Spanish Tax Declarations for Residents & Non Residents

[Ian]

As many are aware or maybe not, all residents & non-residents have to submit a tax declaration to to tax man here in Spain.

Non-Resident Tax Information
If you are a Non resident, may solicitors or gestors (accountants) can do this on your behalf, some charging not much and others charging a few hundred Euros per person.

A client of ours has recently found that a company based in Cambridge will complete this service for you for approximately £25. The company takes your details: NIE,valor catestral (property value) etc, then prints and sends you the tax form 120 to sign and take to your Spanish bank and make payment. http://spanishtaxforms.co.uk/Tax Forms.

Thank you to Douglas for sending this information in.


Spanish Resident Tax Information

If you are resident and have assets of over 50,000 Euros in other countries, you are obliged to disclose these to the tax man. A disclosure limit is the end of 30 April 2013 and future years will be 31 March each year, more information is available below.

What do you need to declare?

If you own any of the following assets outside Spain, valued at €50,000 or more per asset class, you need to declare them.

Accounts held with financial institutions
All types of immovable property (real estate) and rights over such property
Shares and securities
Life insurance policies
Temporary or lifetime income generated from the lending of money, rights or other assets (including immovables) to foreign entities.

If the total value of your assets in each class is less than €50,000, you are not obliged to report. For example, if you have four bank accounts worth €10,000 each, you do not have to report, but if you have one bank account with €55,000 deposited or six bank accounts worth €10,000 each, you do have to report.

Once you have reported the assets the first time, you do not need to report them again each year provided the value of all your reportable assets has not increased by €20,000 or more.

What values do you use?

The value to be reported for accounts with financial institutions (bank accounts), shares, securities, life insurance policies and other assets is that at 31st December. In the case of bank accounts, you also need to report the average balance over the last three months of the year.

For immovable property, the value is the cost of acquisition. You need to provide information on the type of property, its location and date of acquisition.

What happens if I do not report?

If you fail to report any assets as required by the new law, penalties will be imposed if the omission is discovered. No-one should try to hide assets. Spanish residents are obliged to declare their worldwide income and assets. There is a high level of exchange of information between countries these days and the penalties are now very heavy. Legitimate tax planning is the only way to lower your tax liabilities.

You would have to pay all of the following:

Income tax at the income tax scale rates even if the income would normally be taxed under the savings income regime. The top rate of these is over 50% compared to 27% under the savings income regime.

Plus late payment interest for the last four years. Plus penalties, which can be as high as 150% of the total tax due on the asset.

Plus a fine of €5,000 per each piece of unreported data, with a minimum fine of €10,000.

The undeclared income arising from the asset will be deemed to arise in the last tax year which is not statute barred – four years in most cases. This effectively abolishes the statute of limitations.

When you submit your declaration form by 30th April, you need to be sure you have filled it in correctly and included all the overseas assets that you should have, with the right values. Any mistakes or omissions, even accidental, could prove very costly

Ian

[Ian]

An excellent contact for any of your Spainsh Tax queries, problems and tax submissions is Javier, details shown below. All information can be done at a distance and you do not need to visit Marbella to arrange or ask Javier to complete tax form submissions for you.

http://jullastres.es/wordpress/?cat=65
Website in English

http://jullastres.es/wordpress/?p=718
Information regarding the Modelo 720 tax form for declaring assets held outside Spain.

http://jullastres.es/wordpress/?page_id=47
Email address shown on the website above:

Tel: +34 951 319 717
Mobile +34670720457