General Tax & Wealth Tax

Information and questions about the Law in Spain and Andalucia.
onlinelee
Tourist
Posts: 8
Joined: Tue Jun 09, 2015 8:36 am

General Tax & Wealth Tax

Postby onlinelee » Tue Jan 03, 2017 10:36 am

Hi,

My wife & I are overdue becoming tax residents in Andalucia. We own our own house in Spain but have no income or property in the UK, only investment funds and cash savings, we do not draw dividends from funds as they are automatically added to the unit value. Non of this will change for at least 7 years until my wife & IO start receiving state pension.

Meanwhile, I will seek advice but hoped one of the Guru's could just give me a potted version of what I can expect tax & wealth tax wise until we start drawing pensions or investments. Thanks Lee

El Cid
Andalucia Guru
Posts: 13384
Joined: Sun Oct 24, 2004 10:42 pm
Location: La Herradura, Costa Tropical, Granada

Re: General Tax & Wealth Tax

Postby El Cid » Tue Jan 03, 2017 11:21 am

So, if you have no income and don't take dividends, what are you living on - savings?

You should look at these two FAQs first and then come back with more specific questions.

viewtopic.php?f=42&t=27576
viewtopic.php?f=42&t=30699

Sid

Lavanda
Andalucia Guru
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Joined: Thu Jul 29, 2004 1:42 pm
Location: Cáceres Province, Extremadura

Re: General Tax & Wealth Tax

Postby Lavanda » Tue Jan 03, 2017 12:14 pm

no income or property in the UK
implies the income derives from Spain but the question is, agreed, a bit woolly.

onlinelee
Tourist
Posts: 8
Joined: Tue Jun 09, 2015 8:36 am

Re: General Tax & Wealth Tax

Postby onlinelee » Tue Jan 03, 2017 12:43 pm

Sorry, I wrote the post in a rush just prior to my wife dragging me out the door!!

My wife & I are retired here with no income in Spain or UK. We live on tax paid savings drawn from UK bank accounts. Ideally I would like to know as a couple who have no income, like the UK would there be any tax to pay, I would like to think not? At what point of worth should I worry about wealth tax, as I assume this may be the only other tax that applies? I appreciate this would all change once we have income, thats many years down the road though!

In short, the link El Cid kindly sent suggests we will pay no tax as a return is not necessary, this just leaves the question about wealth tax, and at what point it would become a concern for a couple in our position?

El Cid
Andalucia Guru
Posts: 13384
Joined: Sun Oct 24, 2004 10:42 pm
Location: La Herradura, Costa Tropical, Granada

Re: General Tax & Wealth Tax

Postby El Cid » Tue Jan 03, 2017 1:46 pm

If you have savings which are paying interest, then you are liable to pay Spanish income tax on it, even if the tax has been paid in the UK. You can offset any UK tax against any Spanish tax due on the same income.

If you are tax resident in Spain, which you will be if you exceed the 183 day rule, you are deemed tax resident whether you submit a tax return or not. It is always advisable to submit your first tax return even if there is no tax due as this establishes you in the tax system.

Remember that your entire worldwide income is taxable in Spain and the rules on income producing investment funds may be different to the UK. You might be liable to Spanish CGT on the increase in value of the fund.

Your biggest exposure is if you do not submit a Form 720 asset declaration which you must do if you have assets in any one category of more than €50000. The fines and penalties for failing to do this are severe.

Wealth tax does still exist in Spain, but you get an allowance against your permanent Spanish home of €300k (each if jointly owned) and an individual additional allowance of €700k.

Sid

onlinelee
Tourist
Posts: 8
Joined: Tue Jun 09, 2015 8:36 am

Re: General Tax & Wealth Tax

Postby onlinelee » Tue Jan 03, 2017 3:27 pm

El Cid, super helpful as always, thank you.

One final point... yes we earn some interest on cash ISA's etc and assume this along with any other interest is potentially taxable, however, its a small amount, maybe £2000, as a tax resident would I not have a tax free allowance to take of that? You confirmed what I hoped for re wealth tax.

onlinelee
Tourist
Posts: 8
Joined: Tue Jun 09, 2015 8:36 am

Re: General Tax & Wealth Tax

Postby onlinelee » Fri Jan 06, 2017 9:25 am

El Cid, sorry, clearly I should have read your detailed report on tax. It seems as a married couple with no children or dependants our total income from savings interest and draw down or pension payments before tax is payable is 11,000e - This is far less than the 40,000e my Spanish solicitor led me to believe, she must have misunderstood my question!!!

markwilding
Andalucia Guru
Posts: 5862
Joined: Fri Aug 14, 2009 11:02 am
Location: Bilbao Spain

Re: General Tax & Wealth Tax

Postby markwilding » Sun Jan 08, 2017 5:10 pm

My wife and I have various accounts and rental income from the UK but it's not enough to pay taxes in the UK so we have found it easier to fill in the various forms so as not to pay any tax in the UK at source then declare everything here.
We stll have to fill out both a UK return around September and a Spanish one in May.

The English one we do ourselves and is quite straightforward especially now as we have done quite a few. The one I do here is more complicated because I'm self employed so I pay someone to do it for me.

If your wife and you don't earn more than the UK tax allowances, it might be a good idea to do it this way.


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