Exchange rate for tax return 2020

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fyfin
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Exchange rate for tax return 2020

Postby fyfin » Sun Jan 03, 2021 10:48 am

Happy New Year everyone and apologies for jumping the gun, but having nothing better to do I've been completing my spreadsheet for the tax return.

With no assets in the UK I'm not interested in the rate as at 31st Dec 2020 but I will need the average rate for the year as my private pensions are paid into my UK bank account.

I saw it somewhere as €1.1248 but I don't know if that is the correct rate to use.
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El Cid
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Re: Exchange rate for tax return 2020

Postby El Cid » Sun Jan 03, 2021 11:23 am

The ECB rate is 1.1240.

Rather than use a spreadsheet, you can use the AEAT simulator.

https://www2.agenciatributaria.gob.es/w ... &EJER=2019

Sid

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fyfin
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Re: Exchange rate for tax return 2020

Postby fyfin » Sun Jan 03, 2021 11:40 am

HI Sid, yes indeed. I use the simulator (can't get yet) but I use the spreadsheet just to record the various bits of income etc.
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Re: Exchange rate for tax return 2020

Postby fyfin » Tue Feb 16, 2021 7:53 pm

Just as an aside I had a word with my gestor who is allegedly an accountant, her husband is a solicitor so they've got it sown up in our little town. She charges €30 and uses the information I provide on the spreadsheet. I mentioned before I use the spreadsheet to keep a record both for me and my wife and it is really easy to amend from year to year once set up. I have used the simulator and could do my own return but there some complications that make it easier to use this company who charge €30.
Anyway, I had sent off the spreadsheet with the exchange rate for income in sterling as €1.124 and she told me that she uses €1.1123 which, of course is the rate as at €31st Dec.
It appears there is no rate specifically set by the Hacienda to use for renta but there is a rate for the 720 form which is as at 31st December.
I'm not going to argue as a) it makes very little difference and b) it's in my favour, but if there was a drastic change in December next year I will insist on using the average.
I suspect she is not alone in using this rate for income.
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Re: Exchange rate for tax return 2020

Postby Paddy Pumpkin » Tue Feb 16, 2021 9:31 pm

The gestor is completely in agreement with my accountant.

Renta you can use any rate you want. I asked the accountant for my business what to use because it is not defined she told me anything at all so long as I can justify it. So for my personal taxes I have a look at whether the average, the average of month ends, the weekly average, the year end, the year start and anything else I can come up with and choose the one that suits me best. If the difference is marginal then I use the year end rate as the 720 is I think the only modelo that defines what rate to use.

The 720 is not pefect though as it doesn't define how to calculate the average balance so that leaves a lot of room for you to inflate or deflate your balances depending on your needs.

It never ceases to amaze me how there are basic simple gaps in Spanish tax law that can be exploited. The people who draft the laws have years to get it right and they still make errors....unless of course they are leaving the gaps there for their mates to exploit!

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Re: Exchange rate for tax return 2020

Postby elusive » Tue Feb 16, 2021 9:42 pm

720 is the amount on the 31st dec and the amount at the end of the third quarter. No averages

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Re: Exchange rate for tax return 2020

Postby fyfin » Tue Feb 16, 2021 9:50 pm

Paddy, yes I was quite surprised at that. Mind you ,once they get your teeth into you they can be very tenacious, as we found out.
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Re: Exchange rate for tax return 2020

Postby El Cid » Tue Feb 16, 2021 11:08 pm

For Renta, the average rate for 2020 is 1.124.

As Paddy said you can use the actual rate at the time the payment is made, but there isn’t usually much difference vs the average rate. Our state pension gets paid in Euros into our Spanish account. We just declare the actual Euro amounts that were paid into the bank.

As the system in Spain is self declaration, you can use any method you like, but if you are using a more favourable rate then you could be asked to justify it. The only fixed rate as has been stated is the year end figure for asset declaration. Many gestors don’t get it right and confuse the two methods. Spanish gestors are used to dealing with the tax affairs of Spanish people and it is simple as they are paid in Euros.

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Re: Exchange rate for tax return 2020

Postby Paddy Pumpkin » Wed Feb 17, 2021 11:35 am

elusive wrote: Tue Feb 16, 2021 9:42 pm 720 is the amount on the 31st dec and the amount at the end of the third quarter. No averages
You have to provide two figures for bank account. Balance on 31st December and also the average balance for the last 3 months of the year.

That average balance is super easy to manipulate to hide assets as there is no explanation of how to calculate it. Do you take balance on day 1 and balance on 31st December and divide by 2? Do you take weekly balances? Do you translate foreign balances daily and at what rate Etc etc etc.

You can also manipulate assets upwards using the same approaches.

So you can make yourself appear richer or poorer than you really are depending on your needs.

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Re: Exchange rate for tax return 2020

Postby El Cid » Wed Feb 17, 2021 12:24 pm

The question was about Renta, not asset declaration. Please stay on topic

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Re: Exchange rate for tax return 2020

Postby fyfin » Wed Feb 17, 2021 1:05 pm

Sid, having agreed with my gestor that I was happy for her to use the rate at the year end (only for private UK pension as state pension is paid into my euro account here), she then sent me this email.

I'm now confused as to what she means. I'll copy the other bit she sent me but I don't think it's relevant or is it?

For “Patrimonio” the correct thing is to use the exchange rate at the end of the year

for “Renta” the correct thing is to use the exchange rate at the time that you obtain the income (please find attached an inform of the tax office)

So yes it is logical to use the average exchange rate - attached

Pregunta
Un contribuyente tiene una cuenta en dólares estadounidenses en una oficina bancaria situada en España con la que
realiza operaciones de compra y venta de bonos cotizados. Todas las operaciones se realizaron en dólares. ¿Los
rendimientos se deben calcular como si se hubieran producido en euros, es decir convirtiendo el valor de cada
operación a euros al tipo de cambio vigente en ese momento, o por el contrario se debe calcular el rendimiento en
dólares y luego convertirlo a euros en el momento en que se ha producido el rendimiento?
Respuesta
Las operaciones de compra y venta de valores realizadas en una cuenta en dólares, o cualquier otra divisa, generarán rentas que
tendrán la calificación de ganancias o pérdidas patrimoniales de acuerdo con lo previsto en el artículo 33.1 de la Ley 35/2006 del
Impuesto sobre la Renta de las Personas Físicas (IRPF). Si las operaciones de compra y venta de su cuenta en dólares se
realzaran con activos financieros, dichas rentas se calificarían como rendimientos de capital mobiliario, de acuerdo con el artículo
25.2 del mismo texto legal. A este respecto debe tenerse en cuenta la consulta V1046-16, de la Dirección General de Tributos,
que establece que Cuando dichas operaciones se efectúan en una unidad monetaria distinta de la moneda nacional, la ganancia
o pérdida obtenida deberá convertirse a la moneda nacional al tipo de cambio oficial correspondiente a la fecha en que se
produce la alteración patrimonial que determina la obtención de dicha renta.
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Re: Exchange rate for tax return 2020

Postby peteroldracer » Thu Feb 18, 2021 5:50 pm

Am I right in thinking that the period for submitting 2020 income (Renta 2021) starts on the 1st April?
I have trawled the Agencia Tributaria website but can see nothing. Is it possible to complete the return ready to submit what the portal opens?
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Re: Exchange rate for tax return 2020

Postby El Cid » Thu Feb 18, 2021 6:08 pm

Why the hurry Peter? Actually, it starts on the 7th April.

If you want to work out the tax you can still use the simulator. The tax rates and allowances haven't changed.

https://www2.agenciatributaria.gob.es/w ... &EJER=2019


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