Tax Form 720 Asset declaration

Information and questions about the Law in Spain and Andalucia.
alpujarran
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Re: Tax Form 720 Asset declaration

Postby alpujarran » Sat Jan 26, 2013 11:03 am

Sid, surely company pension have a transfer-value - no?

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Re: Tax Form 720 Asset declaration

Postby gerryh » Sat Jan 26, 2013 11:04 am

alpujarran wrote:Gerry - as I understand it you declare the income on the normal Renta and the value (cash/transfer) of the fund on the 720.
That contradicts what El Cid said in the reply above yours.
So, who is correct?
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Re: Tax Form 720 Asset declaration

Postby alpujarran » Sat Jan 26, 2013 11:10 am

Gerry - good point. I'm sure Sid will get back to us on this :)

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Re: Tax Form 720 Asset declaration

Postby El Cid » Sat Jan 26, 2013 11:14 am

Let's differentiate between a pension fund and a pension.

A personal pension fund is a pot of money that you have control over and have not yet taken income from. It accumulates income within the fund and that does not have to be declared on your income tax declaration because the interest stays within the fund. If this was a personal pension fund it would need to be declared as an asset.

A company final salary pension that you are drawing no longer has an asset value as you cannot cash it in and you just declare the interest.

A personal annuity results from you buying an annuity using the cash in your personal pension pot and is an asset that has to be declared both as an asset and as income.They are specifically mentioned in the new law.

I assume that a draw down pension scheme would be treated the same way.
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Re: Tax Form 720 Asset declaration

Postby alpujarran » Sat Jan 26, 2013 11:49 am

El Cid wrote: . . A company final salary pension that you are drawing no longer has an asset value as you cannot cash it in . . .
Sid
So does that mean that anyone who has not started to draw their company pension needs to obtain a transfer value and declare it ?

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Re: Tax Form 720 Asset declaration

Postby El Cid » Sat Jan 26, 2013 12:02 pm

It depends on the pension. If the fund belongs to you individually and you can exercise control over it then it would apply but most company pensions are not structured like that.

It is personal pensions that are mainly affected but a lot has changed over the last few years with regard to company pensions. I imagine that the new "defined contribution" plans could fall into that category but they weren't around in my working days so I know nothing about the way they work.

You need to take advice from the company to see if they could be affected. If in doubt there is anything to stop you declaring them, assuming you can get an asset value for them.

It will all become clearer when the experts get to grips with the legislation.

For the moment all I can suggest is that the only things that are clearly defined in the law are Rentas Vitalicias which are personal annuities and the income from which is specifically declared on the Renta forms.

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Re: Tax Form 720 Asset declaration

Postby Miro » Sat Jan 26, 2013 6:34 pm

El Cid wrote: A company final salary pension that you are drawing no longer has an asset value as you cannot cash it in and you just declare the interest.

A personal annuity results from you buying an annuity using the cash in your personal pension pot and is an asset that has to be declared both as an asset and as income.They are specifically mentioned in the new law.
Sid
But if you've bought an annuity with the cash in your pot, you can not cash it in either, so surely also has no asset value? It's just an income.

I wonder who the experts you refer to are? I certainly have no confidence in my gestor, who has made one foul up after another on my simplest of simple annual declarations, and I know from personal experience that the staff in Hacienda (the same people who will be responsible for dishing out fines for incorrect declarations?) don't know their ar5e from their elbow. I know I am not the only one who feels very apprehensive about this whole thing - even though I have nothing to hide. I just have no confidence at all in this administration. It seems to have gone into panic mode, and I fear utter chaos will ensue.
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Re: Tax Form 720 Asset declaration

Postby El Cid » Sat Jan 26, 2013 7:57 pm

Miro wrote:

But if you've bought an annuity with the cash in your pot, you can not cash it in either, so surely also has no asset value? It's just an income.

I wonder who the experts you refer to are? .

Apparently it is classed as an asset and is definitely included in the list of things that have to be declared. I agree that getting an up to date valuation could be tricky.

The experts I referred to are the those financial advisors who frequently post information in the English press such as Blevins Franks who were actually the first to bring this new law to my attention.

Of course they have a vested interest and want to drum up business but they should at least have access to tax lawyers who can decipher the new law.

I am working closely with Beachcomber to try and understand the implications and more importantly the details of exactly how you go about filling in the declaration. In due course we will put together a FAQ on the subject. However it is not up to us to offer definitive advice as exactly what needs to be declared but some assets are clearly defined so they should not be a problem - bank accounts, shares and property being quite clear. It is other assets such as insurance policies, pensions and annuities that get a bit more complicated as they all vary so much. In those cases professional advice will be needed.

I share your concerns - utter chaos may well ensue!

Sid

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Re: Tax Form 720 Asset declaration

Postby Miro » Sat Jan 26, 2013 8:03 pm

You efforts are much appreciated. :thumbup:
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Re: Tax Form 720 Asset declaration

Postby rafiki » Sat Jan 26, 2013 8:20 pm

Miro wrote:You efforts are much appreciated. :thumbup:
ditto.
Brian.

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Re: Tax Form 720 Asset declaration

Postby Wicksey » Sun Jan 27, 2013 11:18 am

Miro wrote: But if you've bought an annuity with the cash in your pot, you can not cash it in either, so surely also has no asset value? It's just an income.
I'm sure El Cid and Beach will help us all out with the finer details (where would we all be without you two :wave: ) but I do agree that with our experience of a very small annuity, the money has never been available to cash in and is tied into the insurance company forevermore, with only a set sum received each year. Is it that they want to see the sources of income (ie savings = interest, property = rental income etc) to check that things are being declared?
I feel that much of this is aimed at foreign residents as it is more likely to be us that own assets abroad. I know of so many Spanish that own other properties locally that are rented out for holidays or long term rentals, I wonder if those sources of income are being looked into?
I see that the deadline has been moved to 30 April, but since the details are not yet published it is worrying that they are threatening such huge fines for mistakes, when they haven't even got their act together yet. I agree with Miro that "chaos will ensue" :crazy: .

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Re: Tax Form 720 Asset declaration

Postby El Cid » Sun Jan 27, 2013 11:49 am

No I don't think the intention is to single out foreigners at all.

It is all part of a major campaign that has been going on for the last few years against "Fiscal Fraud" and it is aimed at rich Spaniards who have put their assets offshore or who have used undeclared income to buy assets, such as property, outside Spain.

Unfortunately foreigners are much more likely to have offshore assets for obvious reasons, they kept a property as a bolt hole, they nearly all have foreign bank accounts and many have insurance policies and pension pots etc that were obviously set up in their home country.

It is probably true to say that most expats living in Spain are not wealthy - if they were they would be living somewhere like Switzerland or Monaco.

When Hacienda receive the hundreds of thousands of asset declarations they will not have the time to go through them all so will obviously concentrate on those most likely to yield more tax revenue which probably excludes most of us.

If it wasn't for the draconian fines for not declaring, I think most people, who are already declaring their incomes correctly, would simply not bother. However if there is the slightest chance that you could lose everything and more, it would be unwise to take that chance.

Sid

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Re: Tax Form 720 Asset declaration

Postby katy » Sun Jan 27, 2013 12:51 pm

Interesting stuff :think: Been talking to a friend in Spain and he wasn't aware of the new rules! If people own a property in Spain and one in the UK. Some investments and a private pension they could find themselves having to pay wealth tax as it is payable over 700,000€. What is the rate payable now?

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Re: Tax Form 720 Asset declaration

Postby Mowser » Sun Jan 27, 2013 1:35 pm

I've been digging away at the following. It's a tad long and it's in Spanish.

http://www.boe.es/boe/dias/2012/11/24/p ... -14452.pdf
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Re: Tax Form 720 Asset declaration

Postby El Cid » Sun Jan 27, 2013 4:15 pm

Yes, that's the one. It gives more details of what has to be declared but it still isn't easy to understand.

The draft declaration form is also available at

http://www.agenciatributaria.es/static_ ... /Anexo.pdf

If you can get through that you will certainly have a headache!

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Re: Tax Form 720 Asset declaration

Postby gus-lopez » Sun Jan 27, 2013 7:21 pm

At the end of the day how many foreigners with properties in their original countries,having declared them under new rules , will like having to pay IHT when either partner dies ? None I would have thought especially when there is no tax in the Uk on inheritance between spouses.
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Re: Tax Form 720 Asset declaration

Postby El Cid » Sun Jan 27, 2013 8:24 pm

gus-lopez wrote:At the end of the day how many foreigners with properties in their original countries,having declared them under new rules , will like having to pay IHT when either partner dies ? None I would have thought especially when there is no tax in the Uk on inheritance between spouses.
Well if you choose to live in Spain you have to accept their tax laws.

If you don't like it then go back to the UK.

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Re: Tax Form 720 Asset declaration

Postby gus » Wed Jan 30, 2013 11:16 pm

Oh, and make sure you do it before you die :wink:

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Re: Tax Form 720 Asset declaration

Postby Miro » Thu Jan 31, 2013 7:55 pm

...or before the end of December 2012, which is when they want to know exactly how much you have in assets. Oh, too late :(
I'm still convinced this is all leading to something more worrying. Did someone mention earlier that wealth tax is currently charged on assets over 700K? If so, I will "eat my shorts" if they don't decide to lop a zero off that figure as soon as they have all this info in.
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Re: Tax Form 720 Asset declaration

Postby El Cid » Thu Jan 31, 2013 8:13 pm

It's not due until April 30th.

If they change the wealth tax rules in future there isn't much you can do about apart from going somewhere else where you prefer the tax rules.

Not declaring your assets will probably save you paying wealth tax as if they find out that you haven't declared you won't be left with any wealth to tax. :thumbdown:

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