Go Back  British Expats > Living & Moving Abroad > Europe
Reload this Page >

Spanish Sale and Inheritance Tax

Spanish Sale and Inheritance Tax

Old Nov 21st 2003, 6:23 pm
  #16  
C.G.D.S
 
sibsie's Avatar
 
Joined: Nov 2003
Location: Ireland--->London--->Spain--->Rockport, MA
Posts: 3,353
sibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond repute
Default

Originally posted by pebbs
thanks sibsie think i get what you mean, been finding info out for weeks now and not many people give positive advice on moving to spain
The Capital Gains issue is one of the reasons to go for Residencia. Tax in general is a real incentive to have it.

Of course if you live here for more than 183 days a year then you HAVE to have it.
sibsie is offline  
Old Nov 21st 2003, 7:04 pm
  #17  
Forum Regular
 
Dolphingirl's Avatar
 
Joined: Oct 2003
Location: Malaga
Posts: 126
Dolphingirl is an unknown quantity at this point
Default

Originally posted by sibsie
The Capital Gains issue is one of the reasons to go for Residencia. Tax in general is a real incentive to have it.

Of course if you live here for more than 183 days a year then you HAVE to have it.

I may be wrong here...you DO NOT NEED RESIDENCE PERMITS!!!The treaty of Rome was ratfied in August so all you need is documentry evidence of your home country being a member of the EU, so I think the 183 days is no longer valid.

Its adviseable to get Residencia if you are thinking of selling your house, to buy you only need a NIE number which you can obtain from the Police Commission in any major town, you just need a copy of your passport, you fill in 2 form take it to the counter, the clerk will stamp it and it will normally take approx 20 days to get your number. I purchased a house without it, although my application was in, but will have to provide it as soon as I get it to my lawyer.

Dont get put off about buying in Spain, other countries are often complicated also, I brought my house within 2 weeks, apart from a nightmare with the Agent, the sellers were Spanish and are lovely. They often pop in to see if everything is okay and are becoming friends, since I am often alone they have also told me to call them if I have any problems and they dont speak English, so its pigeon. If you are coming to the Costa Del Sol area, theres a couple of us on here also, so if you need a good lawyer etc, I´m sure one of us could point you in the right direction. Tax is a problem in any country nowadays, and its just having a good accountant to take the heat away from you and advise you. As Sibsie has stated, tax avoidance is very common here and is accepted by the Banks, lawyers etc within reason......and dont forget to add 10-12% on any house you are looking at for fees. This is taken care of by your lawyer, I gave him the 10% of the BUYING value and they will make sure my taxes etc are sorted...... Dont forget also when you sell it, apart from under declaring, you can also use the 10% as fees against captital gains. You get capital gains in UK. The one to watch is the inheritance tax, (depending on your age) as said you can miminize this if you have a chat with a tax consultant prior to you buying which will protect your dependents etc....You have also inheritance tax in UK, and same principles apply in certain respects, although of course here they are higher.

If you are thinking of coming down to Malaga region I can recommend my lawyer as so far they have been really good and they will look after you.

Dolphin Girl...
Dolphingirl is offline  
Old Nov 21st 2003, 7:13 pm
  #18  
C.G.D.S
 
sibsie's Avatar
 
Joined: Nov 2003
Location: Ireland--->London--->Spain--->Rockport, MA
Posts: 3,353
sibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond repute
Default

You still very much need to apply for Residencia. If you live here year round and exceed the 183 days you are liable for Spanish tax.

The only time you don't need to "apply" for it is if you have a contract of employment with a Spanish employer and are working here. Then you automatically go into the system.

But there really is no way round avoiding applying. At least from a legal stand point.
sibsie is offline  
Old Nov 22nd 2003, 1:49 pm
  #19  
BE Forum Addict
 
Mercedes's Avatar
 
Joined: Oct 2003
Location: Depends
Posts: 4,041
Mercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond reputeMercedes has a reputation beyond repute
Default

From what I gathered about the new Residencia laws was if you had a business or was buying one you had to have Residencia and if you were selling a property it was advisable. I think there is a double tax treaty with Britain also, depends where your income is coming from. It is more tax benefical to be under the Spanish tax system than the UK one.....but laws are changing so much in both countries its best to see some one who is upto date with the laws etc as there seems to be much confusion lately with regard......A couple of months ago the British Gvt were looking at taxing homes overseas, especially if they were under a Company name......As DG said earlier, best to speak to the Pros to be safe.....at least you can sue them if they give you the wrong advice


This is a helpful website www.spainlawyer.com which may answer some questions and be a good source to start with...

Mercedes.









Originally posted by sibsie
You still very much need to apply for Residencia. If you live here year round and exceed the 183 days you are liable for Spanish tax.

The only time you don't need to "apply" for it is if you have a contract of employment with a Spanish employer and are working here. Then you automatically go into the system.

But there really is no way round avoiding applying. At least from a legal stand point.
Mercedes is offline  
Old Nov 22nd 2003, 2:09 pm
  #20  
C.G.D.S
 
sibsie's Avatar
 
Joined: Nov 2003
Location: Ireland--->London--->Spain--->Rockport, MA
Posts: 3,353
sibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond repute
Default

The double taxation treaty means that you can only claim back from the Inland Revenue the tax you pay in Spain. Regardless of where the income generates, unless you are a crown pensioner, then you have to pay tax in Spain. You claim it back from the UK.

It's not as confusing as it sounds once you've spoken to a lawyer.
sibsie is offline  
Old Nov 23rd 2003, 3:49 pm
  #21  
jdr
RETIRED ;-))
 
jdr's Avatar
 
Joined: Jul 2003
Location: Benalmadena Pueblo,Spain
Posts: 20,156
jdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond reputejdr has a reputation beyond repute
Default

The only time you don't need to "apply" for it is if you have a contract of employment with a Spanish employer and are working here. Then you automatically go into the system.
Is that the bit where they say you earn 50 € a week, so they dont have to pay tax for you ? etc
jdr is offline  
Old Nov 28th 2003, 10:15 am
  #22  
BE Enthusiast
 
Joined: Sep 2002
Location: UK & Spain (Cádiz Province)
Posts: 454
Nige has much to be proud ofNige has much to be proud ofNige has much to be proud ofNige has much to be proud ofNige has much to be proud ofNige has much to be proud ofNige has much to be proud ofNige has much to be proud ofNige has much to be proud ofNige has much to be proud ofNige has much to be proud of
Default

The 'ruse' to buy at less than the true cost as sibsie mentioned, is not really sensible IMHO. I have experience of buying a property on that basis i.e. 80% up front on deeds and 20% as cash to seller. As I was advised would be a good idea by the locals. I had only local advice at that time.
So what happens? The local ayuntamiento send in a revised tax bill for the purchase based on WHAT THEY CONSIDER THE VALUE to be. Fair enough. But then I pay the full purchase tax on the value near to the amount I paid for the property. So I saved ZILCH but the seller actually saved.
Also, if I come to sell the property I would need to find some buyer who was also prepared to go along with the 'under declaring' system and that person may not be my ideal purchaser. If the purchaser wanted the 100% amount to be on the Escritura then I, the owner, would suffer because of the Gains Tax.
So basically, what on earth is the point of agreeing to buy a property at less than the value being paid for it ?
Nige
Nige is offline  
Old Nov 28th 2003, 10:21 am
  #23  
C.G.D.S
 
sibsie's Avatar
 
Joined: Nov 2003
Location: Ireland--->London--->Spain--->Rockport, MA
Posts: 3,353
sibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond reputesibsie has a reputation beyond repute
Default

I'm selling at the moment and word on the street is that people are being advised to be a lot more careful with underdeclaration.

A few lawyers and banks are advising 100% and the majority seem to be saying 80%. I can see the days of that tradition coming to a complete end. Remember that a silly declaration will raise the suspicions of the Hacienda Office. And obviously if you have a mortgage you have to declare over the mortage amount.

As Nige said, essentially all you are doing is deferring tax.

I recently rejected an offer from someone who wanted to declare 100% as I'd declared 85% when I bought. A nice new buyer did come along that week who wanted to declare 85% and offered me an extra 25k as well. So I'm a very happy Sibsie.
sibsie is offline  
Old Dec 1st 2003, 8:47 am
  #24  
Forum Regular
 
Dolphingirl's Avatar
 
Joined: Oct 2003
Location: Malaga
Posts: 126
Dolphingirl is an unknown quantity at this point
Default

When I went to buy the Agent wanted me to go 50%, my lawyer told me that he wouldnt do that and did the negotiation and it was set at 80:20. I even asked my Bank Manager if this was the norm and he also replied yes........If there is any come back the Seller should also be penalised...........I brought off an ex Copper, and my Lawyer is well known and was up for being a judge. The property was apparently registered in July this year, so it will be interesting to see then if I get penalised. I´m not planning on selling it for a few years yet but they certainly do things differently here. But the other problem is is trying to buy a property that they dont do it this way, I was told by my lawyer that they wouldnt possibly sell it to me and I would find it harder to buy if I did not consider this....

Especially on this coast they seem to have their own rules. Anyway its all in the hands of my lawyer.





Originally posted by Nige
The 'ruse' to buy at less than the true cost as sibsie mentioned, is not really sensible IMHO. I have experience of buying a property on that basis i.e. 80% up front on deeds and 20% as cash to seller. As I was advised would be a good idea by the locals. I had only local advice at that time.
So what happens? The local ayuntamiento send in a revised tax bill for the purchase based on WHAT THEY CONSIDER THE VALUE to be. Fair enough. But then I pay the full purchase tax on the value near to the amount I paid for the property. So I saved ZILCH but the seller actually saved.
Also, if I come to sell the property I would need to find some buyer who was also prepared to go along with the 'under declaring' system and that person may not be my ideal purchaser. If the purchaser wanted the 100% amount to be on the Escritura then I, the owner, would suffer because of the Gains Tax.
So basically, what on earth is the point of agreeing to buy a property at less than the value being paid for it ?
Nige
Dolphingirl is offline  
Old Dec 1st 2003, 2:09 pm
  #25  
Just Joined
 
Joined: Nov 2003
Posts: 8
willmags is an unknown quantity at this point
Default

If you buy a property for 50,000 and sell for 100,000 after say 5 years you will not be liable for CGT on 50,000. You are allowed to deduct legal and admin costs of the purchase and sale. You are also allowed credit for the inflationary increase in the intervening period. In other words 50,000 in 1998 would be worth less than 50,000 today. Your purchase price is therefore adjusted upwards by a multiplier for each full year.

As a non-resident you pay CGT at a flat 35% on the taxable amount.

Some of the postings confuse domicile with residency. If you spend more than 182 days in Spain, the Spanish authorities will deem you to be domiciled in Spain and claim tax on all your earnings and assets - the same applies in most other countries.

If you pay tax in more than one country, double taxation agreements apply and you will be refunded. For example if you have a property which you rent out in Spain, you will be taxed in Spain on the rental profit. If you are still paying tax in the UK, you will also be taxed on income from the Spanish rental property, assuming you declare it of course. You can claim back the UK tax by proving you have paid the tax in Spain.

If you underdeclare the actual value on the escritura when you purchase and you cannot obtain a reciprocal underdeclaration on the sale escritura, you will pay more CGT. E.g you pay 50,000 and declare 40,000 on the escritura. You sell for 100,000 and the purchaser insists this is the amount which goes on the escritura. You are then liable for CGT on 60,000 before adjustments but your actual gain was only 50,000.

If you intend taking a mortgage and are entering a purchase agreement with an underdeclared value, this will affect the amount you can borrow. If the maximum loan available is 70% then in the example above you are limiting yourself to 70% of 40,000.

Swings and roundabouts. It all comes back to the same thing. Get a good lawyer before buying or selling anything of value.
willmags is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service -

Copyright © 2024 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.