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Declaring worldwide assets to Hacienda

Declaring worldwide assets to Hacienda

Old Jan 23rd 2013, 6:05 pm
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Default Declaring worldwide assets to Hacienda

Having read an article about this, I wonder if it is widely known about and if anysome/most/all expats have actually declared rental income from properties in the UK.

It seems that after the rental income has been taxed in the UK. it will be taxed again in Spain if I have got it right.
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Old Jan 23rd 2013, 7:17 pm
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Default Re: Declaring worldwide assets to Hacienda

Originally Posted by me me View Post
Having read an article about this, I wonder if it is widely known about and if anysome/most/all expats have actually declared rental income from properties in the UK.

It seems that after the rental income has been taxed in the UK. it will be taxed again in Spain if I have got it right.
This has always been the case, but officially hacienda will be taking this kind of tax evasion more seriously from now on. There are big fines if they find out that you have properties or bank accounts that you havent declared

Remember, every resident in Spain must declare all bank accounts that they have in their name across the world to the Spanish tax office each year

The UK and Spain have a double taxation agreement so you wont be taxed twice, although the taxes may be higher in Spain so you end up paying more, or they may tax on slightly different things
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Old Jan 23rd 2013, 8:24 pm
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Default Re: Declaring worldwide assets to Hacienda

No, it has never been necessary to declare foreign assets. This is a new law which has only become effective this year.

You always had to submit a wealth tax declaration but even then, only if your wealth was high enough to actually have to pay wealth tax.

You have always had to declare any income from overseas assets but you have not had to declare the actual assets.

This is a new law and the penalties for non declaration are draconian. If you fail to declare an asset worth over €50k in total you could lose all of it and still pay a fine.
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Old Jan 24th 2013, 2:31 pm
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Default Re: Declaring worldwide assets to Hacienda

I believe the form you need to make the declaration is Modelo 720, but it isn't finalised yet and the deadline has been extended to 30 April. Does anyone know more?

It applies to assets worth over €50k as at 31-12-2012, including bonds, bank acounts and property.
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Old Jan 24th 2013, 3:41 pm
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Default Re: Declaring worldwide assets to Hacienda

Not sure whether it will be called Form 720 - it could be a completely new one or the old form modified for the extra data required.

Yes, it is now due at the end of April. It would make more sense if they delayed it to the end of June to tie in with the normal tax declaration.
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Old Jan 24th 2013, 4:30 pm
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Default Re: Declaring worldwide assets to Hacienda

I know of one woman who is not going to declare her assets because even her husband does not know that she has a few properties in the UK.

She is keeping her fingers crossed that they will not catch up with her this year or next and they will be back in the UK by then.
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Old Jan 24th 2013, 6:32 pm
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Default Re: Declaring worldwide assets to Hacienda

My gestor tells me that its a bit more complex than that
Bank accounts and investments OVER €50k
Property over €50k

These are treated separately so if you have €49k of bank and investments and a house worth €100k, then you only have to declare the house.

And this is a reporting thing, not a direct tax thing. They want to know what you have got, they are not saying they will tax it all
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Old Jan 24th 2013, 6:49 pm
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Default Re: Declaring worldwide assets to Hacienda

You would think that they would be happy that millions of foreign devils still come here to live, bringing in lolly every month and spending it here. Talk about 'invisible export'. But no, they are going to machine-gun themselves in the foot once again. Not content with being known across Europe for their amusing take on 'illegal houses', they now want to frighten away anyone moderately wealthy who is still thinking of moving here.
As for those of us who are here, and can't sell up: why thanks Mr Taxman!

Last edited by Lenox; Jan 24th 2013 at 6:50 pm. Reason: over-enthusiasm
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Old Jan 24th 2013, 7:39 pm
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Default Re: Declaring worldwide assets to Hacienda

Originally Posted by Mitzyboy View Post

And this is a reporting thing, not a direct tax thing. They want to know what you have got, they are not saying they will tax it all
Very true - apart from wealth tax you cannot be taxed just because you have an asset and the current wealth tax threshold is 700k plus a 300k allowance for your habitual residence.

Clearly if you have assets that are income producing and you have not previously declared them then there will be tax implications.

The real killer blow comes if you have assets and do not declare them. If Hacienda subsequently find out about them they will treat the whole value of the asset as a capital gain. That's logical. If today I say I have no money in the bank and next year they find I have 100k in the bank they will assume that is a gain.

Under the new law they will assume the gain was made in the current tax tear and under existing tax rules a gain in the current year is taxed as income.

The gain can be taxed at the highest rate of 52% and on top of that there will be a fine of 150% of the tax due. That effectively means you lose the entire asset and still pay a fine on top.

This is really not something to be ignored. Failure to declare could have really severe consequences - far higher than anything you have seen before.
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Old Jan 24th 2013, 7:52 pm
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Default Re: Declaring worldwide assets to Hacienda

Originally Posted by Fred James View Post
Very true - apart from wealth tax you cannot be taxed just because you have an asset and the current wealth tax threshold is 700k plus a 300k allowance for your habitual residence.

Clearly if you have assets that are income producing and you have not previously declared them then there will be tax implications.

The real killer blow comes if you have assets and do not declare them. If Hacienda subsequently find out about them they will treat the whole value of the asset as a capital gain. That's logical. If today I say I have no money in the bank and next year they find I have 100k in the bank they will assume that is a gain.

Under the new law they will assume the gain was made in the current tax tear and under existing tax rules a gain in the current year is taxed as income.

The gain can be taxed at the highest rate of 52% and on top of that there will be a fine of 150% of the tax due. That effectively means you lose the entire asset and still pay a fine on top.

This is really not something to be ignored. Failure to declare could have really severe consequences - far higher than anything you have seen before.
But assets / investments that have been providing an "income" or "draw down" are worth far less than they were when they were invested, so its not really a gain that can be taxed
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Old Jan 24th 2013, 8:08 pm
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Default Re: Declaring worldwide assets to Hacienda

Originally Posted by Mitzyboy View Post
But assets / investments that have been providing an "income" or "draw down" are worth far less than they were when they were invested, so its not really a gain that can be taxed

I have no idea how this will work in practice, will the land registry and banks inform the Spanish authorities?

I don´t see how they will be so efficient when even within the UK, the authorities there often fail to spot benefit claimants who own a string of properties which they do not declare. A case in the news today about a woman who claimed 13k in housing benefit while having a 750k mortgage on a million pound house.

How will the Spanish taxman fare any better in catching culprits, when having to deal with the same banks, land registry etc as the British fraud investigators.

For every fraudster caught in the UK there are hundreds who will never get caught, and a lot who do get caught are through tip offs which alert the benefits office to dodgy dealing.
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Old Jan 24th 2013, 8:35 pm
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Default Re: Declaring worldwide assets to Hacienda

Call me suspicious but if they just want to know what you own but don't intend taxing you on it what is the purpose? Also once declared your UK assets then when the inevitable happens and you die then your family end up with a huge inheritance tax bill for uk assets? Only thing this does for me is convince me to just struggle on doing half and half UK/Spain this will just deter people from taking residency. Maybe that's what they want. Plus as someone else said if you have property in Spain now you can't even sell up and move on.
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Old Jan 24th 2013, 8:40 pm
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Default Re: Declaring worldwide assets to Hacienda

Originally Posted by bobd22 View Post
Call me suspicious but if they just want to know what you own but don't intend taxing you on it what is the purpose? Also once declared your UK assets then when the inevitable happens and you die then your family end up with a huge inheritance tax bill for uk assets? Only thing this does for me is convince me to just struggle on doing half and half UK/Spain this will just deter people from taking residency. Maybe that's what they want. Plus as someone else said if you have property in Spain now you can't even sell up and move on.
I'm with you there Bob. I'm seriously considering what course of action to take what with this and other stuff thats happened over the last few years. Doesnt encourage you to stay resident in Spain
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Old Jan 24th 2013, 8:56 pm
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Default Re: Declaring worldwide assets to Hacienda

Yes Mitzy I intend to the best of my ability that my daughter will inherit what me and her mother have worked hard for in the UK, this to me just looks like a way of luring you into disclosing all, no doubt to be hit at some future point. Bad enough that a large part of my life saving went into us buying a little place in Spain to retire to that is now worth very little. Of course that can't be changed and I just have to try and make it work between the two, but as I am not currently resident in Spain until I know the full implications I think it will stay that way.
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Old Jan 24th 2013, 8:58 pm
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Default Re: Declaring worldwide assets to Hacienda

Originally Posted by bobd22 View Post
Yes Mitzy I intend to the best of my ability that my daughter will inherit what me and her mother have worked hard for in the UK, this to me just looks like a way of luring you into disclosing all, no doubt to be hit at some future point. Bad enough that a large part of my life saving went into us buying a little place in Spain to retire to that is now worth very little. Of course that can't be changed and I just have to try and make it work between the two, but as I am not currently resident in Spain until I know the full implications I think it will stay that way.
Well, Ive been out of Spain until now since August on and off, so thats almost six months already
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