To reside or not to reside...

Information and questions about the Law in Spain and Andalucia.
PavAmber
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To reside or not to reside...

Postby PavAmber » Thu Mar 09, 2017 8:55 pm

Hi all
We are now at the stage where having bought a house and car, got an NIE, ITV etc. We were ready to spend a pleasant few hours in the police station applying for Residencia. From the start we have wanted to be fully legal, pay tax here in Spain etc.

We mentioned this in one of our local bars the other night to be met with much incredulity on the part of some hardened ex-pats,

To explain. Our intention was to stay for good (certainly be in the country for longer than the 180 odd days to be deemed tax resident) but in truth could go back to the UK for long enough not to. The view of the horde was we would be mad to become resident if we have the choice not to. Amongst many reasons were:-
1. Higher tax - given our income is effectively just my private pension c€1200 pcm, I wouldn't have thought we would pay much tax. It is, of course, already taxed in the UK before being paid to me.
2. Driving license doesn't need changing. Not sure if this is true but feels a bit "so what". I can't say I am particularly attached to my UK one.
3. No overall benefit having "Residencia". Again I don't really think this is correct but if we decide to stay here it is the law surely.
4. There were numerous other points which just felt like moaning (bureaucracy, poor building, corruption) and led to me upsetting a few by saying "so why do you live here"?!

Overall, we were left questioning ourselves and our decision. We have always felt that if tax is due somewhere then that is just a fact of life. We don't enjoy paying them but who does?! It also feels our original plan was right, but.....

We would appreciate any thoughts/comments from those who have tread this very path.
Cheers

El Cid
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Re: To reside or not to reside...

Postby El Cid » Thu Mar 09, 2017 9:08 pm

Of course, the "horde" in the bar may soon find out that they have no right of residence in Spain after Brexit.

Sid

ashtondav
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Re: To reside or not to reside...

Postby ashtondav » Thu Mar 09, 2017 10:10 pm

You will pay more tax in Spain. If that is your main concern do not stay more than 180 days. Personal allowance is £11,500 in the uk, rising to £12,500 in the next three years. Personal allowance in Spain is less an half that, I think.

I would stress that this is just based on me skimming the rule book a few months ago.

Others who actually reside in Spain will know MUCH MORE.

As for the "horde", they are illegals. And I'll bet when they were in the uk I'd wager that they'd have illegal non tax paying immigrants either deported or imprisoned.

PavAmber
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Re: To reside or not to reside...

Postby PavAmber » Thu Mar 09, 2017 10:23 pm

Thanks
Sid - A point we made repeatedly. The responses were "jingoism" at their worse.

Ashtondav - Appreciated. We accept we will pay more tax but (subject to OH approval !). We don't think going back for 6+ months makes it worth avoiding some tax. We chose to move here so "when in Rome". We have always said we would try to do things right from a compliance perspective and have felt very welcomed by the Spanish people thus far.

Couldn't agree more on the "horde" comment at the end. It probably has made our mind up for definite. A big part of the reason we left!

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White Horse
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Re: To reside or not to reside...

Postby White Horse » Thu Mar 09, 2017 10:42 pm

PavAmber - you are doing the right things. We also did everything required and it is actually beneficial to comply with the law.It simplifies life, too, - you don't end up trying to convince the Brits you live in Spain and the Spanish that you live in the UK!
Of course, there are those that will say that people who don't live under the radar and tell a few fibs are goody goodies and other similar sleights.
If you ever decide to return to the UK it will be much better if you have lived in Spain legally, having had a resident's certificate, and completed tax returns. It makes selling your property simpler, too.

I hope that you enjoy Spain as much as my family did, although we are now in the UK after 17 excellent years in Almería!

Free at Last
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Re: To reside or not to reside...

Postby Free at Last » Fri Mar 10, 2017 9:11 am

To add to the very valid reasons already given for registering and doing everything legally, I would just add the following.

If your only income as a couple is €1200 per month, then your tax liability (although higher than it would be in the UK) will be minimised if you submit a joint tax return as €3,400 of your partner's personal allowance will be added to your own allowance, plus the €2,000 per year general allowance against earned income. You are likely to save more than the amount you will pay in Spanish income tax on the difference betwen your IBI bill and your UK Council Tax.

If the S1 system survives Brexit, once you become a state pensioner you cannot register an S1 to receive state healthcare in Spain unless you are registered as a resident.

I am afraid the attitude you encountered is all too common and, as you say, is hypocritical in the extreme given the views of those concerned on immigrants in the UK not meeting their obligations.

PS One more reason without a cetificate of having registered as a resident you would not be able to have a resident bank account and would therefore be paying bank charges whereas accounts with no charges are available to residents who pay in more than a certain amount each month.

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Re: To reside or not to reside...

Postby elusive » Fri Mar 10, 2017 9:24 am

Considering brexit is on the way i would make sure are legal ie having residencia. Who knows what sort of problems may arrise interms of entering the country and what if during the talks they say all people with residencia can have free healthcare.not likely but....

If you/their issue is the income tax so dont get residencia.if hacienda pick you out not having residencia means nothing if they see that you live here pretty much full time by looking at your bills etc.that happens alot. If you live here full time under the radar then most who do that stay under the radar altogether.ie they rent they dont sign on the padron prob dont have cars. Ie theres no way of tracing them. The "ones"who get caught are the ones who leave a paper trail.

If you were gonna move lock stock... then do it. But do everything. If you want to save abit in tax which you wont because if you stay in the uk and come out here as and when you will have council tax to pay etc etc .is it worth the hassle

And finally its the law.... people want all the positives without the negatives yet are the first to moan as they sit reading the daily fail

PavAmber
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Re: To reside or not to reside...

Postby PavAmber » Fri Mar 10, 2017 12:25 pm

@Elusive. Didn't mention it, but 2 actually had copies of The Mail with them..! I know a number do exactly as you say and rent/don't own a car etc. Not really sure why they moved.

@FreeAtLast. Thank you for the tax comments. Well worth investigating. We'll wave as we drive through Velez en route the police station at Torre del Mar!

All in all common sense from the forum again. It is appreciated.

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Re: To reside or not to reside...

Postby Miro » Fri Mar 10, 2017 1:01 pm

PavAmber wrote:Not really sure why they moved.


They didn't, they're on an extended holiday. Like any other holidaymaker, they don't bother to learn the language or anything about local customs or culture. Not that there's anything wrong with that: if you're keeping a foot in both camps, i.e. splitting your time between Spain & UK, there's an awful lot to be said for remaining a UK resident and simply taking extended holidays in Spain. When (if) it comes time to pack up and go back home permanently, you'll be glad you didn't get embroiled in Spanish bureaucracy in the first place, 'cos it ain't so easy to extricate yourself once you're in lock stock....just the thoughts of one who's leaving after 20 years of "doing it right". :wink:
Don't worry about what people think, they don't do it very often

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elusive
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Re: To reside or not to reside...

Postby elusive » Fri Mar 10, 2017 3:34 pm

I think alot of people would have a foot in both camps if they could afford to. Been here in june, july and august really isnt that pleasant for a start. But unless you live in the right part of the uk,worked and retired in the right sector or were able to sell off grannies cheaply brought council house for a lotto winning amount then for alot of people its a pipe dream and they have to jump in with both feet or stay in the U.K

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Wicksey
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Re: To reside or not to reside...

Postby Wicksey » Sat Mar 11, 2017 10:57 am

I agree Elusive. You need a good income to be able to run 2 homes, especially the UK one with council tax being so high. Our UK house is working for us and giving us an income but we could never afford to just have it there sitting empty for us to use on a few months a year (as much as we would love to escape the heat of summer ... mind you the 4 cats would have to go with us too!) We used to have the Spanish house as a holiday home but it cost very little to run and we were working then. We are here for good now even thought the tax rates here are much worse than the UK :(

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Re: To reside or not to reside...

Postby wollie » Sun Mar 12, 2017 5:08 am

I cannot offer any advise to OP as each situation but i have a few questions to add to.
Say i have an income of €25k in the uk and €20k after tax after tax and uk tax resident.
Q 1... If a person becomes tax resident does the €25k become liable for tax in Spain and no liability whatever in uk?
Q 2... Also what is the individual tax allowed per individual? i am assuming couples are assessed separately and its just x 2.
Q 3... What % of income is paid after we have reached our individual allowances?
Q 4... Is there a scale where the % of income is more if we earn more (ie first €5k 20% next €5k 20%)
Apologies to OP as more questions but they likely interested in these answers too.
I just like to know these things.


Many thanks.

El Cid
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Re: To reside or not to reside...

Postby El Cid » Sun Mar 12, 2017 8:36 am

I suggest you read the extensive FAQ on the subject.

viewtopic.php?f=42&t=27576

Sid

Pamela1
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Re: To reside or not to reside...

Postby Pamela1 » Sun Mar 12, 2017 8:40 am

wollie wrote:Apologies to OP as more questions but they likely interested in these answers too.
I just like to know these things.
Many thanks.


Yes i'm interested too Wollie, it's good to have an understanding of how things work.

wollie
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Re: To reside or not to reside...

Postby wollie » Sun Mar 12, 2017 9:40 am

El Cid wrote:I suggest you read the extensive FAQ on the subject.

viewtopic.php?f=42&t=27576

Sid


Sid,

Thanks for that alot of good info in that document, i will have a proper look later.

Savings.

All savings income including personal annuities are taxed at a flat rate of 19.5% up to €6000. From €6000 to €50000 the rate is 21.5% and any income above that is taxed at 23.5%. Savings accounts will have had the tax withheld (at 19.5%) If your income was over €6000 then there will be a small amount extra to pay.

I am assuming this tax is on the interest accrued over the year?

Many thanks..

El Cid
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Re: To reside or not to reside...

Postby El Cid » Sun Mar 12, 2017 11:38 am

Yes, just the interest element.

Sid

markwilding
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Re: To reside or not to reside...

Postby markwilding » Sun Mar 12, 2017 5:18 pm

Simply put even if you live in Spain, you have to pay tax on UK income in the UK However, it would have to be over the tax threshold before you pay. I have Uk income split betwen my wife and I, doubling the threshold. We have to do a UK tax return each but pay nothing

I then pay the tax on it once a year here.As it's rental income, the amount paid is a little peculiar because 21% is paid on 80 percent no matter how much the expences are, although I believe it to be paid on a smaller percentage in other parts of Spain

El Cid
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Re: To reside or not to reside...

Postby El Cid » Sun Mar 12, 2017 5:58 pm

markwilding wrote:Simply put even if you live in Spain, you have to pay tax on UK income in the UK


Not if it is pension income.

Sid

Miro
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Re: To reside or not to reside...

Postby Miro » Sun Mar 12, 2017 6:04 pm

Or interest on savings
(remember that?)
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.

PavAmber
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Re: To reside or not to reside...

Postby PavAmber » Sun Mar 12, 2017 7:49 pm

Hi all
Many thanks for all the replies and comments. Very interesting.

Basically, our decision is made and we will progress with our residencia and submit our tax returns here etc. It feels right and, as pointed out, swings and roundabouts when you take into account council tax etc. in the UK.

In reality, after reading all the replies, we actually don't think we have a choice anyway. Although we could go back to the UK regularly, we don't have a property there anymore so our "domicile" is factually Spain.

As previously said our income is only from my pension (private) and around €1200 pcm. Interested in Sid's comment that tax not payable on pension income? Not sure how it works as my income is taxed already in the UK?

So our "to do" list looks like:- some at same time
1. Residencia
2. Driving license
3. Padron
4. Tax return(s)

We have since seen a number of "the horde" again and, whilst not true of all, it appears quite a number don't have a foot in the UK and Spain but have simply stayed under/off the radar for some spectacular amounts of time in some cases!

Thanks again.


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