A year-long temporary stay

[Mary Falconer]

Hi – new here. Great forum and am learning a lot from its contributors. Thanks all.

Some advice please which I have parts of the jigsaw, but sometimes read slightly contradictory advice. I know there were changes with Spanish residency requirements for EU citizens too last summer in 2012.

My partner and I:

- are UK residents paying tax here and own a property
- do not own property or assets abroad
- are under retirement age

This year we will be:

- renting a property in Andalucia [not buying- that may come later]
- staying for a year - so certainly over the 183 day rule
- unlikely to be working in Spain, so a 'long holiday' if you wish
- renting our property in the UK for income to help support us in Spain
- we will not - apart from using some UK savings - have any other income

Can you advise:

- after 3 months we have to get a NIE from the local police station, relevant authority - correct?
- after 183 days what happens? We are tax resident in Spain and have to declare income and assets wherever they may be? [although I've read if it's income from renting a UK property this isn't included?]
- are we covered health-wise for 3 months under the EU Health Card scheme but then HAVE to show the Spanish authorities we have adequate private healthcare - correct?

Or can we simply come to Spain, let HMRC know about our UK income [and pay tax due accordingly]. I'm learning about the double tax thing between EU countries but as it's unlikely we'll earn 'Spanish' income - or own a property there - what exactly is our relationship with the Spanish authorities?

[I, at least, will be completing a UK Self Assessment for 2012-13 and presumably 2013-14.]

Thanks

Mary

[Enrique]

Hi Mary,
Welcome to the Forum.
Depending on when you intend to have your "visit", you could do up to 183 days this year and have the same in 2014.
That would keep it simple and you could remain a UK Tax payer.
You will need NIE for renting and Bank account , need to register on the Foreigners list and get the infamous A4 "Green" Form...although having said that a family member registered in Madrid area end of last year and got a credit card size green card that was pressed out of the A4 Form.

Have fun.............

[Mary Falconer]

Hi Enrique

Thanks for the speedy response.

If we're planning on staying more than 183 days in 2013 [eg by coming out in say, April and staying to the following March/April,] what happens then – and the associated rules about where to pay tax?

For example, would we pay tax in Spain on the Income from renting the property in the UK?

There's also the question about health cover if you/someone could help with that.

Thanks

Mary

[El Cid]

If you spend more than 183 days in Spain in any one calendar year you become tax resident for the whole of that tax year (which in Spain, unlike the UK is January to December).

However you do not have to declare your income until the following year before the end of June.

UK rental income is taxed in the UK and you still get UK personal allowances to offset against it but the income must also be declared in Spain. however you can deduct any tax paid in the UK from any tax due in Spain and of course you will get Spanish personal allowance against it as well so you will probably end up paying little or no tax on it.

You say you will live on your savings but savings usually earn some form of interest (unless under the mattress!) and any such income must be declared in Spain.

You also need to know that as from this year all Spanish tax residents who have assets outside Spain worth more than €50k in each category (bank accounts, savings, shares, property etc) must now declare them in Spain (whether or not they are income generating) otherwise there are very substantial fines for non declaration even if there is no tax due from them - the minimum fine in each case is €10000.

If you are staying as a permanent resident - ie more than 90 days - then your EHIC card is strictly illegal as you have exceeded your temporary stay. If you have been paying NI in the UK then you should be able to apply for form S1 from the DWP which will give you full health cover for up to 2 years.

When you sign on the register of foreigners after 90 days (or before if you know you are going to stay for more than 90 days) then you will have to prove that you have sufficient income and health cover otherwise your application will be refused and strictly speaking you then have to leave the country.

Anyway, that's what the law says. You could of course just turn up, enjoy your stay and do absolutely nothing at all, get cover under your EHIC and ignore the tax issue. Many people would choose to do this and I cannot possibly suggest that you should do that but at least you know the situation.

Sid

[Mary Falconer]

Sid

That's very clear and helpful – thank you.

Mary

[rafiki]

You also need to know that as from this year all Spanish tax residents who have assets outside Spain worth more than €50k in each category (bank accounts, savings, shares, property etc) must now declare them in Spain (whether or not they are income generating) otherwise there are very substantial fines for non declaration even if there is no tax due from them - the minimum fine in each case is €10000.
Sid

I must have missed this before somehow. Is this declaration made with the tax return this year Sid? How are joint accounts treated?

[El Cid]

I must have missed this before somehow. Is this declaration made with the tax return this year Sid? How are joint savings accounts treated?

No, it's an entirely separate declaration and has to be in by the end of March. This news is just beginning to hit the expat press and no doubt there will be some confusion about the whole thing.I imagine it is an individual tax so joint accounts should be apportioned but even that is not clear at the moment.

It has been shabbily introduced (as usual) with little official explanation and as yet they haven't even got round to producing the declaration forms. No doubt they will be much more efficient at dishing out the huge fines which for some people could be €30k or more. Of course there is no point is saying that you won't pay the fines as they will just take it out of your bank account and put an embargo on your house.

Expect total confusion and panic among the foreign tax resident community

Sid

[Mary Falconer]

Sid

On reading back on your post – didn't the rules change for NEW people going to Spain - i.e, you can't simply plug into the Spanish health care system just because of one's paid NI contributions in the UK for x years- and that, instead, you have to have private health cover - and show the Spanish authorities you have it - along with sufficient funds in the bank?

Mary

[El Cid]

Sid

On reading back on your post – didn't the rules change for NEW people going to Spain - i.e, you can't simply plug into the Spanish health care system just because of one's paid NI contributions in the UK for x years- and that, instead, you have to have private health cover - and show the Spanish authorities you have it - along with sufficient funds in the bank?

Mary

Yes, if you have paid NI for a sufficient number of years, that's exactly what you can do by using the form S1 process but it's limited to 2 years cover. Just for the record for everyone who submits a form S1 the Spanish state receives over €4000 from the UK government to cover their treatment.

When either of you reaches UK pension age you both get lifetime cover under the same system.

The income requirement is another issue and so far it is not exactly clear what the level of income needs to be and what proof is required.

Sid

[gus-lopez]

I wouldn't bother ,or if you do then every 89 days leave for 1 complete day , keep tickets etc ; & return; this obviates the requirement to apply for residency as residency is consecutive & the clock is reset every time you leave
. Fiscal residency is cumulative so you will still probably get caught for that. The Hacienda will say that all residents are fiscally resident but that is gollipillas & illegal.

[frank]

[quote="gus-lopez"]. The Hacienda will say that all residents are fiscally resident but that is gollipillas & illegal.[/quote]
Or gilipollas even!

[gus-lopez]

[Footprint]

When you sign on the register of foreigners after 90 days (or before if you know you are going to stay for more than 90 days) then you will have to prove that you have sufficient income and health cover otherwise your application will be refused and strictly speaking you then have to leave the country.
Sid

Leave the country? But Spain is in the EU?

[El Cid]

Leave the country? But Spain is in the EU?

Yes it is but while the rules allow you freedom to move within the EU they don't allow you to stay in one country for more than 90 days.

You have freedom to stay as a tourist for up to 90 days only. After that period EU law allows countries to insist that you comply with certain requirements that you have an adequate source of income and also have made arrangements to have health cover without having to use the state system. They may also require that you register as an EU foreigner in that country assuming you can meet the registration requirements.

If you cannot do so then you can be asked to leave.

Of course it is difficult to enforce this rule and generally there is no good reason why they should want to. As the 90 day rule is for consecutive days then leaving the country for one day would reset the clock and you can re-enter for another 90 days.

So, in reality you can stay pretty much as long as you like and not bother to sign on. Tax residency is another matter as that happens by default after you have spent 183 days in the country in one calendar year and the fact that you haven't signed on the register or the padron is irrelevant.

Just remember that you have the right of free movement within the EU. But you do not have the right to stay.

Sid

[Mary Falconer]

Thanks Mary here – original poster.

Sid: "..prove that you have sufficient income and health cover"

I understand that there's confusion on what 'sufficient income' actually means but the health cover - in our case at least for the year in Spain - is the S1 form arrangement [assuming all's OK with out NI contributions etc] - correct?

Also, "...Tax residency is another matter as that happens by default after you have spent 183 days" - by default meaning that the authorities automatically know you're there for that long? or that the onus is on us? default sounds like the former.

For the moment I'd rather know the score if we go without popping in and out Spain etc!

Thanks again

Mary

[mountainlass]

Thanks Mary here – original poster.

Sid: "..prove that you have sufficient income and health cover"

I understand that there's confusion on what 'sufficient income' actually means but the health cover - in our case at least for the year in Spain - is the S1 form arrangement [assuming all's OK with out NI contributions etc] - correct?

Also, "...Tax residency is another matter as that happens by default after you have spent 183 days" - by default meaning that the authorities automatically know you're there for that long? or that the onus is on us? default sounds like the former.

For the moment I'd rather know the score if we go without popping in and out Spain etc!

Thanks again

Mary

HI we are moving over end of year. Having contacted a Spanish Solicitor they have told us that income can be in the form of "pension" income and money in the bank. The amount given was 5K (euros pp). Proof of healthcare ie S1 or private. We were told that residency and tax obligations after the 183 is not voluntary, but necessary. All income MUST be declared in spain, even if taxed in UK

ML

[El Cid]

HI we are moving over end of year. Having contacted a Spanish Solicitor they have told us that income can be in the form of "pension" income and money in the bank. The amount given was 5K (euros pp). Proof of healthcare ie S1 or private. We were told that residency and tax obligations after the 183 is not voluntary, but necessary. All income MUST be declared in spain, even if taxed in UK

ML

A solicitor may quote a figure of 5k but I would not take much notice of that as no real official guidance has been issued. Eventually it just depends on what the person behind the desk at the police station believes to be the correct figure and it will not be negotiable.

As for health care a form S1 is just a step on the process of getting an official health card. The people at the police station may not accept that but the INSS office will and eventually issue a health card.

Yes, tax residency is not optional and you will be liable to Spanish tax on your worldwide income.

Sid

[gus-lopez]

Yes the figure of 5k is on an official document somewhere , I've seen it, I just can't find it again !! It is some obscure amount like 5074,47€, which is the official minimum amount considered to be able to survive & below which you can claim from the state. ( If you are able ! )

All EU countries can require people to register but few do.( In some EU countries, failure to report your presence might result in a fine, but you cannot be expelled just for this. )
Spain along with Greece & Italy are some that do. Failure to register in these countries is the offence you commit . If you fail to meet the criteria to gain a residency certificate you cannot be asked to leave. This is why the UK do not ask people to apply for residency certificates , which are available if you wish to apply & under more or less the exact same requirements as Spain requires. As the spokesman in the UK said
" Why would we ask people to apply for certificates of residency when they cannot fulfill the requirements & under EU rules they cannot be asked to leave if they cannot comply ? " " We do not need to make more work & expense for ourselves ."

If you apply in Spain for a certificate of residency without being able to meet the requirements that is enough to fulfil the legal requirement & not become liable to be fined. You cannot be asked to leave, expelled or deported from any EU country except under 3 circumstances.

" Union citizens or members of their family may be expelled from the host Member State on grounds of public policy, public security or public health."
From here.

http://europa.eu/legislation_summaries/ ... 152_en.htm

" In some EU countries, failure to report your presence might result in a fine, but you cannot be expelled just for this. "

" If you have to register, you may be fined for not doing so but may continue to live in the country and cannot be expelled just for this."

" In many countries, you will need to carry your registration certificate and national identity card or passport at all times. If you leave them at home, you may be fined but cannot be expelled just for this."


from here,
http://europa.eu/youreurope/citizens/re ... dex_en.htm

[gus-lopez]

Just a thought that might solve all the problems re; Residency/fiscal residency etc. Many people who have motorhomes/ caravans come to spain for extended periods over the winter. Many don't bother worrying about residency etc; but there is actually an ' non-resident extended vacation ' document that you can apparently obtain at border crossings !! lol .Just that there aren't many border crossings these days. Motorhomers that have actually obtained this document have usually done it at the customs registration areas situated near where the old border crossings were.
Might be a way if you are only renting etc. I'll see if I can find what it is actually called as it was dealt with on another forum some time last year.

[Mary Falconer]

Hi Gus-Lopez

Thanks for info but we won't have a motorhome.