Re: Cost of living?
 

Hi Mitzboy and ScotinSpain - I didn't realise you still pay Wealth Tax as well! I seem to be within the limits for that anyway, having looked it up. And you're quite right of course, Civil Service pensions are not taxed in Spain - they leave it to the UK to tax.

To be fair to the original question, however, would you agree that for Residents who are not receiving Civil Service pensions, nor have allowances for children or a mortgage, one has to throw into the 'costs of living in Spain' the extra income tax one has to pay. I suppose you could say that is being a bit selective but I would imagine that there are a heck of a lot of people in that category.

For 2005 I (and I'm not well known for my maths abilities!) have just worked out that the income tax in the UK for £12000 is about £1300, and I also work out that the income tax in Spain for the same amount (call it 17400 euros) is about £2070

That means an extra expense of £770 or say 1100 euros per year.

If you agree (roughly) with my figures than this is quite a difference isn't it.

Re: Cost of living?
 

I know where you are coming from ..... but there are so many variants between one person and another its difficult to be precise. For instance, is your income split between you and a partner? I have no illusions ... I did a bit of work a while back and decided I would be about the same, but I won't have to find £1500 a year in council tax, £175 a year in road tax. Swings and roundabouts I guess, but I have decided for sure to get a very good gestoria to sort out my taxes.

Re: Cost of living?
 

What exactly constitutes a Government or Civil Service pension. I was in local government and receive a pension from Wirral Borough Council. Does this qualify?

Re: Cost of living?
 

Not sure if it extends to local government or not ... who pays your pension? Is it Capita Hartshead? If so theres a good chance. My wife was in the Customs & Excise and hers is going to be paid tax paid in UK.

Re: Cost of living?
 

Paid by Merseyside pension fund, administered by Wirral Metropolitan Borough Council

Re: Cost of living?
 

Then I'd say unfortunately the answers probably no

Re: Cost of living?
 

If that is the case how does the taxation work? Would I be taxed in Spain as well as the UK, or just in Spain at a higher rate?

Re: Cost of living?
 

If you are not careful you will be taxed in Spain and the UK. You need to de register for tax in the UK

However the british tax regime requires you to reside outside the UK for a full tax year before you are no longer a tax resident there. The tax year being april to March. However the Spaniards will tax you from Jan to December. So new people in Spain will probably suffer double taxation.

You can apply for a refund to

Inland Revenue Inspector of Funds
Lynwood House
Thames Ditton
Surrey KT7 0DP

You get the forms from them, then when you pay your Spanish tax you present these forms and the hacienda will stamp them and you use these to reclaim the tax from the UK!!!

Nobody said it would be easy did they :)

Re: Cost of living?
 

Actually I used the figure of £12000 because that's where the thread was headed, discussing whether £12000 was enough. It does not apply to me at all. I based the calculation on one person earning the £12000.

The point I am really (and I hope nicely) trying to make is that income tax is a big factor in these things, when we say how much it costs to live in Spain. Unfortunately it is often ignored, which I think is a disservice to those who are coming out here to live. Be aware that income tax is higher in Spain.
The amount you are allowed to earn in the UK before tax even starts is £4895 (in 2005.)
The amount you are allowed to earn in Spain before tax starts is just 3400 euros - about £2350.
And then when you do start working out the tax the Spanish rates are higher.
I am basing all this on someone who has no allowances for mortgage and kids.
Prove I'm wrong... please! I thought I had a good Gestoria, but that's what he came up with, and much as I don't like it I can't see that he's incorrect. I really think we have to be up front on this.

Re: Cost of living?
 

I knew I would start another minefield and I didn't intend to!!!!!!!!!!!!!!!!!! I only needed to know how much very approximately it would cost three adults to live for about six months!!!!!!!!!!!!!!!!

xxx

Re: Cost of living?
 

I agree, and I'm not really disagreeing with you, I suppose it depends on how creative your gestoria is and how totally honest you are :)

With wealth tax a resident pays nothing on the first 108,102 euros and then they have an allowance of 150253 on their first residence. Husband and wife both have these exemptions so if your house and assets are in joint names then you have a fair old exemption available.

Income tax, an example, married pensioners over 65 earning 14000 euros pension. Personal minimum is 4200 euros each, so 8400 in total. If your pension is over 12000 euros then you can also deduct wage earners deduction of 2400 euros, total deductions euros 10,800. Take this from your pension and this gives you a taxable income of 3200 euros. As no tax is due up to the first tax band of 4161 euros, you have no Spanish tax to pay!

Obviously if you have kids or a mortgage then you can deduct more (Eur 1400 first child, Eur 1500 second). There are further deductions for handicapped children. There are also better tax rates for incomes from lifetime annuities

Re: Cost of living?
 

If you recieve a tax deferred (tax free in other words) income from a UK onshore bond (20% tax paid within the bond) what is the situation if you reside in Spain? Likewise, if you hold an offshore bond with Friends Provident, NU or Skandia for example, there is no UK tax payable until it is bought back into the UK (taxation gross roll up applies). Again, do you know what the situation is if you reside in Spain?

I know the situation if you are a UK resident but not Spanish.

Re: Cost of living?
 

If you are a Spanish resident then I'm afraid you have to pay Spanish Tax on it. Same as cash ISA's .... Both my wife & I have one in the UK that is tax free, but in Spain its taxable :(

I know of some people who have gone offshore in the Isle of Man etc etc .... although this may make you feel better, the income and capital is STILL (theoretically) taxable in Spain

Re: Cost of living?
 

That is a pain in the bum. I would have thought that the reciprocal tax agreement would have taken this anomaly into account.

I wonder if there is any way around this from a trust point of view?

Re: Cost of living?
 

Broadband package with telefonica+phone 39.90 euros per month Unlimited free National calls in Spain when you order ADSL Home. Adsl home gives you speeds upto 1mb per second and unlimited use.,otherwise phone 15.64 euros per month+call charges.
http://www.telefonicainenglish.com/

paris :)