Spanish Tax Question - CGT
subject
Agree that you cannot extract this information at this stage. If the job is offered to you would be able to accept/reject on the basis that you will need to consider the tax implication and being a international firm their Human resources department would be well placed for it.
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costa-brava
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living in spain
You will find quite a lot of bad advice coming through for a question like this. People babble back and fore and don´t really know the implications. The worst advice comes from those who are using a Spanish gestor (unless they are extremely unlucky).
Anyway here is my tuppenceworth.
You have to register with the Office of Extranjeros after or during the initial 180 days and you get a NIE (identity number for foreigners) In the first couple of months of the first tax year you must go online to declare if you have bank accounts of more than 50000 euros in another country. The same if you have property of more than 50k or if you have shares etc of more than 50k. You only have to do this once unless the amounts change and there is NO TAX to pay with this declaration. However, you MUST do this or incur horrific penalties and in subsequent income tax declarations there is a small annual tax for capital gains. Also in the annual tax returns you must declare all forms of income.
Most of this information is available online in English or you can google-translate it. The Spanish tax agency is Agencia Tributaria and you are best to consult the one for the region you plan to live in.
But, but, but, but! Why get involved in buying a property here in Spain at the outset. Take out a six month rental. The prices are good and the process is simple compared to buying.
The property crash followed by stringent austerity measures has really messed up the market and the tax laws. YOU WILL NOT FIND ANYBODY with all the answers.
There is no doubt that prices have really come down and the pound is flying high but take a Ryanair or Jet2 or Vueling and mooch around.
BUT STAY AWAY from professional "advisors" till you have a reasonable idea yourself. This applies even more so to estate agents, especially the ones of your own nationality.
God helps those who help themselves.
Anyway here is my tuppenceworth.
You have to register with the Office of Extranjeros after or during the initial 180 days and you get a NIE (identity number for foreigners) In the first couple of months of the first tax year you must go online to declare if you have bank accounts of more than 50000 euros in another country. The same if you have property of more than 50k or if you have shares etc of more than 50k. You only have to do this once unless the amounts change and there is NO TAX to pay with this declaration. However, you MUST do this or incur horrific penalties and in subsequent income tax declarations there is a small annual tax for capital gains. Also in the annual tax returns you must declare all forms of income.
Most of this information is available online in English or you can google-translate it. The Spanish tax agency is Agencia Tributaria and you are best to consult the one for the region you plan to live in.
But, but, but, but! Why get involved in buying a property here in Spain at the outset. Take out a six month rental. The prices are good and the process is simple compared to buying.
The property crash followed by stringent austerity measures has really messed up the market and the tax laws. YOU WILL NOT FIND ANYBODY with all the answers.
There is no doubt that prices have really come down and the pound is flying high but take a Ryanair or Jet2 or Vueling and mooch around.
BUT STAY AWAY from professional "advisors" till you have a reasonable idea yourself. This applies even more so to estate agents, especially the ones of your own nationality.
God helps those who help themselves.
Hi costabravarent. I already own a property in Spain and I have an NIE. I have to look for a tax adviser because I do not wish to risk what you have identified - huge penalties for failing to register and pay my dues. However the question was really about selling my UK property in a year in which I am Spanish tax resident and I think the answer is "don't sell your UK main residence in a year in which you are Spanish tax resident" so I am going to spin things out and not move to Spain until after July/August.
Yes, but I aim to be non Spanish resident this year by spending fewer than 183 days in Spaincasasantoestevo wrote:Casscat; the Spanish tax year runs from Jan to Dec.
Interview looming, but time scale for commencing the job fairly fluid. I will not make any changes here in the UK until I am offered the job and then it will take a few months to sell my place in London. I don't aim to be officially tax resident in Spain this calendar year, but I am aware of the 'centre of economic interest' rule....
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costa-brava
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Yes, sounds good. But watch out for the point I was making. Even if you don't sell your UK property, if you become a Spanish resident, when January comes along you need to do an online declaration of what you own (or participate in ownership) in the 3 categories if any one is more that 50k euros.
If you get your normal tax declaration wrong they hit you with a 10% or 20% surcharge.
If you get the above declaration wrong there is a penalty of thousands of Euros and they apply the penalty to each datum of information you missed.
If you get your normal tax declaration wrong they hit you with a 10% or 20% surcharge.
If you get the above declaration wrong there is a penalty of thousands of Euros and they apply the penalty to each datum of information you missed.
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costa-brava
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house in spain
Hello again Casscat
If you own a property in Spain and one in the UK and have NIE, you must already know about the declaration of assets in form 720. Unless I am well off the mark (has been known before) you or your Spanish gestor will already have declared your UK assets. If you have not done this and then sell your UK house you may well get involved in the big penalties regardless of which side of the water you are. Here is the link to the Spanish tax office in English https://www.agenciatributaria.gob.es/AE ... icio.shtml and the UK government advice site https://www.gov.uk/living-in-spain.
I have been taking a look at my tax returns. You spoke about capital gains tax. This is really a piddly tax. They have a calculator based on the value of the house which comes out at earnings of very approximately half of one per cent of the value. Then it is taxed at around 20% depending on other factors in your tax return. So the tax per year is about one tenth of a per cent of the value.(0.1%). On a property worth €200,000 it will be €200 tax.
The real killer is income tax. If you sell a property they take the acquisition price from the selling price and your theoretic profit is counted as income for that year. This profit is taxed at about 20%. So if you have made, let's say €20,000 the tax will be about €4000. Many people call this capital gains tax erroneously.
I really, really recommend that you clarify your current position on the declaration of assets 720. You ought to have done it two years ago and it can only be done online within the first couple of months of the year. If you didn't do it and you stir up the wasps' nest now, the penalties will total many thousands of euros. I can't remember offhand but I think about €50,000 or more.
The other thing that you need to have clear is called padronamiento. http://spain.angloinfo.com/moving/resid ... onamiento/
If you reside in Spain you should have your name on the list at your local town hall. If you have done this or if you do this, it becomes your official address for Spanish tax. The tax authorities have access to these lists and they have bang up to date information on all your bank transactions in Spain.
You can't just wing it and it's not about whether or not you get the job. Given that you asked the question in the first place shows that you are not clear. Ignorance is not bliss. I have in the past been hit with a tax bill of over €60,000 on a house sale because I had my name at the wrong address on the padron list at the town hall.
Sorry to be so hard hitting. It is genuine advice given with the best of intentions. Check it all out down to dotting the last I and crossing the last T. Do it now. Don't leave it.
If you own a property in Spain and one in the UK and have NIE, you must already know about the declaration of assets in form 720. Unless I am well off the mark (has been known before) you or your Spanish gestor will already have declared your UK assets. If you have not done this and then sell your UK house you may well get involved in the big penalties regardless of which side of the water you are. Here is the link to the Spanish tax office in English https://www.agenciatributaria.gob.es/AE ... icio.shtml and the UK government advice site https://www.gov.uk/living-in-spain.
I have been taking a look at my tax returns. You spoke about capital gains tax. This is really a piddly tax. They have a calculator based on the value of the house which comes out at earnings of very approximately half of one per cent of the value. Then it is taxed at around 20% depending on other factors in your tax return. So the tax per year is about one tenth of a per cent of the value.(0.1%). On a property worth €200,000 it will be €200 tax.
The real killer is income tax. If you sell a property they take the acquisition price from the selling price and your theoretic profit is counted as income for that year. This profit is taxed at about 20%. So if you have made, let's say €20,000 the tax will be about €4000. Many people call this capital gains tax erroneously.
I really, really recommend that you clarify your current position on the declaration of assets 720. You ought to have done it two years ago and it can only be done online within the first couple of months of the year. If you didn't do it and you stir up the wasps' nest now, the penalties will total many thousands of euros. I can't remember offhand but I think about €50,000 or more.
The other thing that you need to have clear is called padronamiento. http://spain.angloinfo.com/moving/resid ... onamiento/
If you reside in Spain you should have your name on the list at your local town hall. If you have done this or if you do this, it becomes your official address for Spanish tax. The tax authorities have access to these lists and they have bang up to date information on all your bank transactions in Spain.
You can't just wing it and it's not about whether or not you get the job. Given that you asked the question in the first place shows that you are not clear. Ignorance is not bliss. I have in the past been hit with a tax bill of over €60,000 on a house sale because I had my name at the wrong address on the padron list at the town hall.
Sorry to be so hard hitting. It is genuine advice given with the best of intentions. Check it all out down to dotting the last I and crossing the last T. Do it now. Don't leave it.
I don't live in Spain costabravarent. I don't need to declare my UK assets in Spain, nor my UK income in Spain, just my earnings from the rental of the Spanish property which have to be declared in both countries. I will not be liable to Spanish wealth tax unless I become resident.
Capital gains tax (CGT) is applied against the profits achieved upon the sale or transfer of chargeable assets. In the UK one's main residence is exempt, but no such exemption applies in Spain so my concern is to avoid being Spanish tax resident this year in order to sell my main residence in the UK and have no CGT to pay. As I will not be Spanish tax resident they cannot tax me on the gain arising from the sale of a UK asset.
My job is advising people on taxation, estate planning, trusts, investments etc. but my knowledge relates to the UK not Spain hence getting to grips with Spanish tax law is - um - well taxing really
Capital gains tax (CGT) is applied against the profits achieved upon the sale or transfer of chargeable assets. In the UK one's main residence is exempt, but no such exemption applies in Spain so my concern is to avoid being Spanish tax resident this year in order to sell my main residence in the UK and have no CGT to pay. As I will not be Spanish tax resident they cannot tax me on the gain arising from the sale of a UK asset.
My job is advising people on taxation, estate planning, trusts, investments etc. but my knowledge relates to the UK not Spain hence getting to grips with Spanish tax law is - um - well taxing really
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costa-brava
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There is a substantial portion of the gain from selling your residence in Spain which can be used for the purchase or renovation of your new home and is exempt from tax.
In my case it gave me tax savings of about 40,000 euros. Unfortunately the crisis came along and we continued to live in temporary accommodation while renting out our new home. Our address in the "padron" was not the new home so 4 years later I had to repay the tax, plus interest and a fixed penalty. This was because they did not accept that we had invested the money in a new home. I couldn't prove our intentions and lost but your comment about no allowance for your personal dwelling in Spain is not correct.
My son sold his apartment here and bought a house in Canada. He claimed the tax exemption. He had to produce Canadian title deeds etc but the Spanish tax office accepted these and he gained about 10,000 euros.
I cannot possibly be sure because I have not done it personally but I am fairly sure that the Spanish Agencia Tributaria would accept that you are moving home from the UK to Spain.
As to the capital gain you can give it whatever name you choose but the fact remains that the capital gain is taxed in two different ways. The annual tax stands whether your property gains value or not and the one you call CGT is not a separate tax but shows as income on the standard tax form which is presented in May or June each year for the previous year. Spanish tax year is from Jan 1 to Dec 31.
In my years in Spain I have bought 12 properties and sold 6. We signed the contract to sell off another one last week (with substantial argument with the estate agent because he wanted to re-invent the law)
I am not an expert but I have made a point of checking out everything for myself. You will find many mentions in Lay-my-hat about having to charge VAT on your holiday lets but this only applies if you use an agent or set up in business. Private holiday lets are exempt from VAT. This is a side issue but it illustrates my point. CHECK IT OUT FOR YOURSELF. DON'T BELIEVE THE EXPERT who is charging you for his services. It's your house and it's your money. It's YOUR responsibility to get the tax right. You pay the penalties not the "expert".
With that I am bowing out. I will not comment more on your venture. I hope you get it right and enjoy life whatever you decide.
All the best.
In my case it gave me tax savings of about 40,000 euros. Unfortunately the crisis came along and we continued to live in temporary accommodation while renting out our new home. Our address in the "padron" was not the new home so 4 years later I had to repay the tax, plus interest and a fixed penalty. This was because they did not accept that we had invested the money in a new home. I couldn't prove our intentions and lost but your comment about no allowance for your personal dwelling in Spain is not correct.
My son sold his apartment here and bought a house in Canada. He claimed the tax exemption. He had to produce Canadian title deeds etc but the Spanish tax office accepted these and he gained about 10,000 euros.
I cannot possibly be sure because I have not done it personally but I am fairly sure that the Spanish Agencia Tributaria would accept that you are moving home from the UK to Spain.
As to the capital gain you can give it whatever name you choose but the fact remains that the capital gain is taxed in two different ways. The annual tax stands whether your property gains value or not and the one you call CGT is not a separate tax but shows as income on the standard tax form which is presented in May or June each year for the previous year. Spanish tax year is from Jan 1 to Dec 31.
In my years in Spain I have bought 12 properties and sold 6. We signed the contract to sell off another one last week (with substantial argument with the estate agent because he wanted to re-invent the law)
I am not an expert but I have made a point of checking out everything for myself. You will find many mentions in Lay-my-hat about having to charge VAT on your holiday lets but this only applies if you use an agent or set up in business. Private holiday lets are exempt from VAT. This is a side issue but it illustrates my point. CHECK IT OUT FOR YOURSELF. DON'T BELIEVE THE EXPERT who is charging you for his services. It's your house and it's your money. It's YOUR responsibility to get the tax right. You pay the penalties not the "expert".
With that I am bowing out. I will not comment more on your venture. I hope you get it right and enjoy life whatever you decide.
All the best.