mikeglover

I know this is a bit cheeky but could anyone tell me (showing workings will earn extra marks) what the spanish income tax would be on a gross annual earning of 13,500 e (no savings income) for a 56 year old? i presume tha calcs would be the same for the wife who earns the same but is slightly (she says much) younger. Many thanks

Domino

not saying I can give you an answer, but what "allowances" are you able to claim against the income ? ?
i.e. rent, medical etc

Fred James

13500 - earned income reduction of 2652 gives taxable base of 10848.

10848 taxed at 24.75% = 2684.88 tax

Personal allowance deduction of 5151x24.75% = 1274.87

2684.88 - 1274.87 = 1410.01 tax due

You can get the same result by deduction both allowance from the gross income and taxing the balance

13500 - 2652 - 5151 = 5697 x 24.75% = 1410.01

This method only works on taxable incomes below 17700 as the first method restricts the effect of the personal allowance to the basic rate of tax.

The first method is the method used in the tax program.

These figures do not take into account any special allowances that could be due.

There is a tax simulator at https://www2.agenciatributaria.gob.e...s/dacoda2rs00w

mikeglover

I didnt know i could claim rent against income.

mikeglover

Ta Fred, presumably, if the income is all unearned, such as rent, the 2652 earned income allowance would not apply ?

Domino

only if you are a tenant
its only a small amount, but its there.
it can be a double check for the Hacienda - if tenant claims but landlord hasn't registered the let then tenant doesn't get the relief until he does, but from what I have heard Hacienda don't give up.

as a landlord in the UK dependent on your total income you may get tax relief from HMRC on the income, which is part of the UK/SP Dual Tax Agreement.
Although you can get it without taxation if you feel your better off being taxed on that income by Spain.

`

cricketman

Not such a small amount, we got 1500 euros back each year when in Andalucia, think that is now limited to 800 euros here in Asturias

frigilianafreddy

Crikey!

I won't become tax resident at that kind of tax rate on that kind of income level.

Makes the UK appear as a tax haven.

Especially as there's a whisper that the budget may increase the personal allowance to £10,000 (about 11,500€ at todays rate.)

Is there any income level where it is more advantageous to be tax resident in Spain (in other words when it makes sense to stay there over 183 days?)

cricketman

No, you pay a lot more income taxe in Spain. I pay 45% on some of my income and I dont earn THAT much

Add on 10% property sales tax and 21% IVA and I am not surprised that so many people avoid tax altogether. Its not as if there are generous child tax credits either

But on the plus side, things cost less and the beach and mountains are free And to be fair, we get thousands back each year due to tax rebates for renting, children etc etc

Fred James

Generally, unless it is savings income and that includes annuities, it is earned income.

Remember that the allowance for earned income varies from 4080 to 2562 based on how much you earn on a sliding scale. The income you quoted is just above the maximum so the minimum allowance applies.

Fred James

The tax on certain income types can be very much lower than in the UK.

Annuities are very favourably treated in Spain and depending on your age when you buy them. If you were 60-65 when you bought it then you only pay tax on 24% of the income and if you were 70 you only pay on 8% of the income.

The tax rates are the same as the savings rates which vary from 21% to a maximum of 27% which is very much less than the rates for other income.

EsuriJohn

IF you are one of the lucky few who have a UK State Pension and one of the so called "gold plated" Government Pension. Spain is a tax haven. You get a very generous Spanish allowance to set against your State Pension exported tax free from UK. You also benefit from the UK tax allowance to set against your Government pension which if what you say is true most Government Pensions would also be tax free ( average public sector gold plated pension is about £6500 ).

mikeglover

When completing a Spanish tax return based on UK income, i understand that the UK income is converted from pounds sterling into euros and Spanish income tax calculated. Any Uk tax (euro equivalent) already paid on this income can be offset and only the balance of the tax has to be paid to the Spanish tax authorities. I have 2 questions here - 1) is the exchange rate for the conversion of sterling into euros based on a particular date (such as 31st dec) ? and 2) what proof would i need to attach to the Spanish tax return that i had actually paid the UK income tax that i wish to offset against my Spanish income tax.

Fred James

If you have a regular income you would normally use the average rate over the year which for last year was 1.222

If you had irregular payments you could use the rate that was applicable at the time you received the payments.

My pensions are paid into my Spanish account in Euros so I just total the actual payments I received.

You do not have to provide proof of anything unless your tax affairs are under a subsequent investigation. It is a self assessment system and, quite frankly, you can enter whatever you like on the declaration.

If you use a Gestor he may well want to see the detail just to enable him to complete the declaration but the actual details are not submitted to Hacienda.

mikeglover

Many thanks Fred