Re: Declaring assets/income
 

It's quite funny (or tragic) to see the results of some of the shenanigans expats have got up to when confronted with the modelo 720 a year ago.

A couple we know quite well went missing for a few months at the end of last summer and we bumped into them at a social function last week. While my wife embraced her friend in the usual, enthusiastic Spanish way, I noticed she seemed to be holding back as the husband and I shook hands politely.

I said, 'How's it going, Frank, and how's Jean?'

The guy was red as a beetroot. 'I'm John and my wife's name is Maggie.'

The funny things is they still live in the same house and have the same car.

Re: Declaring assets/income
 

Surely these people and those like them can be flushed out? I thought the tax office checked electricity bills to see if they were resident or not

Re: Declaring assets/income
 

The reality is that the tax office can't even flush out the big boys, like Luis Barcena, who hid 49 millions worth of black money in Switzerland. That's what this legislation is all about.

It must be infuriating for the super honest living in their crumbling urbanisations in the desert to observe their tattooed neighbours doing taxi runs in illegal British cars that should never even be in the country. Or the illegal British tradesmen who don't even know what an IVA bill is. Or the British estate agents who would cheat their own grandmothers for extra commission.

The amount of 'black' money has just increased again to some ridiculous amount unimaginable to ordinary British expats. It makes you cynical but you need to know what's going on around you if you live in Spain.

Otherwise you're the one that gets flushed out, in a Latin country where you're guilty until you prove yourself innocent.

Re: Declaring assets/income
 

We have purchased a small townhouse in Murcia and were planning to retire there shortly for all least 10 years before probably returning to UK Grandkids by then hopefully! We were planning to sell UK property and keep proceeds in bank until return and purchase a property then. How can we mitigate the risk of Spanish IHT on the UK element of our savings.

I have no issues paying Spanish income tax on our income from pension, building society interest, etc (no state pension to young as retiring early). IHT allowance in UK would be over £300k Murcia 16k euros! you cant buy a property for 16k euros!

Not planning to kick the bucket whilst in Murcia but you never know:fingerscrossed:

thanks for any advice

Re: Declaring assets/income
 

[QUOTE=Kezar;11108743]We have purchased a small townhouse in Murcia and were planning to retire there shortly for all least 10 years before probably returning to UK Grandkids by then hopefully! We were planning to sell UK property and keep proceeds in bank until return and purchase a property then. How can we mitigate the risk of Spanish IHT on the UK element of our savings.

I have no issues paying Spanish income tax on our income from pension, building society interest, etc (no state pension to young as retiring early). IHT allowance in UK would be over £300k Murcia 16k euros! you cant buy a property for 16k euros!

Not planning to kick the bucket whilst in Murcia but you never know:fingerscrossed:

Of course 16,000 euros won't buy another house! That's the allowance against your assets!
if you are resident in Spain, you will have to declare your worldwide assets on the 720 form if over 50,000 euros in any of the categories of savings, property or investments;the Spanish tax office will then have a nice checklist for IHT should you die.
If you do die, and you're left everything to your wife, she will have to pay IHT on all your worldwide assets, which, including the house will probably be a huge sum, if you've stashed away the proceeds from the sale of your UK house.The state allowance of 16,000 euros is offset against that and the remainder taxed at varying degrees.The house can't be sold to pay the inheritance, so unless your wife is rich in her own right, Spain will have the lot!
There is no way to avoid IHT that doesn't have substantial disadvantages:
Leave it to your children-how will they pay the tax? Fine if you have 12 children the cost will be spread between them, but the spouse will not have the money needed to carry on her life and the usufruct agreement where the wife can stay in the house until death may work with someone very old but not if the wife was eg 55 and wanted to downsize or move somewhere else.She would have no control over her life
Put the house in the names of your children -that in itself involves a cost,it will either be CGT or gift tax
Invest the property in an English company, again not without costs. One particular firm is always advertising in the expat press. If you have substantial savings, IHT would still be due on these.
Spanish compliant bonds, the new kid on the block, again involves costs and disadvantages.
Don't register the death for 4.5 years. This old favourite won't work now, and if you are discovered there will be huge fines;if you're a care free, sleep easily at night sort of person and like taking risks, fine, but what would you do when the deceased's signature or input is needed on a financial matter?
Murcia has shot itself in the foot, by abolishing the regional allowance -who will want to live or invest here now? Why do you think I want to get out?
The best way to retire here is to rent, and spend all your savings!
HBG-yes if you try to do things by the book, you're the one who suffers, when the Hacienda should be searching for those under the radar, making an example of them when they catch them. It's Mr and Mrs Average in the squeezed middle who will continue to suffer as usual.

Re: Declaring assets/income
 

Thanks Neptuno for such a comprehensive if depressing response

Re: Declaring assets/income
 

if you rent though tebo53 and spend more than 6 months in Spain aren't you considered to be tax resident and therefore Spanish IHT rates would then apply?

The other option is only spend slightly less than 6 months in Spain and therefore do not become tax resident, certainly not ideal in our case, having worked for 40 years we would like to relax in the sun and not worry about death, IHT liabilities, spouse left having to sort out problems and costs, etc.

Has anyone gone down the 'set up a UK company route for their uk/worldwide assets?' if so please could they forward any advice.

every day I learn something via this website

thanks to everyone

Re: Declaring assets/income
 

If you spend more than 183 days in Spain you will be tax resident, whether you buy or rent.
Even if you spend less than this and use it as a holiday home you will still have to pay IHT on it, the only difference is you will pay it only on the assets in Spain not worldwide, as you would being resident.
Don't forget that if you are resident, and receive a lump sum, pension pot, inheritance or winnings from the UK, you will pay tax on those in Spain, even if they are tax free in UK.
The advice usually given is to see a financial advisor and restructure your finances.
Life is easier when you're not wealthy!

Re: Declaring assets/income
 

I would like to add that if you feel you have assets that you would like to keep more or less intact, then becoming Spanish residents will not be the best for your pockets.

If on the otherhand you are willing to exchange your assets for sunnier climes, then there is a price to pay.

We have recently become non residents so as to keep our assets for ourselves and children, so now we are back in th Uk for a while then off to a rental property in Portugal for a few months 18 week's to be exact then we can hop between Spain Portugal and the UK or wherever, depending on our mood. As we will not be in either Spain or Portugal for 183 days we will pay only UK tax.

if one of us kicks the bucket it will be simple.

Re: Declaring assets/income
 

so.....

If we spend only 182 days in Spain and
say 60/90 days anywhere else such as florida, Portugal etc and
spend the balance of the year back in UK each year,

we should remain UK taxpayers?

Thanks again for your advice

Re: Declaring assets/income
 

More or less yes.

Infact I don't think you even have to spend 90 days in th Uk.

If you are not in any one place long enough to become tax resident, by default you are a UK tax resident.

Re: Declaring assets/income
 

'I came here to praise Caesar' didn't I? Or Hacienda? There's no difference, is there?

Spain has truly shot itself in the foot with its modelo 720, it has made life impossible for a million British expats. Our pied pipers, Blevins and Franks and the others have led us to the top of the hill and led us down again, when they realised they were wrong. They're still doing it.

Only the Spanish Manana law can save us. By the time they've got fed up chasing their own tail, their own black money, we'll be long dead.

Re: Declaring assets/income
 

What about the fact that as they would be spending most of their time in Spain, doesn't this become their centre of interest ... and so their main residence .... and so they would be tax resident?

Re: Declaring assets/income
 

Yes but don' t forget even as non resident IHT. Will still be payable in Spain by the surviving spouse on your property
I assume you are already aware of the non resident taxes payable yearly on your house, IBI, imputed income

Re: Declaring assets/income
 

If you don't qualify to be a tax resident in Spain or anywhere else because you do not spend 183 days a year there, then you are not tax domiciled and as you cannot be without a TD then your domicile of birth takes over, which in most cases for BE posters is UK.