Tax Amnesty

Information and questions about the Law in Spain and Andalucia.
ChrisW
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Tax Amnesty

Postby ChrisW » Thu Apr 19, 2012 9:13 am


El Cid
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Re: Tax Amnesty

Postby El Cid » Thu Apr 19, 2012 10:05 am

It seems to be aimed at Spaniards who have been hiding money offshore.

What is much more relevant to the "ordinary" taxpayer is that the 4 year statute of limitations on tax undeclared is being revoked.

Sid

ashtondav
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Re: Tax Amnesty

Postby ashtondav » Sat Apr 21, 2012 9:22 am

the 4 year statute of limitations on tax undeclared is being revoked.


Sid, do you know how that would work in practice.

For example I have owned an apartment and rented it to holiday makers for 8 years, and paid all the appropriate taxes. I know at least 8 or 9 owners in my complex who have done the same but not declared any tax (for the early years this was due to lack of knowledge). Some of them are now concerned about this and want to start paying from this year (they have seen ads by the likes of Blevins Franks on tax crack downs).

How likely is it that the authorities would look into their rental history, if they start paying now? I very much doubt they have kept any detailed financial records. Whenever they have asked me I have told them the 4 year rule doesn't apply because it is intentional tax evasion, and therefore the authorities could go back to the inital purchase date.

Are there any precedents for how tax authorities identify or estimate undeclared rent from previous years, when payment has predominantly been through UK accounts.

El Cid
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Re: Tax Amnesty

Postby El Cid » Sat Apr 21, 2012 10:00 am

The only time it is likely to be relevant is when the taxman decides to do a tax investigation. At the moment he can only go back 4 years. Under certain circumstances he can go back further but it has to be a case of major fraud rather than just non declaration.

Non payment of non residents imputed rental income is usually collected when the property is sold and that would be affected by the new rules.

Renting out property without declaring it is getting more problematic as they are trying to clamp down on it - you have probably read about their ability to look at utility bills to get a picture of the occupation of the property. Once they have cornered you for non declaration of rental income I am pretty sure they will want to look back as far as possible. If you don't have the records they will just assume a certain income and it would be up to you to disprove it. In these cases it is a case of guilty until proved innocent!

There is no doubt that they are going to try and collect more undeclared tax from whatever source. With the current economic situation the overall tax take is falling as companies make less profit and overall earnings reduce. It has to be made up from somewhere.

Sid

ashtondav
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Re: Tax Amnesty

Postby ashtondav » Sat Apr 21, 2012 12:42 pm

Renting out property without declaring it is getting more problematic


To be clear. Such individuals would not be covered by this amnesty, then?

El Cid
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Re: Tax Amnesty

Postby El Cid » Sat Apr 21, 2012 1:50 pm

ashtondav wrote:
Renting out property without declaring it is getting more problematic


To be clear. Such individuals would not be covered by this amnesty, then?


I imagine they would be covered but the amnesty is not a question of not being taxed. It means that if you declare previously undeclared income, you will pay tax on it plus a fine of only 10%. It lats until November - after that the usual fines apply - 50% and upwards.

No doubt the abolition of the 4 year rule will also apply so some people will be getting a very large bill.

Sid

ChrisW
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Re: Tax Amnesty

Postby ChrisW » Sat May 05, 2012 10:27 am

El Cid wrote:It seems to be aimed at Spaniards who have been hiding money offshore.

What is much more relevant to the "ordinary" taxpayer is that the 4 year statute of limitations on tax undeclared is being revoked.

Sid


Do you have a link for the statute of limitations change?

El Cid
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Re: Tax Amnesty

Postby El Cid » Sat May 05, 2012 11:00 am

ChrisW wrote:

Do you have a link for the statute of limitations change?


At this stage it is just a proposal. The article was in El Pais but I don't have a link to it.

Sid

gus-lopez
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Re: Tax Amnesty

Postby gus-lopez » Sat May 05, 2012 1:32 pm

El Cid wrote:[

I imagine they would be covered but the amnesty is not a question of not being taxed. It means that if you declare previously undeclared income, you will pay tax on it plus a fine of only 10%. It lats until November - after that the usual fines apply - 50% and upwards.

No doubt the abolition of the 4 year rule will also apply so some people will be getting a very large bill.

Sid


No , that's not correct Sid. It is just a flat 10% of the amount brought back into the system & made legal. No tax is payable.

I.E. If you own up to 1 million euros undeclared it's a 10% 100k donation, then the remaining 900k is now legal & from then on you'd pay tax on the interest earned on it , if any.

The idea is to get the 54 billion in 500€ notes back in the system. + all the smaller denominations.
Todos somos Lorca.

El Cid
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Re: Tax Amnesty

Postby El Cid » Sat May 05, 2012 6:15 pm

gus-lopez wrote:
No , that's not correct Sid. It is just a flat 10% of the amount brought back into the system & made legal. No tax is payable.

I.E. If you own up to 1 million euros undeclared it's a 10% 100k donation, then the remaining 900k is now legal & from then on you'd pay tax on the interest earned on it , if any.

The idea is to get the 54 billion in 500€ notes back in the system. + all the smaller denominations.


That remains to be seen when the legislation goes through. It would not surprise me to see some retrospective tax introduced bearing in mind the current situation.

I doubt that it applies to any forum members but the proposal to abolish the 4 year rule could be very significant.

Sid

El Cid
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Re: Tax Amnesty

Postby El Cid » Sun May 06, 2012 7:23 am

Thinking about this proposed "amnesty" in a bit more detail, it doesn't sound very generous.

If you had a million invested in a tax haven at 5% then the tax due on that for the last 4 years would be about 40k as the tax rate is only about 20% and it is a flat rate.

That means that the "fine" of 10% of the capital amount is more than twice the tax that was evaded!

Sid

gus-lopez
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Re: Tax Amnesty

Postby gus-lopez » Tue May 08, 2012 1:05 pm

El Cid wrote:Thinking about this proposed "amnesty" in a bit more detail, it doesn't sound very generous.

If you had a million invested in a tax haven at 5% then the tax due on that for the last 4 years would be about 40k as the tax rate is only about 20% and it is a flat rate.

That means that the "fine" of 10% of the capital amount is more than twice the tax that was evaded!

Sid

Yes , I agree but they aren't going to ask where it came from ! I suppose if you are wealthy then if it had been earning interest then it's possible that it could increase the rate at which you are taxed.
Then again the spanish don't like to pay anything if they can help it & the absolute minimum if they have to.
A week before signing for our house the owner suddenly decided that he wanted to reduce the declared amount by 200,000 pesetas , about £800, to reduce the amount of tax he paid !! Probably saved £200 ! It all counts ! :lol:
Todos somos Lorca.


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