Work and taxes in Spain

[Niki Harrison]

Does anyone know how much you can earn in Spain before having to pay tax?

Thanks

Niki

[El Cid]

You are not obliged to make a tax declaration unless your income is over 8000 euros. This is likely to be increased to 9000 next year.

Sid

[safeashouses]

A lot more generous allowance than UK then and yet another reason for moving to Spain.

[El Cid]

I should have added that this minimum figure applies to the joint income of husband and wife and any children living at home and must not include more than 1600 from investments.

If you are running a business or are self employed you have to declare.

Its not a bad idea to declare even if your income is low enough to generate a zero tax figure - it is an easy way to make sure that you are officially tax resident when you want to claim the benefits of being resident with regard to CGT and IHT.

The actual allowances are less than 8000. You get 3400 personal allowance and a wage earners allowance of between 2400 and 3500 depending on income. The higher the income the lower the allowance.

I think you will find that the UK allowances are better than this. The over 65 allowance in the UK is an additional £2245 but in Spain it is only 800 euros.

The tax rates in Spain, at almost any income level, are higher than the UK.

Spain is certainly not a tax haven!

Sid

[Moving Soon]

I would be grateful if Sid or someone else equally knowledgeable could answer a question for me.

If I succeed in selling my house in UK and move over within the next few months, neither I nor my partner will have any earned income for the next few years until our pensions come on stream. We will be using the money from the house sale plus some inherited capital to live on in the meantime. Not worried about depleting our capital as pension lump sums will replenish eventually, to some extent at least - plus I don't have any childen to worry about leaving it to.

Other than tax deducted at source from bank interest, will we have any other tax liability in Spain until we start to receive our pensions? I note your comment about submitting a tax return for the purposes of proving residence for tax purposes and think this could be worthwhile in order to try to get bank interest paid gross, and eventually pensions as well, so that we won't have to pay UK tax and then try to reclaim it. I don't want to avoid paying tax in Spain in any way, I already submit annual non-resident tax returns and pay my dues! Juast want to be sure what we will need to pay out so I can check our projected budget is accurate and not get any nasty surprises at year end.

[safeashouses]

Oh dear got myself overly excited about the tax allowance then thought it was each.

Moving Soon - we are in the same position as you. Why can nothing be simple red tape etc. always has to get in the way.

Healthcare is another consideration we will all have too unfortunately as we fall between two stools.

[El Cid]

Other than tax deducted at source from bank interest, will we have any other tax liability in Spain until we start to receive our pensions? I note your comment about submitting a tax return for the purposes of proving residence for tax purposes and think this could be worthwhile in order to try to get bank interest paid gross, and eventually pensions as well, so that we won't have to pay UK tax and then try to reclaim it.

Your tax liability in Spain is your world wide income. Initialy, as you have no income you will pay no tax.

As for bank interest it depends where the bank is. If it is in the UK it is normally possible to get it paid gross if you are non UK tax resident. This also applies to pensions. Bank interest in Spain has tax deducted at source but you declare this in your tax return and it will be repaid fairly quickly.

You will need to apply to the UK revenue to be classed as non resident if you wish to get UK income paid gross. There is a special Centre For Non Residents (CNR) who deal with this. You fill in a form with your personal details and get it stamped by the Spainsh tax office. It is then returned to the UK. This ensures that you can only become non tax resident in the UK by becoming tax resident in another country. "Off one hook and onto another" springs to mind! I think it would be worthwhile to do this as soon as you can, rather than wait until your pensions kick in.

The CNR have an excellent website at http://www.hmrc.gov.uk/cnr/ where you can download the forms.

Sid