mikeglover

I have read a few articles in local papers that say that the Spanish authorities are looking at peoples electricitry bills to ascertain whether they are staying in the country for more that 6 months of the year and, if the electricity bill implies this, they are deemed to be resident and therefore have to fill in Spanish tax returns for all uk income. I was just wondering whether there is any truth in this or is it just a scare used to push people who have been living here without residencia. We visit our property quite often but ensure that it is less than 6 months a year. However, we let familly and friends come and stay and, even when there is no-one at the property, there are still certain electrical items on. Overall, there would not probably be any period between readings when no electric would be used. Even central heating for one week in winter or aircon for one week in summer would produce a fairly hefty regular bill.

Fred James

They certainly have the ability to do so but I doubt that it would be done in a random fashion - more likely when they are disputing a specific case such as undeclared rental income.

mikeglover

Thanks Fred. Is the non -residents property tax used as an alternative to having to do an annual rental tax return or would a payer of the non-residents property tax also have to fill in a tax return based on rental income (assuming no other income in Spain)

Mitzyboy

Well you pay non residents tax on the basis that they assume you are renting the villa out, so when you think about it an electricity bill doesnt actually mean that YOU are living there. It could be people you are renting to

frigilianafreddy

Well, yes and no!

If you have paying tenants, be they short term, long term, friends or families you should be declaring the rent quarterly on form 210, and paying Spanish tax.

Mitzyboy

Spanish tax on revenue that never actually enters Spain of course ..... That's where it gets slightly complicated, because as the revenue being is taken in the UK you would have to declare it there also

mikeglover

So does this mean that if i rent the property out occassionaly to famillly and friends for a week or so at a time, i have to fill in a spanish tax return f(orm 210) every year AND pay the non - residents tax of 1.1 % of valor catstral or is it a case of one or the other?. I thought the 1.1% (or 2.2% of valor catastral if property not revalued since 1994) was an alternative to filling a tax return for the casual letter

Fred James

And of course it also works the other way round.

If you are tax resident in Spain and let out a property in the UK you have to declare it in both countries and offset the tax, one from the other.

Mitzyboy

Found this

http://www.rdtabogados.co.uk/service...residents.aspx

Domino

remember also that many people in Spain have constructed properties but not finished them. Hence they may live in the flat above an unfinished shop or vice versa.

IIRC you only pay tax on a completed property, so having it part finished is a financial bonus.
In the event of any dispute then electricity useage will be a reasonable indicator of the use of the property.

In the flat we lived in the electricity remained in the landlord's name, in this house it is in the BH's name as she signed the lease.

bobd22

I would agree that it could be used as evidence in a dispute, but can't see it alone being outright proof? After all often (I will be checking my meter myself when out next month) I get estimated bill showing usage when not there, usually corrects itself later from proper reading. We only use our house ourselves but would let my daughter/immediate family use it for free, that is not rental but would be used. Even if on return they choose to pay me for electric water used (obviously not the same as cost to rent) I personally would not consider that renting but me making use of my house as I see fit and not in anyway as a business, surely that is within my rights of privacy and family life?

bobd22

Just another point on this. I know a couple who live permanently in their property in Spain have done for years, one is resident the other not obviously not right . I doubt the one who doesn't actually pays non residents tax which surely they should. A check on their electric would show full time use but still a non resident getting away with it. My self I believe it comes down to honesty and common sense. At this time I choose to be non resident and plan to use as much of my 185 days as I can.

Fred James

No it's not conclusive proof - just an indication that you might be resident.

It the taxman claims that you are resident you are the one who has to prove that you are not!

As far as tax is concerned it's a case of guilty until proved innocent.

frigilianafreddy

The law is clear:

You have to pay the annual Spanish tax

You have, in addition, to complete a spanish tax return for all rental income, quarterly, and pay tax.

You also have to declare the income in the UK on a self assessment form. You will not pay any more tax as there is an agreement between spain and the UK

Do only some, or none, of these things and you are liable for prosecution.

I wouldn't worry as the tax office is very inefficent and is after the big boys - not someone renting an apartment to friends a few weeks ayear.

EsuriJohn

That depends which end has the higher rate of tax for that type of income. If the income is in Spain and the tax rate higher then there will be nothing to pay. If UK rate was higher they would offset what you had payed in Spain and take the difference.