This is a website for buyers, owners, and sellers of property in Spain, offering reliable information and resources to help you get things done with confidence. It is run by Mark Stücklin, author of the Spanish Property Doctor Column in The Sunday Times (2005-2008), and the book ‘Need to Know: Buying Property in Spain’ published by Collins.
A recent report on national Spanish TV makes it clear that expats have good reason to be worried about a new law obliging them to declare their assets outside of Spain.
The new law “affects all residents in Spain, including the 1 million foreigners who make tax declarations in Spain,” explains the news clip, which was aired on the national news (RTVE) on March 17th.
According to Spain’s new reporting requirements all residents have to declare assets abroad worth €50,000 or more (per category) before the end of April.
Relatively few Spaniards have assets outside of Spain, but hundreds of thousands of retired European expats living in Spain have properties, bank accounts, trusts, and pension funds back at home. This law hits them harder than anyone else. Some experts suggest it was designed to do so, whilst others argue it might be an unintended consequence.
Oscar Anton, Deputy Mayor of Javea in the Costa Blanca, believes the asset declaration exercise is missing its intended target – Spanish citizens moving money abroad to avoid taxes – and instead hitting foreign residents keen to abide by the rules. “People living here and paying taxes must declare assets over 50,000€. Why? Because the government is not thinking of the expats but the Spaniards sending money out of Spain,” he told Round Town News.
Whatever the true motivation, expats are the biggest group of victims. “We think this law goes for the collective of retired foreigners resident in Spain, who live on our coasts, and who normally maintain links with their country of origin…. bank accounts, properties,” explains Estebán Raventós, a partner of the prestigious international law firm Baker & McKenzie (starting at 0.16 in the clip). “Watch out! These people are obliged to report [their assets] before the 30th April this year.”
Further on, Jose Maria Tovillas, a professor of tax law at the Universtiy of Barcelona (starting 0.48) describes the new measure as “the most powerful that Spanish lawmakers could have come up with to get people with assets abroad to pay taxes on them in Spain .”
Which is the biggest group of residents with assets abroad? Retired European expats, especially British pensioners. Conveniently, none of them can vote in national elections.
ORGANISED CRIME, TERRORISM, AND EXPATS
Introduced as part of a drive against tax evasion, money laundering, and the financing of terrorism, you would expect this law to target locals who have defrauded Spain and taken their ill-gotten gains offshore. But in reality, it mainly affects elderly European pensioners who have moved to Spain to enjoy their retirement, having worked and saved all their lives outside of Spain.
The reporting requirements, arguably more onerous than domestic requirements, are complex and can only be done online by professionals, at extra cost. The guidelines, in so far as they exist, lack clarity: As a result, confusing and contradictory advice now abounds.
Early complaints even suggest the new reporting requirements are incompatible with financial data from other countries, making it impossible to comply in some cases. For example, Spain does not recognise trusts, which are quite common in the UK.
To make matters worse, the law has not been well publicised (a fact the news report points out) so many elderly expats may not know about the new law and how it affects them. What little information the Spanish tax office has provided is almost all in Spanish.
CRUSHING FINES
Crushing fines could be imposed on expats who fail to comply, with swingeing costs for even small mistakes. Fines start at €10,000, and escalate from there.
According to calculations by Lex Tax Consulting, failure to declare a house outside Spain worth €150,000 could lead to a fine of €162,000 were the Spanish tax authorities to get wind of it in 2014.
Such disproportionate fines, targeting a politically powerless group, could be a poisonous source of bad news for Spain for years to come. The international media would have field day with stories of expat pensioners being ruined by a law they were unaware of.
SPAIN SHOOTS ITSELF IN THE FOOT
There has always been talk of Spain becoming the “California of Europe”, attracting millions of pensioners from Northern Europe to buy homes in Spain, and spend their savings here, creating wealth, jobs, and revenues for Government coffers. Already under threat from various scandals involving corruption and illegal building in popular places like Marbella, that model will be doomed if Spain becomes a fiscal danger zone for expats.
It stands to reason this new law will discourage expats from retiring to Spain, or at least doing so legally and declaring their residency.
Everyone knows the Spanish state is struggling to fund high deficits. How many expats will now move to Spain and put their life’s savings within the grasp of the Spanish tax authorities?
BAD NEWS FOR HOUSING MARKET
Foreign demand for homes in Spain will almost certainly fall as a result. I estimate this new law could reduce foreign demand by 10pc or more, at a time when Spain needs all the help it can get to digest its property glut. As a result, Spain will lose tens of billions of Euros of foreign investment in housing alone.
Spanish banks, with their massive property portfolios, will be big losers, and the Sareb – Spain’s so-called “bad bank”, the biggest loser of all.
MISSED OPPORTUNITY
The surprising thing is, the Spanish Government knows it needs to attract foreign buyers, which is why it recently floated the idea of residency permits for Russians and Chinese who spend more than €160,000 on a home in Spain.
Many Spaniards would agree that measures are needed to encourage foreign demand, which could help Spain recover. Foreign demand for homes in Spain is the only segment showing some signs of life.
What Spain should do now is make itself an attractive fiscal destination for millions of retiring baby-boomers from Northern Europe. A big step in that direction would be a new fiscal category, like the former non-doms in the UK, making Spain an irresistible fiscal destination for expats. That would help attract millions of European baby-boomers to Spain, creating wealth, jobs, and Government revenue. It would also help deal with property glut.
Unfortunately, these new regulations take us in the opposite direction, and will alienate Europeans and non-Europeans alike. Spain now treats people it desperately needs to attract like potential criminals.
The irony is, the Spanish state will almost certainly end up with less tax revenues as a result.
The Spanish Government claims the new measures are merely “informative” but the experts appear to disagree. Why would Spain want to know about assets abroad if not to tax them at some point in future? If the objective really is just to gather information, then it will come at a high price.
UPDATE
Javea’s Deputy Mayor Anton is planning to lobby the Government in Madrid to improve the law. “I want to present a motion explaining to Madrid that they don’t realise what they have done to the expat – the spirit of the law was for the Spanish not foreign residents.
“I want to say to Madrid that we are not happy about the law and the government must limit things because in future people will not choose Spain to make a new home because the state will be asking you a lot of questions,” said the politician.
“People are coming here to retire and relax or to work – they pay their taxes, we do not want more taxes from them because they spend their money in our shops, restaurants and bars and for our services. It is wrong to get to these people.”
Meanwhile, expat action groups are preparing a petition for Brussels questioning the legitimacy of the declaration process under European Union law. Complaints have also sent to the European Commission – with the possibility of a challenge in the European court of Justice.
Carole says:
If you are an expat resident, time to leave Spain forever. If you are not a resident, never think of becoming one.
Malcolm Berry says:
I could not agree with you more! We will continue to rent or perhaps purchase in Portugal. If assets are being taxed in your home country, I thought they were exempt from tax in others?
John says:
Would never ever register as a resident in spain. There are many other countries with even better climate, lower prices higher quality of life and that are keeping thier greedy fingers away from peoples money.
Spain is not south europe, its north africa.
Phil says:
Hi John,
saw your comment on Spanishpropertyinsight regarding the “expat disclosure of assets”. You mention other Countries as alternatives to Spain to locate to.
Could you share these please and the reasons ?
Best Wishes
Phil
tg says:
Locate to Portugal, they do not tax pensions and Malta, soon Cyprus as long as you do not use the banking there.
Paul says:
Cyprus.
Graham Richard says:
Try Malaysia, no tax on pensions, 10 year residency status, double tax treaties with European countries, low cost of living, etc etc, but hot and humid.
Paul says:
“No taxation without representation”.
Sound familiar?
The article is spot on regarding Northern European baby boomers, that will now be strangled at birth.
Phil says:
Forgive my naivety as I still work in the Uk but retirement is around five years away.
Are you saying that you get your pension tax free in Portugal, Malta and Cyprus ?. If so, to achieve this, do you have to move your pension pot in to Banks in those Countries ? …not a good idea with the recent experience in Cyprus.
Would love to know more how you guys did your tax planning.
Thanks in advance
Phil
Graham Richard says:
yes you are not taxed on your pension in Malaysia and it can be held offshore. You are also not subject to having to spend at least 6 months here to prove your tax residency status, providing you avoid staying for more than the six months in the UK in which case you would be deemed to be tax resident there.
Basically Spain is doing the usual thing, when the chips are down go after Jonny foreigner, bring up the Gibraltar issue and so on. It gives the local Spanish a warm feeling, and gets them thinking that the problems are all caused by the foreigners. Its not so much the tax that you should be afraid of in Spain, its the reaction of the out of work young people when they get down to a bit of serious rioting in the future, with foreigners as the target, starting with anyone with a dark skin followed by the Brits.
Brenda Stein says:
We all pay tax on our pensions in the UK even if we are residents of somewhere else. What Spain wants to do is a double tax and on everything we have even though it has nothing to do with Spain. This is illegal.
Wendy says:
I work in th property business and British people have already started to deregister at their local police stations and are returning to the UK. Spain will not listen to the expats, the elderly put all their pension money into the local community. They say its just informative but we know better.
Jackie says:
Wendy,
I’m interested in your comment about how people at the registering at their local police stations.I am a journalist and have written about various important issues expats in Spain for the UK media, including the Guardian, Observer, Daily Mail and Times Educational Supplement. This whole issue about the asset declaration process has been brought to my attention by a contact in Orihuela, and I intend to write about it, including the petition, etc. It would be very useful to have examples of expats who are actually leaving Spain because of this. One thing that isn’t clear from various articles I’ve read is whether everybody has to fill in the 720 forms, regardless of whether they have €50,000 asset?
Mark Stucklin says:
Jackie, you only have to file if you have €50,000 or more in one category (for example cash).
ian mccartney says:
hi wendy i have a property in benitachell spain, for the pass 5 years, i am a non resident and will never become a resident.
i have a lot of dutch german irish and uk friends and all of them would now hold spanish resident papers, and have all regained residence in the states they came from.i have spoken to allmy good friends and in turn they would put back into the spainish community appox twenty five thousand euroe,s per year. the only people this money grab set up is going to affect long term is the spanish community. it is a short term fix which will turn out to be a long term issue which will hurt shop, bars banks, and the big hit will be the lost of spanish jobs.i am sorry to say but the spanish government has set it,s self in course to be a bannana republic,they may get a few weeks of spending money from person,s on holiday, but they will have lost the long term spender which they will lose for ever.
Neil D says:
This could be a populist move to win an election, but with the general election what, 3 years away?, it is hard to see any justification for killing the only goose spain has that lays golden eggs. Stupidity.
Richard says:
Carole and John are right.
What are the Spanish authorities smoking?
First they bulldoze down people’s houses (in Vera) and are then shocked when the expat housing market collapses.
Now they do this. People will be flocking to Spain to retire now!!!
Another own goal.
These people seem to be adept at killing the geese that have laid the golden eggs for years in the hope of chasing after a few additional Euros in the short term. Do they not understand how people will react to this?
When will they ever learn?
Bill says:
What’s the problem ? Just declare your assets, Spain has many double taxation agreements so taxation on your
investment income will be split between your home country and Spain. This is fair if you live in Spain now.
The only people this is a threat to are tax evaders. International tax evasion is being stamped out all over the globe,
Eventually your “preferred locations” will catch on as well. Countries like the US and Spain are just ahead of the curve in this respect.
sammy knight says:
Sorry Bill,
I think you are misled we do not pay tax on our house of abode here in the UK.
Further to this matter once you have submitted all of this information to the Spanish they could at any time implement a wealth tax (god knows at what rate) based on your world wide assets which you have submitted. sound familiar! just look at what has happened in Cyprus, and that scenario has not finished yet.
I was planning to move with my partner to Spain and set up a business in the health sector, total outlay 1 million Euros.
FORGET IT!!!!!!!!!!!!!!
Sammy
Bill says:
If you move to Australia, Switzerland, USA or most other countries you WILL pay tax on rent received from your UK abode, subject to the double taxation agreements. Many countries such as Switzerland (where I live) have a nominal wealth tax which covers all foreign assets. I declare my Spanish property each year and pay wealth tax on it in Switzerland.
What Spain is doing is nothing abnormal, just targeting evasion, although the penalties for evasion seem harsh.
sammy knight says:
Sorry Bill,
Still think you are missing the point, we are not talking about rents we are talking about whole assets, once the Spanish authorities have all the information they require it is no problem for them to impose a wealth tax this could be a one off massive rate or an annual tax or even both.
Why o why would I want to invest a life time’s savings (on which tax has been paid) to be penalised at the whim of a corrupt and opaque region?
Your last sentence mentions evasion and abnormal that is what we are afraid of.
Strongly recommend that you read and reread the comments from Nick Holmes.
Kind regards, Sammy
Bill says:
If you’re resident you will be treated the same as locals tax wise, there is a 700K limit for wealth tax. The local populace would not stand for massive wealth taxes. Plenty of countries have wealth taxes, nothing new, Spain is just trying to stop evasion. Corruption is another issue and is not relevant to the topic.
SAMMY says:
Hi Bill
just a thought, your not a retired Spanish politician now living in Switzerland are you? if so can I have a rebate? I accept cash.
God bless you
Sammy
James says:
Sam,
Spain does have a wealth tax. It was reduced to 0% by Zapatero – not taken off the statute book- and was reactivated by Rajoy on a ‘temporary basis’. Income tax was introduced in Britain on a temporary basis to fund the Napoleonic War. Draw your own conclusion! Mallorca declined to reactivate this tax, but did so in October 2012.
James
Nick Holmes says:
Sorry Bill
Look at Cyprus and you have an example of dishonest politicians stealing depositors’ money. Remember the bank guarantees that were never paid on off-plan holiday houses when developers went bust. Remember the bad publicity of bulldozing houses which lawyers and local politicians had said were legal. Many ex pats learn the hard way that spanish law in not the same as english law. English bank guarantees are honoured. Spanish bank guarantees are never ever paid !!!! I know because I lost money and the abogado said you have to sue the bank and will lose more money.
Your money is safer in England. Take a holiday or rent in lovely Spain but don’t risk your life savings buying in a country which is more like a banana republic in its lack of respect for property rights. If Spain exits the euro your money will definitely go down the pan.
Malcolm says:
I am inclined to agree with you. However we do not have the luxury of having too much spare retirement resources to risk having our assets frozen in Spain. (They will seize your real estate if you do not pay). It boils down to a question of trust and we will not want to spend our retirement fighting legal battles with a greedy government.
Chris says:
Bill have you seen the formula that has to be completed online and the information required? The form is (deliberately?) poorly designed, the information asked for is not easy to obtain from abroad (precise dates of the opening of all my bank accounts, some of which were opened over a quarter of a century ago, the average balance of each account over the last quarter of 2012, the tax registration numbers of each entity holding my cash, the listing ID number of each coany in which I hold shares, date of purchase of those shares (how does that work when a company in the past has occasionally given free shares to long standing shareholders?) etc etc. Why should EU residents (probably the majority of those declaring) have to declare assets in EU countries? What about EU freedom of movement? Why haven’t the Spanish Tax Office contacted all foreign residents on their database to inform them of this new obligation? Why are the fines so disproportionately high? If you fail through ignorance to make this declaration the Spanish can seize your assets anywhere in Europe at ANY TIME IN THE FUTURE. How can Brussels accept this punitive legislation???
Paul says:
Wow!! when will these political people learn from past mistakes ,more particularly in Spain. This has to the most crass economical move move by the ‘Rohoy’ government. It smacks of desperation from a government that is struggling with a fiscal deficit that was bought about by the previous policies of a generally corrupt political scene throughout the country. Rather than seeking some political gain to shore up their embattled position by making the expat community the financial lifebelt required.
The ‘Rohoy Government’ should be seeking to increase the numbers of expats bringing their wealth and spending power by seeking to reside in Spain, NOT chasing them away..
Remember, remember,the property halcyon days when the Spanish Government of the time was actively encouraging the influx of expats to blow their money ( in some cases their life savings) on those properties with horribly inflated prices in the 70s & 80s and happily raking in the tax revenues along with it., Yes by all means seek to stop money laundering and terrorism financing but to TAX expat retirees on holdings outside of Spain,WHAT A CHEEK!!!
One final point, will this proposed tax affect someone who rents a property in Spain long term but only uses it for part of the year, will they have to declare in the same way as full time residents?
sammy knight says:
Cant see many people supporting this idea.
Well done Mark this is good and unbiased coverage of the situation
love the monthly updates.
Regards Sammy
HM says:
I’m just shocked! My partner and I have been talking about retiring to Spain for the last 10 years. We live in Canada and have travelled to Spain every year for the last 10 years…We love the country, but it seems like the new Spanish government is dtermined to do even more damage to Spain than the previuos one did by ignoring the problems, hoping they would just “go away”
The latest moronic ideas are… well, just shocking! The reason is…no one can trust the Spanish officials, they just seem to lie and lie! Also they seem to have no consistent game plans, always reactive rather than proactive…self-perpetuating more instability!
It is really sad, as now we must re-think our plans to retire in Spain.
PS; comparing Spain to the USA might actually be true to some extent…they both act like bullies!
Nicky says:
I now will not be retiring to Spain. Why become resident in a country where you will live in fear officials can grab your house. Why spend retirement in legal and financial complication.
This worldwide asset information is all about future taxes being imposed on residents. Spain’s unemployment will go even higher with this sort of anti expat legislation. It won’t be long before more bad news stories come out from Spain where ex pats have their house seized. Many ex pat residents probably don’t even know about the new rules and the draconian penalties.
Everyone knows that you pay income tax on a rented second property. England does not have secretive banks or wealth tax like Switzerland. This declaration is about future wealth tax especially if Spain leaves the euro. No one really knows what the true situation is. Spain’s property price index like everything else is smoke and mirrors.
RONALD says:
Wow, Bill you really are missing the point or maybe you have been drinking too much cheap Spanish wine.
I have lived in Spain for 28 years and can assure you that nothing and I mean nothing is as clear as you seem to imply. Corruption with politicians and the developers ably assisted by the banks were and still are the major problem in Spain, nobody trusts them. We the residents have no idea what they will dream up next.
What you are witnessing here is a gathering of information to apply some type of tax that may help Spain out off the economical problems that are worsening by the day; I can only assume that you know nothing about Spain or its deep rooted problems.
No one with any sense would expose themselves to such risks and Spain are therefore destroying all that they have tried to build since the Franco regime.
Try to look at what has happened in Cyprus, the European Euro zone thought that they had found a sedative for the white elephant and decided to try it on the mouse before injecting the Elephant, the mouse had a heart attack and the doctors thought again, they came up with another possible cure and have now forced it onto the mouse, lets watch and see what happens, Spain thinks that they have another sedative!!!!
The doctors in this analysis are the finance ministers of the Euro zone countries which include those who have admitted their problems and those waiting to own up. Rather like controlling the chicken coup with the fox. Trust them!!!! no way Jose.
bob says:
I must say that the myopic views on here are amazing going on about corrupt politicians in other countries , greedy governments, etc,etc. Just do not look too closely at yourselves. It is your choice where you live but it is their laws, exactly as it is for foreigners living in the UK.
How do you arrive at the quote that Spanish people do not have investments abroad?? Amazing bunch of inward looking brits who probably would go down well at UKIP.
RONALD says:
Hey Bill,
Just read the following in the El Pias newspaper, translated into English for you. This is just one of the may roots that rot Spain, the residents are mere pawns. Note the Swiss co-operation paragraph!!!!!!
The High Court on Tuesday announced that it has officially named a third former Popular Party (PP) treasurer as a suspect in its ongoing corruption and tax-fraud investigations, which have already ensnared several members of the ruling party.
Ángel Sanchís, who served as treasurer for the Popular Alliance (AP) party, the PP’s predecessor, will have to appear before Judge Pablo Ruz on April 10.
Anticorruption prosecutors have asked Judge Ruz to subpoena Sanchís after determining that he helped Luis Bárcenas, another former PP treasurer who is the target of a money-laundering and tax-evasion investigation, help launder and conceal some 38 million euros in Swiss bank accounts.
Álvaro Lapuerta, Bárcenas’ immediate predecessor, who served as treasurer from 1987 to 2008, has also been named as a target by anticorruption prosecutors in a related inquiry regarding a slush fund that may have been used to pay top PP officials bonuses on top of their regular salaries. The inquiry stems from a series of balance sheets that record the extra pay bonuses as well as donations from private sector officials covering an 18-year period in which both Lapuerta and Bárcenas served as treasurers.
Bárcenas stepped down as treasurer in 2010 when he was indicted in the Gürtel kickbacks-for-contracts investigation, which is being conducted by Ruz.
According to the judge’s order, Sanchís “contacted managers” of Bárcenas’ accounts in Switzerland, “cooperating in the concealment of these accounts of funds that allegedly came from illicit activities.”
Iván Yáñez testified earlier this month before the High Court that he served as a front man for Bárcenas. Ruz said that there are indications that Sanchís was also involved after reviewing evidence from information on money transfers to the United States.
Chris says:
I understand that in the USA and France you have to declare world-wide assets. Have also been told that this is coming in throughout the whole of the EU eventually. Its the old, old story – it is best to have nothing or be mega rich. The ones in
the middle always get hit hardest.
Brenda Stein says:
In the US you have to declare them but they are not taxed. It’s spooky info gathering that’s all. Somehow no one feels so confident about the Spanish reasons for suddenly doing this. Also could some one please explain how the double taxation treaty works?
Nicky says:
Bill is either a Spanish politician, a Swiss Cockney banker or windup merchant. Please let us know.
Having fleeced their own citizens these self serving officials can only get money through the ECB or taxing middle income ex-pats on their overseas assets. What other reason can there be for collecting this sort of information. Vultures always go for the easy pickings.
I like the economic analogy of elephants and mice. The Mad Hatters Tea party is another.
Thanks to Mark for letting us get off some steam. These matters affect our quality of life and where we choose to live.
Bill says:
Neither, just a law abiding tax payer.
People here seem to be suffering from the Greek disease of thinking tax evasion is a right and obligation. It’s not.
Spain is cracking down on those with undeclared foreign income, declaring foreign income is an obligation in most countries, except in the UK if you are non domiciled (which I was for 5 years while living there, it was great). Sadly most countries do not have such tax loopholes as the UK and you are taxed on your worldwide income.
Mark Stucklin says:
Bill, this is not about avoiding income tax. This is about a mad reporting process, poor communication, insufficient guidelines, disproportionate fines, failure to think through the consequences, and making Spain an unattractive destination for EU retirees. It may be a headache for the expats it affects, but it’s definitely bad for Spain. Everyone is a loser. That is the problem.
Bill says:
I agree Mark the proposed laws are at the moment opaque and the fines excessive, but declaration of foreign assets is not corrupt or illegal as some here are suggesting, it is quite common internationally.Ironically Spain is actually cracking down on corruption with these laws.
In Switzerland all foreign assets must be declared annually and a minimal wealth tax paid. I declare everything, it is not a problem. A friend here was caught with an undeclared UK property (he had sold it and transferred the funds to Switzerland – DOH !). He paid a fine plus interest, but nothing like the penalties in your article.
SAMMY says:
Bill,
Be thankful that you are living in Switzerland and not Spain.
Mark, please keep this forum and its contents for future use I’m sure it will roll and roll. Time will tell.
Sammy
James says:
Mark,
It’s also in addition to the requirement to file a separate tax declaration for the Wealth Tax!
Iestyn ap Robert says:
If the modelo 720 is such an innocent information gathering exercise, why is it asking for details of assets which have a value of only €50k? Even if you breach that limit in all three categories, that’s still only €150k. Just compare that to the value at which the wealth tax kicks in: €700k. Is that not a bit suspicious? I think it is… and the fines, completely disproportionate too. This just looks like panic and desperation on the part of the Spanish government….
Nicky says:
Your question highlights the dangers lurking within this asset declaration.
Trusts are an anglo saxon legal concept, not used in Spain. Will trusts are commonly used in tax planning when a spouse dies. My belief is that if you are a Beneficiary of the trust assets or a trustee(legal owner) & signatory then you must declare it. Spanish law will trump English law if you are resident. Seems unfair, but they don’t recognise what type of discretionary trust protection you have acquired legally in the UK.
There are complex rules on income derived from business assets and private property companies must be commercial not just owning or renting to be exempt. All this needs specialist advice and there will probably still be grey areas open to appeal. I thought that life was supposed to get simpler in retirement !
Benbo Hilton says:
I have a holiday house in the Canarias and have Canary Islands residence. But I live and work in UK.
Does this lot affect me?
Mark Stucklin says:
It only affects residents. Where are you resident, the UK or Spain? You can’t be both.
Benbo Hilton says:
In ther UK mostly, but I spend lot of time in the Canarias where I have a residencia certificiate
which is issued to any applicant with a property and is empadronado (on the electoral role )
SAMMY says:
Mark,
Please would you cover the new EEC in your next article.
I cannot see our the estate agents, letting agents and Notaries can deal with this one
Regards
Sammy
mark says:
just to clarify /i live in spain dont work or pay tax in spain do not get free health care or anything else for that matter i am a resident however :{ but live on my uk income from property lets. i pay tax on this income in the uk/if i go down to the local police station and hand back my residentcia are my worrys of hefty fines over, i love spain but this doesnt sit well with me
Mark Stucklin says:
Mark, if you leave Spain and go live somewhere else as a resident then this change doesn’t affect you. Note that this law does not ask you to pay any new taxes, at least not yet (people worry that is where it’s leading). You just have to declare your assets abroad worth €50k or more. Unfortunately, the reporting process is complex and the fines disproportionate.
susan gladwen says:
my husband has a mortgage in his name of 110k on a house worth 150k. It belongs to him and his brother and they have a paper drawn up to explain that. After mortgage is paid and maintenance costs they get a rent of £350 per month between them.
so £175 month each rent and 20k equity in house each. Does he have to declare this. Susan G
Mark Stucklin says:
Susan, you will have to check it with a Spanish tax consultant, but I’m almost certain you will find that your husband is obliged to declare the house because it is worth more than €50k.
Tisdl says:
What if your UK Property is mortgaged. I am told there is nowhere on the form to declare this. so you are just reporting assets and not liabilities – how can this be fair?
Jackie says:
Corrected:
I am a journalist and have written about various important issues affecting expats in Spain for the UK media, including the Guardian, Observer, Daily Mail and Times Educational Supplement. This whole issue about the asset declaration process has been brought to my attention by a contact in Orihuela, and I intend to write about it, including the petition, etc. It would be very useful to have examples of expats who are actually leaving Spain because of this. So please get in touch if you are leaving because of this or know somebody who is.
One point I’d like to make with regard to the article above (which otherwise is a very good one) is that Spain does not want to be the retirement capital of Europe. In the last seven years (since I’ve been covering the subject) Spanish politicians, including national health ministers (e.g. Elena Salgado), have been complaining about the financial burden of of providing health and social care for older EU resident. Doctors unions have backed them up on this, and the Spanish media has stirred it up for a good seven years. Obviously, the healthcare costs are much higher for a population aged 55+ than for a young immigrant working population like we get in the UK. Spanish politicians have said the existing reciprocal agreement with the UK does not reimburse them anywhere near fully for the costs. For each state pensioner resident in Spain the UK gives Spain a set figure each year. For Spanish politicians, early retirees have been the biggest complaint as even with the new monthly contribution that nonworking residents have to make, they say true healthcare costs are not covered.
In the last three years there have been several Spanish research studies done on this, and all have concluded that with everything taken into consideration, including the money spent by this older expat population, Spain is losing out and that this influx of older residents in the last 10 years has not resulted in long-term tourist-level spending, as some expected; and they conclude conclude that being a retirement capital is undesirable.This is not, by the way, my opinion — I just wanted to challenge the statement made that Spain WANTS to be the retirement capital. To control this ‘burdon’ is why the Spanish government brought in those new tests of life-long financial self-sufficiency that any new EU resident wishing to live in Spain has to meet. They want an assurance that you can pay for your own health care and even for yr funeral. Obviously they only want the very wealthy retirees. When last researching this subject for the Mail on Sunday last August (when the Spanish government brought in those new wealth checks for new would-be residents), I found it very difficult to get the necessary financial statistics to challenge their claim that EU retirees have net burden on the Spanish say. People will say of the top of their heads that this older expat population is bringing in lots of money, but are unable to back this up with figures.Often the money spent by EU residents is bundled in with the amount spent by tourists. It would be great if you could help out with those figures, that would be great as this subject will no doubt come up again.
Thanks, Jacqueline Stevens. You can find (only) some of my articles on journalist.com/Jacqueline Stevens
Mark Stucklin says:
Article on this subject by Jackie: http://www.thisismoney.co.uk/money/mortgageshome/article-2317127/Expats-head-home-Spain-forced-declare-overseas-assets.html
caroline says:
Modern day Spaniards have progressed from state-run everything to the loads-of-income-generating tourist boom and from there to the money-for-nothing EU grants that funded continuous employment through public works. EU grants have dried up. The state can no longer afford to pay around 40% of the working age population to sit around in glass and chrome luxury ‘administering’ because there is nothing left to administer. Few Spaniards understand the dynamics of a modern democratic economy based on supply and demand and the freedom to spend one’s own hard-earned money as, when and, most importantly where, one wishes. So rather than applying their minds to how to generate and sustain wealth in the long term they take the short cut and tax the ‘rich’ foreigners thinking that we’ll all stay put, cough up and keep coughing up for years to come and that this will solve their problems.
Dream on. Will the last ex pat to leave the country turn the lights out.
Joanne says:
Hi there, i am a resident in spain, and i have recently declared the property that i have in france… I plan to sell it in the coming months, and buy an apartment in spain… will i get double taxed on this?? If i pay capital gains tax in france for the sale of the property in france… will i also have to pay the CGT in spain, or only the difference (if any?) DO you know if there is a difference?
Also, would it make a difference if i have bought a property before the 31 december 2014? If i still have my money from the sale in my bank accounts (outside spain) i know i will need to declare this money, but could i be liable to pay tax on this money?
thanks
Randolph says:
Why would you ever buy a a property in Spain as a foreigner? I´m from the US and just left Spain after living there for 8 years. I spoke perfect Spanish, and most of my friends were Spanish. But at the end of the day, it´s very apparent that all they want to do is steal money from foreigners. I finally got fed-up with the obvious bad intentions of the average Spaniard towards me for being a foreigner, and left the country. I have no problem paying taxes where I live, although when I tried to pay taxes in the Hacienda, they said that I was american and not allowed to pay taxes or do anything official in Spain (yes I had a residency card that entitled me to work 20/week. Even when I got my permanent card, I still was told I could´nt pay taxes because I was american, and should try go back to home.
If you think that the Spanish are using this new law with good intention, you know nothing about how the Spanish are. The govt and people will take any chance to rip-off a foreigner. Also if you think that the law sounds innocent, your kidding yourself. The spanish govt. very rarely obeys their own laws. They will use your information to try and extort money from you in the future with little regard to what there own law says. When it comes to improper treatment of a foreigner, everything is fair game to them. They will take you money regardless of what their own laws say. If you try to do anything about it, they will even listen to you, because you are a foreigner.
Spain can be a wonderful country, and great culture, but it´s not a serious place. I did not want to return to the states, but Spain has just made it impossible for foreigner to live there.
Jeff says:
Can someone here give me some guidance on my proposed move to Spain as a temporary resident and renting a villa. I am an Australian resident and will be working on a 28/28 day rotation out of Spain and leaving my wife and daughter there while at work and we intend on staying in Spain for around 3 years.
Do these Spanish tax laws require me to pay tax to them on my salary being approx. US$180K a year just for living in the country and spending my money and contributing to the communities there.?
And also am I led to believe that I have to declare to the Spanish tax office my property in Australia that my sons live in for rent free and I receive no rental income from.?
If someone can give me any first hand knowledge with a situation similar to mine would be greatly appreciated so as I can start working on a Plan ‘B’ country if Spain is so tax greedy.
Mark Stücklin says:
You need to consult a specialist lawyer, but if you spend less than 183 days a year in Spain you should be able to argue that you are not tax resident and so don’t have to pay tax or declare any assets.
Kim says:
Hi
I own an apartment in Spain, I do not rent it out and I only use it for a couple of weeks holiday each year. The plan was to eventually retire to Spain but all of the latest information in the posts above have scared me.
As a non resident who still pays tax on earning in the UK and who is non resident do I need to complete the forms that have been sent to me by the BBVA bank.
Please help I am really confused.
Kim
Mark Stücklin says:
Kim, what forms have you been sent by BBVA? What title or modelo number?
Joko says:
Now that we are at the end of 2015 and the UK government has introduced new laws to take effect from April 2017 on buy to lets, I am wondering if it will be more viable despite the Spanish tax laws on assets owned abroad, to take up Spanish residency and pay tax on the UK properties. I own buy to let properties in Spain too. I really want to know as soon as possible so that I can plan ahead.
Mark Stücklin says:
Joko, the worldwide asset declaration is just a reporting requirement, not a tax. If you are Spanish resident you pay tax in Spain according to your income. You’ll need to consult a tax lawyer to compare which works out as higher in your case, Spain or the UK, based on your income in both places.
Tony says:
Im a residence in spain since december 2014, I didnt know to fill in a modelo 720 form in 2015..I found out I had to do it the first 3 months in 2015 but I didn’t know a Gestor told me I’m to late so they can fine me with 150% is this right? even If I fill it in one year later? Their advice was not to declare but this sounds strange to me ..I have 700k in assets
ian thomas says:
I have a property in Spain which is in a UK limited company [paying corporation tax on rental income when we are not there] created for the purpose with dual taxation with Spain. I am simply a director and shareholder in the company and can spread the shareholding amongst my family. My shares will pass to my wife . . .
This would seem to be the best way to resolve this very invasive demand for information and obviate any worries about inheritance tax.