Declaring worldwide assets to Hacienda
Mar 6th 2013, 12:16 pm
#331
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Re: Declaring worldwide assets to Hacienda
Annuity valuations seem to be a problem. UK companies, when asked for a current asset value on an existing annuity, are stating that an annuity, once bought, cannot be exchanged for cash so the asset value is zero.
If that is the case they would not need to be reported as an asset but clearly this is at odds with the requirements as annuities are specifically mentioned as an asset that has to be reported
If that is the case they would not need to be reported as an asset but clearly this is at odds with the requirements as annuities are specifically mentioned as an asset that has to be reported
Mar 6th 2013, 1:24 pm
#332
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Re: Declaring worldwide assets to Hacienda
The law, as written, says one thing and then via the FAQ, a number of questions have been answered by Hacienda officials.
The problem is that they might, subsequently, be wrong. All one can do is to follow the law and then wait and see.
I have been told (via FAQ) that I do NOT have to declare my 'Spanish Portfolio Bond' because hacienda have already been notified. However, can I risk the fine?
Mar 6th 2013, 1:33 pm
#333
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Posts: 246
Re: Declaring worldwide assets to Hacienda
Many thanks for the very helpful and informative thread - I have just gone through all of it... leaving equally confused, but also in the process of considering a move back to the UK.
Could I ask what is the mechanism for ceasing to be a fiscal resident in Spain? I opted for resident status about 6 years ago - but now with my current circumstances think I should revert back to UK tax residency - Any advice?
By the way, I have seen the following 'advice' on http://www.inheritancetaxspain.co.uk/ - Do any of the forum members have knowledge / experience of this approach??
"----------Exactly how is this Spanish Inheritance tax protection created?
By forming a UK Company: The owners of the property form a UK Limited Liability company, in which ownership passes into the hands of the company. Each owner becomes a Director of the company. ...
Could I ask what is the mechanism for ceasing to be a fiscal resident in Spain? I opted for resident status about 6 years ago - but now with my current circumstances think I should revert back to UK tax residency - Any advice?
By the way, I have seen the following 'advice' on http://www.inheritancetaxspain.co.uk/ - Do any of the forum members have knowledge / experience of this approach??
"----------Exactly how is this Spanish Inheritance tax protection created?
By forming a UK Company: The owners of the property form a UK Limited Liability company, in which ownership passes into the hands of the company. Each owner becomes a Director of the company. ...
For so long as you remain Spanish resident a sale of the shares would also be subject to tax in Spain if held by you. I would recommend taking advice from a good Spanish lawyer.
Mar 6th 2013, 2:37 pm
#334
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Re: Declaring worldwide assets to Hacienda
My understanding is that if you are resident in Spain you would be subject to tax on the capital gain when you transfer the assets to the company. The company acquires the assets at market value but would have to pay the transfer tax on any Spanish property acquired.
For so long as you remain Spanish resident a sale of the shares would also be subject to tax in Spain if held by you. I would recommend taking advice from a good Spanish lawyer.
For so long as you remain Spanish resident a sale of the shares would also be subject to tax in Spain if held by you. I would recommend taking advice from a good Spanish lawyer.
My presumption was that one would form a UK Company as a non resident ... the web site that I linked to seems to be too optimistic about eliminating taxes .. .does anybody have any experience of this approach? If one were to become a fiscal 'non resident' - I am sure that the Hacienda would not accept this to be a legitimate move?
Mar 6th 2013, 2:41 pm
#335
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Posts: 46
Re: Declaring worldwide assets to Hacienda
There seems to be problem for some expats who have or acquired a foreign property outside Spain before the euro came into being! How can you value this asset in euros?
Mar 6th 2013, 2:47 pm
#336
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Mar 6th 2013, 3:26 pm
#337
Joined: Jun 2006
Location: Granada Costa
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Re: Declaring worldwide assets to Hacienda
UK pension providers will tell you that an annuity has no asset value but that does not apply in Spain. The guidance for the valuation for the asset declaration is that annuities should be valued in exactly the same way as they are currently valued for wealth tax
You capitalise the annuity based on the income it produces based on a fixed interest rate, laid down by law, of 4%.
That means that you work out the amount of money you would need to invest at 4% to generate the same income that your annuity produces. You then discount that amount by a factor that depends on your age.
For someone 69 years old that figure is 20%. IE a value of 10000 becomes 2000. For different ages add or subtract 1% for each year of your age to a maximum of 10% at age 80.
In very simple terms, an annuitant aged 69 would have to have an income from that annuity of 10000/pa for it to be valued at more than the 50K declaration threshold.
Mar 6th 2013, 3:31 pm
#338
Joined: Jun 2011
Location: In the middle of 10million Olive Trees
Posts: 12,053
Re: Declaring worldwide assets to Hacienda
Many thanks for the very helpful and informative thread - I have just gone through all of it... leaving equally confused, but also in the process of considering a move back to the UK.
Could I ask what is the mechanism for ceasing to be a fiscal resident in Spain? I opted for resident status about 6 years ago - but now with my current circumstances think I should revert back to UK tax residency - Any advice?
By the way, I have seen the following 'advice' on http://www.inheritancetaxspain.co.uk/ - Do any of the forum members have knowledge / experience of this approach??
"----------Exactly how is this Spanish Inheritance tax protection created?
By forming a UK Company: The owners of the property form a UK Limited Liability company, in which ownership passes into the hands of the company. Each owner becomes a Director of the company.
As the legal company owner, you remain in full control of the company - and therefore the asset.
You do not relinquish any control or decision making power regarding the property.
You stay in absolute control of the shares of that company, and you have the final say in who owns those shares.
Therefore - Inheritance tax never becomes an issue. Because on your passing, the company still remains the owner of the asset, it's just the shares in the company that will change hands when the time comes.
It's simple, isn't it? And it's totally legal too ! ...
Could I ask what is the mechanism for ceasing to be a fiscal resident in Spain? I opted for resident status about 6 years ago - but now with my current circumstances think I should revert back to UK tax residency - Any advice?
By the way, I have seen the following 'advice' on http://www.inheritancetaxspain.co.uk/ - Do any of the forum members have knowledge / experience of this approach??
"----------Exactly how is this Spanish Inheritance tax protection created?
By forming a UK Company: The owners of the property form a UK Limited Liability company, in which ownership passes into the hands of the company. Each owner becomes a Director of the company.
As the legal company owner, you remain in full control of the company - and therefore the asset.
You do not relinquish any control or decision making power regarding the property.
You stay in absolute control of the shares of that company, and you have the final say in who owns those shares.
Therefore - Inheritance tax never becomes an issue. Because on your passing, the company still remains the owner of the asset, it's just the shares in the company that will change hands when the time comes.
It's simple, isn't it? And it's totally legal too ! ...
I have heard conflicting reports about it, but when you read this
http://www.dailymail.co.uk/news/arti...y-company.html
then perhaps it may, just may, have some credence.
But as I see it with the Spanish requirement to report assets then the shares you hold in an overseas company will have to be reported if valued at over €50k, as it is a "catch-all" report they are demanding.
Directorship doesn't necessarily denote shareholding and that is IMHO a relatively important matter, but then not being a director on the Companies House register whilst having a major shareholding and any form of control of the company is defined as being a Shadow Director.
So I think the jury is out on this one.
unless you own a couple of oil companies and employ an office full of accountants and lawyers.
`
Mar 6th 2013, 3:48 pm
#340
Joined: Jun 2011
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Posts: 12,053
Re: Declaring worldwide assets to Hacienda
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Mar 6th 2013, 4:06 pm
#341
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Joined: Mar 2013
Posts: 46
Re: Declaring worldwide assets to Hacienda
We still need an exchange rate for pounds (and other currencies) to pesetas at that date, although to be exact the exchange rate should be as at the purchase date. Then euros!! A bit complicated if it is to be done correctly.
Mar 6th 2013, 4:18 pm
#342
Joined: Jun 2006
Location: Granada Costa
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Re: Declaring worldwide assets to Hacienda
What the exchange rate was at the time of acquisition is irrelevant.
Mar 6th 2013, 5:49 pm
#343
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Location: St.Leonards, Victoria, Australia
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Re: Declaring worldwide assets to Hacienda
Regarding the cost of declaring your overseas assets using a Tax Adviser here in Oliva, a local Tax adviser is charging €15 per person.
Mar 6th 2013, 5:51 pm
#344
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Re: Declaring worldwide assets to Hacienda
The exchange rate for assets declared up to Dec 31st 2012 is €1.23
Mar 6th 2013, 5:58 pm
#345
Joined: Jun 2006
Location: Granada Costa
Posts: 10,899
Re: Declaring worldwide assets to Hacienda
That said €15 is cheap. I have seen €50 quoted.
And of course, if you have the maximum holding of premium bonds (30000) then, assuming they have to be declared which is not clear, that's an awful lot of pages as each one has a unique number.
It really is not that simple.
The gestors will probably make more money out of this than the government will!
The online declaration is actually more complicated than doing the average tax return and that is typically €100 or more.