Tax liability

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This topic contains 5 replies, has 3 voices, and was last updated by Profile photo of A Bridge A Bridge 1 year ago.

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  • #188043
    Profile photo of A Bridge
    A Bridge
    Participant

    Hi my husband and I both live in Spain and work here and pay income tax.  We are both British and also have a house in the UK which we rent out.  We file a self assessment in the UK (our income is under the personal allowance) and we got to the hacienda every year here in Spain.

    We have been told by someone that we need to declare our UK property here in Spain but we are unsure how to do this and do not want to be fined for not declaring it previously.  We have lived here for just over four years.

    To complicate matters, in February this year we bought a flat in Madrid which we intend to rent out in the future (probably in 18 months or so).  We paid for it in cash and have a small loan in the UK to cover the cost, our UK house is mortgage free.

    We live in Andalucia and any help would be greatly appreciated.

    many thanks

  • #188108

    Hello!

    In general, as you are resident in Spain you have to declare all (worldwide) incomes. But in your annual fillings you should also respect costs which reduce the taxes. But every case is different and needs a concrete study.

    In any case it’s strongly recommendable to every resident in Spain which has assets and incomes out of Spain to consult a local tax advisor who is competent in the Spanish as well as in the UK tax rules to avoid surprises in the future.

  • #188109
    Profile photo of Mark Stücklin
    Mark Stücklin
    Keymaster

    A Bridge,

    I assume your property in the UK is worth more than €50,000, correct? In which case yes, you need to declare it on the 720 tax form, and you could be facing a fine for late declaration. No need to panic, but if I were you I would seek specialist tax advice without delay.

    You can find out more about this topic here:
    http://www.spanishpropertyinsight.com/tag/worldwide-asset-declaration/

    In particular this article: Expats are the target of a new law on worldwide asset declaration

    An interesting news report on the subject (in Spanish)

  • #188132
    Profile photo of A Bridge
    A Bridge
    Participant

    Thanks for your help.  Having done a bit of reading I feel much happier but will try to find a tax expert and get it sorted.

    It’s seems like there is an allowance of 700,000€ so we should be fine.

  • #188133
    Profile photo of Mark Stücklin
    Mark Stücklin
    Keymaster

    The allowance doesn’t apply to your UK property, as far as the modelo 720 is concerned. Best speak to an expert.

  • #188134
    Profile photo of A Bridge
    A Bridge
    Participant

    Oh right, now not so happy.  I must have misunderstood the information.

    Thank you

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