Savings for Expats

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alicia
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Savings for Expats

Postby alicia » Thu Jul 15, 2010 6:19 pm

Hi

Is it worthwhile keeping what little savings I have in UK - I had a small ISA account but now I am in Spain I suppose I cant keep this can i!!!!

Someone did mention to me about British Building Societies in Gibraltar but I would imagine these are not the same as the Building Societies on the UK High Street are they, or covered by same legislation and protection - I know I am going off the subject a bit but look at M&S in La Canada, British High Street name but not the same as UK High Street M&S........if you see what I mean.

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Re: Savings for Expats

Postby El Cid » Thu Jul 15, 2010 7:34 pm

alicia wrote: I had a small ISA account but now I am in Spain I suppose I cant keep this can i!!!! .



Yes you can keep it but if you are tax resident in Spain you will have to pay tax on the income and potentially CGT. It is only tax free in the UK.

Sid

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Campo Steve
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Re: Savings for Expats

Postby Campo Steve » Fri Jul 16, 2010 7:18 am

As Cid says, you can keep it, but have to pay tax on it in Spain.

You also can't add to it.
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Re: Savings for Expats

Postby annfoto » Fri Jul 16, 2010 9:12 am

Someone did mention to me about British Building Societies in Gibraltar but I would imagine these are not the same as the Building Societies on the UK High Street are they, or covered by same legislation and protection


Leeds Building Society in Gib is the same. It is covered by FSA protection from London. The downside however is they do not have internet banking facilities, you have to operate it by post or go there in person. Post to Gib takes about 2 weeks, letters go to the UK and are then sent on to Gibraltar.

Alliance & Leicester International in the Isle of Man is owned by Santander but governed by IOM rules and protection so is Nationwide International in the IOM.

You should advise your UK bank of your new address in Spain and send them the Inland Revenue form to get interest paid gross, then declare it on your Spanish tax return.
Ann

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alicia
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Re: Savings for Expats

Postby alicia » Fri Jul 16, 2010 10:36 am

Hi

When you say, "Tax resident in Spain" what does that mean exactly. The likelihood of my working in Spain is probaby zero so never going to pay tax here as I would not have any earnings to be taxed!!! So from that basis, would I be deemed to be "Tax Resident in UK"!!! I have heard people say you will always be "domiciled" in UK as regards Tax unless you can show you absolutely have no ties to UK - but I have never completely understood the reasoning behind that. Sorry to show my ignorance of such important matters.

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Enrique
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Re: Savings for Expats

Postby Enrique » Fri Jul 16, 2010 11:00 am

Hi alicia,
Loads of coverage on the Forum...............

Also came across this example....................

Mods don't like it so will PM you the example.....very thorough........no PM either :(

Really have to decide which is your main country and stick to the rules if you can . :(
Last edited by Enrique on Fri Jul 16, 2010 11:06 am, edited 1 time in total.

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Trooperman
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Re: Savings for Expats

Postby Trooperman » Fri Jul 16, 2010 11:06 am

In Gib there's also Norwich & Peterborough Building Society and The Newcastle B.S. - there may be others. As fas as I know, you'll be "protected" by the FSA rules - 'cos I asked that very question. The Norwich & Peterborough has internet banking facilities.

El Cid is the tax expert, but I believe you automatically become tax resident in Spain if you spend more than 180 days there - and there's no argument. Whether you're liable for any tax payments depends on your income(s) and the Spanish rules and rates of tax.

Incidentally, Alicia, the M&S in Gib is a franchise operated by a company called York Ltd, incorporated in Gibraltar and I believe the M&S in La Cañada is also run by York Ltd.
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Re: Savings for Expats

Postby El Cid » Fri Jul 16, 2010 11:07 am

alicia wrote:Hi

When you say, "Tax resident in Spain" what does that mean exactly. The likelihood of my working in Spain is probaby zero so never going to pay tax here as I would not have any earnings to be taxed!!! So from that basis, would I be deemed to be "Tax Resident in UK"!!! I have heard people say you will always be "domiciled" in UK as regards Tax unless you can show you absolutely have no ties to UK - but I have never completely understood the reasoning behind that. Sorry to show my ignorance of such important matters.


Tax residency is decided by where you live not where your income comes from.

If you spend more than 183 days (non necessarily consecutively) in Spain in one calendar year you become tax resident by default and then are liable for Spanish tax on your worldwide income (with some exceptions, notably UK government pensions).

Domicile is an entirely different issue and does not normally affect the tax you pay in Spain. You can be tax resident in Spain and still domiciled in the UK (most British expats probably are).

In the UK there has been a lot of comments about "non-doms". Under UK tax law, if you are not domiciled in the UK but tax resident in the UK you do not pay tax on your world wide earnings, only those that are earned in the UK or income from other countries that is brought into the UK.

In almost every other country, including Spain, you pay tax on your worldwide earnings if tax resident - the concept of "domicile" does not exist.

Sid

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Re: Savings for Expats

Postby El Cid » Fri Jul 16, 2010 11:09 am

Enrique wrote: Really have to decide which is your main country and stick to the rules if you can . :(


No - there is no decision to be made - it is made for you.

The only decision you can make is where you choose to live.

Sid

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Mowser
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Re: Savings for Expats

Postby Mowser » Sun Jul 18, 2010 11:41 am

Even if you're not earning, don't you still have to register with the authorities here and make a nil return?

Assuming this is so, as long as you are making a return - albeit a nil one - you can claim back some of the tax you pay on UK savings.
Dave

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Re: Savings for Expats

Postby El Cid » Sun Jul 18, 2010 12:18 pm

The rules for who has to make a declaration are quite complicated but one condition is that if you have investment income of more than €1600 you must make a declaration. remember that you have to declare your world wide income which would include UK investments.

Any tax you may still have to pay on UK savings can be deducted from any Spanish tax due but you can never get a refund from the Spanish taxman if the UK tax is greater than the Spanish tax.

Sid

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Re: Savings for Expats

Postby Mowser » Sun Jul 18, 2010 12:52 pm

Thanks Sid. As an ex council employee (pension) I pay UK tax as is the law. I make a Spanish declaration and include interst on UK savings. My pension is discounted. I also declare income from renting an apartment, but with the allowances in Spain, the tax is zero.

Every year I contact the tax office in the UK and am given a rebate on taxes I've paid on interest.
I have asked Nationwide for the form allowing me to get my interest paid gross. Unfortunately it was optional for banks & building societies to opt into this scheme.
Dave

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Re: Savings for Expats

Postby El Cid » Sun Jul 18, 2010 1:08 pm

Yes, some banks and building societies are not helpful on this point.

I think the maximum they are allowed to deduct is 12% tax for non residents - it might be worth checking this out - it's part of the double taxation treaty.

Sid

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Re: Savings for Expats

Postby Mowser » Sun Jul 18, 2010 1:10 pm

I'm getting that Sid. Thanks.
Dave


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