me me

From what I have seen and heard in the UK press about people having numerous identities, numerous bank accounts with big money deposited, sending children to private school and numerous mortgages while claiming housing benefit, disability and a host of other benefits without the UK authorities cottoning on to the fact sometimes taking years, I can´t see how the Spanish equivalent with have any better chance of tracking down the foreign assets of residents in Spain.

Fred James

I think you are absolutely right.

They really are not after a few relatively poor expats - it's the big fish they want.

If they really want to persue a big fish then HMRC will cooperate but as you said, they don't know either. I'm not so sure that the Cayman Islands would be so helpful!

The only reason to comply with this new law is that the potential loss if you do not is huge - most people cannot afford to lose their entire asset so they will be well advised to comply.

They should have set the bar at 500k not 50k.

The gestors will be the big winners!

me me

For people who are renting in Spain with no property that the Hacienda can get its hands on, I can´t see what can happen to them, it is an empty threat.

rafikiphoto

I don't suppose there is any indication yet how to declare joint savings accounts?

guirijohn

The EU has passed a regulation that enables member states to assist each other in the recovery of tax debts. Of course, we are not talking here about tax debts but the Spanish government seems to think the new declaration will be covered.

http://eur-lex.europa.eu/LexUriServ/...21:0043:EN:PDF

Fred James

It would cover it in the sense that if they found out that you had undeclared assets and, as specified by the law, treated those assets as income or capital gain, then they would be issuing a tax demand which would come under this new directive.

guirijohn

I suppose that is right, but first they would need the cooperation of the UK Inland Revenue to discover that you had undeclared your assets (assuming they are in the UK). There would have to be some grounds for suspicion, otherwise the Inland Revenue would be acting as unpaid investigator for the Spanish tax office.

jackytoo

Exactly, they don't just pass on information at a whim. Supporting documents to justify the request have to be supplied...and correctly filled out

LordLiverpool

Great info, everybody.

I'm still not clear on this "asset class" business - if you have one account with €49999 and another with €49999 do you have to declare them?

I'd just say one thing about the possibilities of getting found out. Not declaring is taking a punt on what will happen in the future (ten years? twenty?) in tax cooperation between EU member states, and also to the IT systems they use (not to mention Spanish public employees). Right now you'd have to assume your chances of getting caught are minimal if you've got an account in a local building society with a few thousand, especially given the laziness and inefficiency of Spanish job-for-life funcionarios. But things could change at some point. Betting they won't is risky.

Fred James

There are three asset classes.

Accounts with financial institutions such as bank accounts

Stocks and shares and insurance policies, annuities

Property

Some assets are more difficult to categorise such as pension funds but no doubt more guidance will appear in due course.

If your total assets in any one category exceed €50k then you have to declare so if you have three bank account with 20k in each you must declare the details of all three.

With regard to the Spanish tax people, their computer systems are a quantum leap better than in the UK and all these declarations will have to be submitted online so it will make it easy for them to cross check with other data they hold.

I would be much less concerned about this new law if it was in the UK and I was a UK tax resident.

me me

Exactly, and also as there are so many reference numbers needed to even contact the inland revenue, and as the Spanish tax would not be in possesssion of National insurance numbers etc, it would be a hard task.


And the Hacienda will be kept busy squeezing a bit more taxout of all the people who have declared assets abroad, because all the work will already be done by the account holders themselves.

Fred James

Don't you believe it!

Any UK pensioner who has used the HMRC form FD9 procedure to get their pensions paid tax free in the UK has submitted their UK NI number to the Spanish tax office.

bobd22

I am sure somewhere along the line of getting mortgage and buying we provided our NI number where that went? Who knows.

I think as Fred says if they want to they can find out. Suppose choice is individual declare and sleep easy or don,t declare and get caught out well who knows but down to each person.

Porth

I suppose it is simply down to your personal values and if you can live with yourself and the decision making process.

Please look up mens rea.

Lenox

I write a weekly newsletter about Spain for foreign property owners called '. here's last week's piece on this tax:
.... ....
I understand Gestors have been told by Hacienda to send out this sort of notice to any resident with whom they deal. And that includes people who may not have “official “ residence, but who live here more than 183 days in any calendar year. The Gestors are also supposed to inform Hacienda if they know there is any irregularity in the declaration - or if some “non-resident” is actually living here. That’s also supposed to be the case with asset/fund managers of which there are many operating here and with portfolios that include assets held outside Spain. Gestors like lawyers here (unlike in other countries) won’t sign tax returns, letters etc. so you carry the responsibility for any of their errors, as your gestor states below.
The problem is that some of the assets to be reported upon don’t fit the scheme here. It’s hard to see how systems used in at least some other countries can be broken down to meet the requirements under this Royal Decree. If you have a stock portfolio, do you have to report only on the total of the portfolio or each share, stock, bond, etc. held in that portfolio? Who has that sort of information? Stocks and bonds etc. are bought and sold often within portfolios- it appears that would have to be reported. Worse, any error, unintentional ones included, is automatically your fault. The fines start at a €10,000 minimum- €5,000 for each undeclared asset. What isn’t mentioned below is that if the fine adds up to over €120,000 you may fall under the criminal code. Conviction could have very serious consequences, effectively including fines that exceed the value of the assets concerned and even travel restrictions lasting for years.
The form to be used, so I read, is like the existing wealth declaration one - that is, it’s very detailed and complex and it will be difficult for many people here to assemble the information and prepare the declarations by the April deadline. New OECD reporting agreements will make it much easier to for the tax authorities to get information on residents assets held abroad. How can the authorities here tell if someone lives here more than six months? It won’t be possible in all cases, but some of the tricks used to detect illegal holiday letting- or where taxes from rental earnings haven’t been paid- might be used.
The sneaky part of this is that if any newly declared asset has provided a financial return over the past four years – even a capital gain and is unsold – the follow up from Hacienda could be a demand for additional income tax, unless that has already been declared and settled. The amnesty last year designed to force the repatriation of huge amounts of money that had been sent out of Spain (almost all by Spaniards) to fiscal paradises and elsewhere - running to the hundreds of billions of Euros - was a spectacular failure. So this is the next step, and non Spaniards are now in the cross-hairs. This won’t make it so easy to persuade more non Spanish buyers to purchase property or to take up residence here, but that doesn’t seem to have been considered.
This new asset reporting law may run contrary to the non discrimination clauses of many bilateral double tax accords, which under international law transcend national laws, and this may need to be tested in courts here and in the other treaty partner state. Finally, while this isn’t stated, the total of assets held abroad, plus those here in Spain could bring some residents over the reporting thresholds for the national wealth tax. This and possible implications for inheritance taxes should be discussed with your gestor or other tax advisor, and soon.

*******

Sample letter:

From: (your Gestor)

Date: 29 January 2013
To: Resident
Subject: ASSET DECLARATION
Name of Resident
Address, email etc.
25th January 2013

Dear Mr./Mrs. Resident

As you should know, in December 2012, a Law ( Royal Decree) has been passed stating that all RESIDENTS (individuals and companies) must now disclose the value as at 31.12.12 of all assets owned by them which are situated OUTSIDE OF SPAIN. The obligation also applies to any such assets SOLD DURING THE YEAR 2012.

The assets are split into 3 groups and it is only necessary to submit a declaration if the TOTAL in any one of the 3 asset groups is more than 50.000 Euros per PERSON.

In successive years, this declaration will only be necessary if the total within any of the groups increases by more than 20.000 Euros, or if the asset is sold.

The tax declaration will normally be due between 1st January and 31st March but in this first year, as the form has not yet been issued, the declaration should be submitted between 1st March and 30th April.

The assets are declared in 3 different groups as follows:

1) BANK and FINANCIAL ACCOUNTS even if they are non-interest bearing
Name and Address of bank or financial institution including Post Code
Account Number including IBAN and BIC
Balance as at 31.12.12 and average account balance over last quarter 2012
If the account was closed during 2012, the closing balance of the account and the date it was closed.

2) INVESTMENTS, ISAS , BONDS, TRUSTS, QROPS, ANNUITIES, LIFE INSURANCES. Please note, however, that Life Insurances with NO SURRENDER VALUE (i.e. only payable on your death) do NOT have to be declared. However, any life insurances etc. where you are named as BENEFICIARY will have to be declared.

Name and Address of investment company including Post Code
Date of Purchase
No. of shares and % of participation
Value at Purchase
Value at 31.12.12 and average balance over the last quarter 2012.
If the investment, policy, etc. was sold during the year 2012, we need the date and value of purchase and the date and value of the sale


3) PROPERTIES OWNED ABROAD including houses, land etc.

Address of property including Post Code stating whether Urban or Rustic
Date of Purchase
Value of Purchase
% of ownership
If the property was sold during the year 2012, we need the date and value of the purchase and the date and value of the sale

If, as mentioned earlier, the TOTAL value of your assets in any one of the above groups is more than 50.000 Euros, then we must declare ALL the assets in that group, even if individually they have a value of less than 50.000 Euros.

Once you have prepared the list of all the assets in the relevant groups with the required details, please bring this to our office so that we can submit the declaration for you. The Tax Office will then verify the information and, if they find it differs from the details they have on record, you will be notified and given 10 days to rectify or explain the difference. Please note, we need the above information for EACH RESIDENT PERSON separately.

Failure to make the above declaration will result in an immediate fine of 10.000 Euros + 5.000 Euros for each undeclared piece of information.

Please, therefore, ensure that you have ALL the details for each asset as listed above as the Tax Declaration cannot be submitted if any of the details are missing.

You may have to contact the financial institutions etc. to provide the information required but this should be made readily available to you.

Please note that (this gestor) will bear no responsibility for any information which is disclosed incorrectly or omitted by you.

If you require any further information, you may contact me direct on my email: Email address of Gestor... etc etc