also precise dates at which bank accounts were opened (even if it was 30 years ago).
    Has any “normal” expat on this forum (ie not a professional accountant or tax adviser) already filed the 720 without help? How did it go?
    Has anyone filed it with professional help? How much did it cost?
    Has anyone been assisted at the tax office in the filling out of the form? (According to a Spanish forum, the tax authorities refuse to give phone help on the 720).

  • #116091
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    Has anyone filed it with professional help? How much did it cost?
    Has anyone been assisted at the tax office in the filling out of the form? (According to a Spanish forum, the tax authorities refuse to give phone help on the 720)

    I’m married to a Spaniard and while I am not a fiscal resident, he needs to declare 50% of our US bank accounts. We have help because of other complications, and have not yet received the bill. But there have been a few issues, including the average value of the account in the last 3 months of 2012 (which I had to manually calculate), and the US does not use IBAN.

    I’ll post again once I have more information.

  • #116099
    Profile photo of Anonymous
    Anonymous
    Participant

    Calculating the average is one. You will also need to calculate the exchange rate, I suppose this will have to be average as well?

  • #116111
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    Calculating the average is one. You will also need to calculate the exchange rate, I suppose this will have to be average as well?

    I used the rate on 31-Dec-2012. I figure that I am doing everything to comply so while there may be a few issues with how I calculated the amounts, I erred on the side of ‘over-reporting.’

  • #116112
    Profile photo of Anonymous
    Anonymous
    Participant

    @shakeel wrote:

    Calculating the average is one. You will also need to calculate the exchange rate, I suppose this will have to be average as well?

    Very good point. They have not given any information whatsoever on the exchange rate to use. Which means you are almost guaranteed to get it wrong, for which they will fine you €5,000.

  • #116117
    Profile photo of logan
    logan
    Participant

    Whilst I agree the new law on asset declaration will not exactly encourage foreigners to live in Spain I think it’s a fuss about very little.

    In actual fact under the double taxation treaty within the EU you only pay tax once. So for EU citizens at least whether you pay tax in your own country or Spain it’s the same result give or take. Tax rates and personal allowances are almost the same.
    In France I have always had to declare my worldwide assets. UK the same.

    Of course for off shore tax evaders who break the law and seek to hide money for whatever reason it’s a different matter.

    It may be a snag for your average Russian gangster but they will just ignore it anyway. 🙂

  • #116119
    Profile photo of katy
    katy
    Spectator

    If someone owns a home in the UK as well as being resident with a decent house in Spain it could push them into the wealth tax bracket when annuities, private pensions etc are added that need to be declared. A modest pension can have a value of €300,000…or more.

  • #116120
    Profile photo of katy
    katy
    Spectator

    @mark wrote:

    @shakeel wrote:
    Calculating the average is one. You will also need to calculate the exchange rate, I suppose this will have to be average as well?

    Very good point. They have not given any information whatsoever on the exchange rate to use. Which means you are almost guaranteed to get it wrong, for which they will fine you €5,000.

    They have, it’s the official bank of Spain rate at 31/12/12 which for British was £0.81610 to 1€,

  • #116121
    Profile photo of logan
    logan
    Participant

    Katy. – You can only be taxed on the income the assets produce not the assets themselves.

  • #116122
    Profile photo of katy
    katy
    Spectator

    Not in Spain, you are allowed 300,000 against the family home that’s all.

    http://www.advoco.es/advice/8-personal-tax/101-spanish-wealth-tax-2012-guide.html

  • #116126
    Profile photo of logan
    logan
    Participant

    I see thanks for that clarification Katy. Asset tax is draconian. I can see Marks point much better now.

  • #116128
    Profile photo of Anonymous
    Anonymous
    Participant

    I don’t know if this is of help to anyone, but fiscal residency is not set in stone. For all sorts of reasons you may want to move elsewhere, usually a return to the UK for most of us expats, and if you do you will come under the UK’s tax regulations.

    And if you find it too cold, too crowded, or an unhealthy place (it isn’t rated too highly in world health tables), you can always return to a warmer and healthier place, even if it’s only as a tourist.

  • #116136
    Profile photo of GarySFBCN
    GarySFBCN
    Participant

    Not in Spain, you are allowed 300,000 against the family home that’s all.

    Thanks for that link.

    If I understand correctly, for a married couple, the wealth tax starts at 1,400,000€, or 700,000€ each and including the home discount, it is 1,700,000€ for the couple before they have to pay any wealth tax.

    My tax attorney told me that the amount is reduced to 1,000,000€ in Catalunya, not including the discount for the family home.
    .

  • #116142
    Profile photo of katy
    katy
    Spectator

    Agree with Mark, a lot of retirees are asset rich and cash poor so it could have implications for those considering moving to Spain permanently. A friend in Spain has shares in a family Co. worth a few million but he only gets a modest income from it.

  • #116148
    Profile photo of Anonymous
    Anonymous
    Participant

    I take your point about the average death age (of males), but the recent health tables dealt more with the still living and their enjoyment of life in a healthy climate, if I remember correctly Spain came top and the UK spluttered in at 19th place.

    I walk at least a mile in Spain every day, and when I visit the UK I walk at least a mile around the City while I’m there, it might be purely personal but I find the air a lot cleaner here in Spain, even in a city environment.

    Or maybe it’s the water, or stress levels, or does dog shit on the streets have healing qualities? If the latter were the case no wonder I’m bouncing with health.

  • #116149
    Profile photo of logan
    logan
    Participant

    If you have lived with bureaucracy as long as I have you get used to it and eventually understand how it works for the common good.

    In France when you initially arrive to live here it all seems a bit pointless but it does work and you eventually see the purpose. They weed out the pointless bits.

    In Spain I have equal experience and yet the bureaucracy fails to deliver. It’s there for it’s own sake and nobody questions it’s purpose or changes anything.

    That is the difference. I suspect it’s the same everywhere. It’s called good governance and Spain deserves better. Not a wealth tax which is completely counter productive. History shows that’s true.

  • #116150
    Profile photo of Anonymous
    Anonymous
    Participant

    Re: asset declaration, I’m confused.

    For the purposes of asset reporting, I’m aware that the capital values of any annuities and private pensions have to be calculated and declared. However, does anyone know if the same applies to final salary pension schemes? I’ve been given conflicting information on this. If it does apply, that would really distort the perceived wealth of an individual and quite probably put them well beyond the wealth tax threshold, because there’s a lot of value in those schemes.

  • #116151
    Profile photo of katy
    katy
    Spectator

    @logan wrote:

    If you have lived with bureaucracy as long as I have you get used to it and eventually understand how it works for the common good.

    In France when you initially arrive to live here it all seems a bit pointless but it does work and you eventually see the purpose. They weed out the pointless bits.

    In Spain I have equal experience and yet the bureaucracy fails to deliver. It’s there for it’s own sake and nobody questions it’s purpose or changes anything.
    That is the difference. I suspect it’s the same everywhere. It’s called good governance and Spain deserves better. Not a wealth tax which is completely counter productive. History shows that’s true.

    Article here re. Spain being at the top for bureaucracy in the catering/hotel trade. One of the highest for time to obtain licences, cost etc.

    http://www.diariosur.es/20130313/local/malaga/burocracia-hector-201303130142.html

  • #116152
    Profile photo of Anonymous
    Anonymous
    Participant

    @Snowy wrote:

    Re: asset declaration, I’m confused.

    For the purposes of asset reporting, I’m aware that the capital values of any annuities and private pensions have to be calculated and declared. However, does anyone know if the same applies to final salary pension schemes? I’ve been given conflicting information on this. If it does apply, that would really distort the perceived wealth of an individual and quite probably put them well beyond the wealth tax threshold, because there’s a lot of value in those schemes.

    My own circumstances appear similar to yours in some respects and I have taken serious legal advice in Spain. I have to say that nobody seems to know a definitive answer. However, I don’t think final salary schemes in the UK are what the Spanish tax authorities are bothered about, at least that’s the advice I’ve been given.

    They want to catch their tax cheats who have hidden their assets abroad, that’s what the new legislation is all about. All of us expats are panicking beyond belief, me included, and the tax advisors are going to get rich advising us about something they’re not even sure about themselves.

    My guy keeps saying, ‘No pasa nada.’ I think he’s right. (I hope he’s right.)

  • #116153
    Profile photo of Anonymous
    Anonymous
    Participant

    and they depend on tourism !!!

  • #116154
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks for your reply, Rocker.

    I too hope your lawyer’s right – it’s all as clear as mud!

    The “no pasa nada” bit isn’t very inspiring – I guess the lawyers/IFA’s/gestors can say that because it’s not them picking up the blistering fines if the form’s not completed properly.

    Right now, it seems that the innocent, small fry expat is possibly being caught up in the same big net that they cast when going after the tax evaders. The conflicting opinions out there are of no use to anyone – it’s no wonder a lot of folk are anxious.

  • #116159
    Profile photo of Anonymous
    Anonymous
    Participant

    So far nobody claims to have succesfully uploaded the modelo 720 without professional assistance. Anyone managed it? Any tips ?

  • #116243
    Profile photo of zenkarma
    zenkarma
    Participant

    @mark wrote:

    I also think It will kill off any recovery in sales for foreigners planning to retire here. It stands to reason that European pensioners will not retire to Spain and buy property here if they have to put their worldwide assets within the grasp of the Spanish taxman. They will stay away or live here in rented accommodation without declaring their residency. Either way, they won’t help mop up the property glut. As a result, I believe that Spain will lose billions of Euros of potential investment, not to mention all the wealth and jobs that come from people retiring here and spending their money in the local economy.

    I agree.

    Spain is seriously shooting itself in the foot with this and putting back their economic recovery by many years. I was considering relocating to live in Spain but I’ve dismissed it now completely as I don’t want to get caught up in these rediculous asset reporting requirements. No way am I declaring to the Spanish taxman my worldwide assets. What I am considering doing is spending less than 6 months there every year to simply step round these new regulations and 6 months somewhere else.

    Interesting you did your MBA at IESE, that must have been pretty tough in Spanish! I did mine at the University of Westminster, not quite in the same league but it was still hard enough and that was in English!

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