Income tax in spain

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Robano
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Income tax in spain

Postby Robano » Thu Oct 08, 2009 6:11 pm

I thought that a tax resident in Spain was liable for tax on all world wide income. An exception would be pensions derived from UK government employment. However, HMRC wants to tax me on interest derived from a UK bank deposit! Also from a small income derived from employment on online work with a UK university. Both of these income have ben declared to the spanish tax authorities. My reading of the double taxation treaty article 15 made my head spin.

Any enlightenment would be gratefully recieved.

Steve
Now living, relaxing and passing the time Cornwall for a while - very often thinking of the Axarquia and its mountains.

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gerryh
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Re: Income tax in spain

Postby gerryh » Fri Oct 09, 2009 8:03 am

Have you told HMRC, and sent them proof, that you are tax resident in Spain and pay all your income tax in Spain?
Worked OK for me. :D
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Gerry
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Robano
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Re: Income tax in spain

Postby Robano » Fri Oct 09, 2009 8:33 am

Hi Gerry

Yes I sent back a full tax return and a letter explaining everything. I think sometimes a little too much information doesn´t work.

Steve
Now living, relaxing and passing the time Cornwall for a while - very often thinking of the Axarquia and its mountains.

Miro
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Re: Income tax in spain

Postby Miro » Fri Oct 09, 2009 7:12 pm

If you are tax resident in Spain, why would you be doing a tax return in the UK anyway? (Genuine question - I don't understand).
If you notify your UK bank of your residency in Spain, all interest will be paid gross.
Don't worry about what people think, they don't do it very often

"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.

Robano
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Re: Income tax in spain

Postby Robano » Fri Oct 09, 2009 8:32 pm

Hi Miro

I put in a tax return as my pension is subject to UK tax as a government service pension. Also I worked the first part of the tax year in the UK.

Re interest on the bank deposit - I thought as you and in fact had the interest paid gross. But then HMRC changed my tax code to reflect tht income - actually reduced my code! The guy explained in too much detail and pointed me to this link - http://www.hmrc.gov.uk/cnr/dtdigest.pdf see page 23. So the spanish will tax it as they should and the UK revenue also tax it. They are sending forms which will mean that the tax is reduced from 20% to 12% but that is it. The actual treaty link for interest is - http://www.hmrc.gov.uk/manuals/dtmanual/DT17610.htm

Actually I have now moved it to an offshore account which will pay me gross, declare the interest to the spanish authorities and it falls outside of the UK tax system so long as I don´t remit it to the UK.

Simples

I guess the moral is to get completely out of the UK

Steve
Now living, relaxing and passing the time Cornwall for a while - very often thinking of the Axarquia and its mountains.

El Cid
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Re: Income tax in spain

Postby El Cid » Fri Oct 09, 2009 10:23 pm

Robano wrote: They are sending forms which will mean that the tax is reduced from 20% to 12% but that is it.

Actually I have now moved it to an offshore account which will pay me gross, declare the interest to the spanish authorities and it falls outside of the UK tax system so long as I don´t remit it to the UK.
I guess the moral is to get completely out of the UK Steve

Yes, the 12% rate is a part of the DT Treaty - strange but that's the way it is.

An offshore account solves that problem but of course you can deduct any UK tax from any Spanish tax due so it all works out OK in the end.

Sid

Miro
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Re: Income tax in spain

Postby Miro » Sat Oct 10, 2009 12:06 am

Thanks for that. Clear as mud now. :shock:
Don't worry about what people think, they don't do it very often

"Acquiring a dog may be the only opportunity a human ever has to choose a relative," Mordecai Siegal 1935-2010.


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