Declaring worldwide assets to Hacienda
Feb 3rd 2013, 3:28 pm
#91
BE Enthusiast
Joined: Mar 2011
Location: Girona/Barcelona
Posts: 381
Re: Declaring worldwide assets to Hacienda
Will this new legislation be applied to Spanish nationals employed by the state who have undeclared monies in Swiss and Argentine bank accounts?
Feb 3rd 2013, 4:01 pm
#92
Banned
Thread Starter
Joined: Apr 2008
Posts: 3,081
Re: Declaring worldwide assets to Hacienda
I write a weekly newsletter about Spain for foreign property owners called 'Business over Tapas'. here's last week's piece on this tax:
.... ....
I understand Gestors have been told by Hacienda to send out this sort of notice to any resident with whom they deal. And that includes people who may not have “official “ residence, but who live here more than 183 days in any calendar year. The Gestors are also supposed to inform Hacienda if they know there is any irregularity in the declaration - or if some “non-resident” is actually living here. That’s also supposed to be the case with asset/fund managers of which there are many operating here and with portfolios that include assets held outside Spain. Gestors like lawyers here (unlike in other countries) won’t sign tax returns, letters etc. so you carry the responsibility for any of their errors, as your gestor states below.
The problem is that some of the assets to be reported upon don’t fit the scheme here. It’s hard to see how systems used in at least some other countries can be broken down to meet the requirements under this Royal Decree. If you have a stock portfolio, do you have to report only on the total of the portfolio or each share, stock, bond, etc. held in that portfolio? Who has that sort of information? Stocks and bonds etc. are bought and sold often within portfolios- it appears that would have to be reported. Worse, any error, unintentional ones included, is automatically your fault. The fines start at a €10,000 minimum- €5,000 for each undeclared asset. What isn’t mentioned below is that if the fine adds up to over €120,000 you may fall under the criminal code. Conviction could have very serious consequences, effectively including fines that exceed the value of the assets concerned and even travel restrictions lasting for years.
The form to be used, so I read, is like the existing wealth declaration one - that is, it’s very detailed and complex and it will be difficult for many people here to assemble the information and prepare the declarations by the April deadline. New OECD reporting agreements will make it much easier to for the tax authorities to get information on residents assets held abroad. How can the authorities here tell if someone lives here more than six months? It won’t be possible in all cases, but some of the tricks used to detect illegal holiday letting- or where taxes from rental earnings haven’t been paid- might be used.
The sneaky part of this is that if any newly declared asset has provided a financial return over the past four years – even a capital gain and is unsold – the follow up from Hacienda could be a demand for additional income tax, unless that has already been declared and settled. The amnesty last year designed to force the repatriation of huge amounts of money that had been sent out of Spain (almost all by Spaniards) to fiscal paradises and elsewhere - running to the hundreds of billions of Euros - was a spectacular failure. So this is the next step, and non Spaniards are now in the cross-hairs. This won’t make it so easy to persuade more non Spanish buyers to purchase property or to take up residence here, but that doesn’t seem to have been considered.
This new asset reporting law may run contrary to the non discrimination clauses of many bilateral double tax accords, which under international law transcend national laws, and this may need to be tested in courts here and in the other treaty partner state. Finally, while this isn’t stated, the total of assets held abroad, plus those here in Spain could bring some residents over the reporting thresholds for the national wealth tax. This and possible implications for inheritance taxes should be discussed with your gestor or other tax advisor, and soon.
*******
etc
.... ....
I understand Gestors have been told by Hacienda to send out this sort of notice to any resident with whom they deal. And that includes people who may not have “official “ residence, but who live here more than 183 days in any calendar year. The Gestors are also supposed to inform Hacienda if they know there is any irregularity in the declaration - or if some “non-resident” is actually living here. That’s also supposed to be the case with asset/fund managers of which there are many operating here and with portfolios that include assets held outside Spain. Gestors like lawyers here (unlike in other countries) won’t sign tax returns, letters etc. so you carry the responsibility for any of their errors, as your gestor states below.
The problem is that some of the assets to be reported upon don’t fit the scheme here. It’s hard to see how systems used in at least some other countries can be broken down to meet the requirements under this Royal Decree. If you have a stock portfolio, do you have to report only on the total of the portfolio or each share, stock, bond, etc. held in that portfolio? Who has that sort of information? Stocks and bonds etc. are bought and sold often within portfolios- it appears that would have to be reported. Worse, any error, unintentional ones included, is automatically your fault. The fines start at a €10,000 minimum- €5,000 for each undeclared asset. What isn’t mentioned below is that if the fine adds up to over €120,000 you may fall under the criminal code. Conviction could have very serious consequences, effectively including fines that exceed the value of the assets concerned and even travel restrictions lasting for years.
The form to be used, so I read, is like the existing wealth declaration one - that is, it’s very detailed and complex and it will be difficult for many people here to assemble the information and prepare the declarations by the April deadline. New OECD reporting agreements will make it much easier to for the tax authorities to get information on residents assets held abroad. How can the authorities here tell if someone lives here more than six months? It won’t be possible in all cases, but some of the tricks used to detect illegal holiday letting- or where taxes from rental earnings haven’t been paid- might be used.
The sneaky part of this is that if any newly declared asset has provided a financial return over the past four years – even a capital gain and is unsold – the follow up from Hacienda could be a demand for additional income tax, unless that has already been declared and settled. The amnesty last year designed to force the repatriation of huge amounts of money that had been sent out of Spain (almost all by Spaniards) to fiscal paradises and elsewhere - running to the hundreds of billions of Euros - was a spectacular failure. So this is the next step, and non Spaniards are now in the cross-hairs. This won’t make it so easy to persuade more non Spanish buyers to purchase property or to take up residence here, but that doesn’t seem to have been considered.
This new asset reporting law may run contrary to the non discrimination clauses of many bilateral double tax accords, which under international law transcend national laws, and this may need to be tested in courts here and in the other treaty partner state. Finally, while this isn’t stated, the total of assets held abroad, plus those here in Spain could bring some residents over the reporting thresholds for the national wealth tax. This and possible implications for inheritance taxes should be discussed with your gestor or other tax advisor, and soon.
*******
etc
I seem to remember none of the Spanish peeps I know broke into a sweat about declaring, and I know for a fact that a good number of them still have undeclared assets.
Feb 3rd 2013, 4:13 pm
#93
Joined: Jun 2006
Location: Granada Costa
Posts: 10,899
Re: Declaring worldwide assets to Hacienda
Putting aside the moral argument for a moment, could it be that the failure of trying to collect the tax from Spanish people who had assets abroad, was because they were not disposed to disclose their assets?
I seem to remember none of the Spanish peeps I know broke into a sweat about declaring, and I know for a fact that a good number of them still have undeclared assets.
I seem to remember none of the Spanish peeps I know broke into a sweat about declaring, and I know for a fact that a good number of them still have undeclared assets.
Under the new rules if you fail to declare a 100k asset you will have to pay 130k as back taxes and fines.
Feb 3rd 2013, 4:16 pm
#94
Banned
Thread Starter
Joined: Apr 2008
Posts: 3,081
Re: Declaring worldwide assets to Hacienda
They still don´t seem to be all that "keen" to declare, even with that threat.
Feb 3rd 2013, 5:04 pm
#95
Joined: Jun 2006
Location: Granada Costa
Posts: 10,899
Re: Declaring worldwide assets to Hacienda
Are "they" all in touch with you and telling you that?
No one will admit to not being prepared to declare or they would be shooting themselves in the foot.
Pure speculation. Only time will tell.
Feb 3rd 2013, 5:27 pm
#96
BE Enthusiast
Joined: Jan 2013
Posts: 977
Re: Declaring worldwide assets to Hacienda
From France I have witnessed a variety of views as to the over-riding ability of Hacienda (which I only have seen in the US films) and under Spanish legislation to get their hands on my 'pile' and which is not much simply on the basis that I do not disclose my asset holdings.
So if I were to believe what I have seen on this forum then it is better that I stay in France. Indeed there is a matrimonial argument between us and tonight that I would prefer to handle what I currently know in France as against going to Spain and where the big wigs have somewhat reluctantly agreed to brown envelopes. This apparently is a developed society?
I declare everything that we have here in France but no one in Spain is going to get their hands on our UK assets. I will stay where I am.
This is madness.
So if I were to believe what I have seen on this forum then it is better that I stay in France. Indeed there is a matrimonial argument between us and tonight that I would prefer to handle what I currently know in France as against going to Spain and where the big wigs have somewhat reluctantly agreed to brown envelopes. This apparently is a developed society?
I declare everything that we have here in France but no one in Spain is going to get their hands on our UK assets. I will stay where I am.
This is madness.
Feb 3rd 2013, 6:29 pm
#97
Banned
Thread Starter
Joined: Apr 2008
Posts: 3,081
Re: Declaring worldwide assets to Hacienda
Even the ones that don´t think it is hot air, are still not convinced to declare the assets.
In fact "they" seem to be a lot more casual about it that most expats.
Feb 3rd 2013, 7:01 pm
#98
Banned
Joined: Dec 2006
Location: Living in a good place
Posts: 8,824
Re: Declaring worldwide assets to Hacienda
If I decided not to declare, I wouldn't tell anyone. I try to keep my financial matters to myself
Feb 3rd 2013, 7:22 pm
#99
Forum Regular
Joined: Sep 2012
Posts: 246
Re: Declaring worldwide assets to Hacienda
I doubt if other governments will cooperate in applying the new law because it overturns the taxing priority set out in double tax treaties. For example, if you sell a second home in the UK the Inland Revenue will tax the gain. Spain may also tax the gain if you are resident in Spain, but it must give credit for the UK tax paid. The UK would not wish to see Spain claiming priority with a deemed capital gain that may not leave any tax revenue for the UK.
Imagine if all governments passed a similar law, it would be a tax free for all and no one would invest outside their home country.
Imagine if all governments passed a similar law, it would be a tax free for all and no one would invest outside their home country.
Feb 4th 2013, 6:45 pm
#100
BE Enthusiast
Joined: Nov 2010
Posts: 377
Re: Declaring worldwide assets to Hacienda
Is there an obligation to file a return when shared ownership of a bank account abroad whose balance at December 31 exceed € 50,000, but whose ownership corresponds to several people?
There is an obligation to inform the bank account when it exceeds this limit (and not attend any of the other exceptions to the obligation to declare) regardless of the number of account holders. Be reported without apportion total balances, indicating the percentage of participation.
and it gets worse, cos the same applies to property
Is there an obligation to file a return when shared ownership on a property located abroad whose acquisition value exceeds 31 December € 50,000, but whose ownership corresponds to several people?
Yes, there is an obligation to report on the property when this limit is exceeded (and not attend any of the other exceptions to the obligation to declare) regardless of the number of headlines about the same. Be informed of the total acquisition value without prorating, indicating the percentage of participation. shall also apply in respect of any of the types of goods and rights contained in these three reporting requirements when there are multiple owners.
Last edited by CapnBilly; Feb 4th 2013 at 6:49 pm. Reason: formatting
Feb 4th 2013, 7:15 pm
#101
BE Enthusiast
Joined: Nov 2010
Posts: 377
Re: Declaring worldwide assets to Hacienda
Well, this one sums it all up (these are google translations, but they're pretty clear)
In the event that the Model 720 is present on any of the reporting requirements on assets and rights located abroad, could we check whether they match income declared? What if income corresponding to undeclared could regulate?
Yes, you could check the property and rights declared corresponds to income subject to having been declared, and if it is found that stem from unreported income could be regularized in accordance with current regulations.
In the event that the Model 720 is present on any of the reporting requirements on assets and rights located abroad, could we check whether they match income declared? What if income corresponding to undeclared could regulate?
Yes, you could check the property and rights declared corresponds to income subject to having been declared, and if it is found that stem from unreported income could be regularized in accordance with current regulations.
Last edited by CapnBilly; Feb 4th 2013 at 7:26 pm.
Feb 4th 2013, 7:32 pm
#102
Joined: Jun 2006
Location: Granada Costa
Posts: 10,899
Re: Declaring worldwide assets to Hacienda
What document are you quoting from?
Feb 4th 2013, 7:39 pm
#103
BE Enthusiast
Joined: Nov 2010
Posts: 377
Re: Declaring worldwide assets to Hacienda
I've just spent the last half hour going through all the FAQ on the Hacienda website. Also had a look at the model. This is the linkhttp://www.agenciatributaria.es/AEAT...delo_720.shtml
Feb 4th 2013, 7:49 pm
#104
Joined: Jun 2006
Location: Granada Costa
Posts: 10,899
Re: Declaring worldwide assets to Hacienda
That's just a page of general options. Where exactly is that information?
Feb 4th 2013, 8:11 pm
#105
BE Enthusiast
Joined: Nov 2010
Posts: 377
Re: Declaring worldwide assets to Hacienda
http://www.agenciatributaria.es/AEAT...declarar.shtml