DLC

There's a new law which being drafted which includes something which could affect a lot of expats, if not all...

http://www.20minutos.es/noticia/1518...fraude/fiscal/

Translated...

Now obviously most expats have at least a current account still open in the UK, if only because it's very difficult to open one later on if you go back to the UK. There are also lots who still have a house in the UK and possibly might even rent it out. In my particular case I didn't even register as a non-resident with the Inland Revenue because it would only affect the interest paid on my current account which is peanuts because it only had a few hundred quid in it... until recently when I started sending money back to the UK because it looks like the eurozone's going to hell in a handbasket.

In the case of current accounts, in theory non-residency must be communicated to the Inland Revenue and the interest paid on that current account in the UK must be declared in la declaración de la renta every year. Since I have been looking into this since news of this draft bill came out and it seems that since 2006 there is a law which says that, in addition, the Bank of Spain must be notified of accounts opened or closed abroad with "formulario DD1" (do a search with those words and you'll find it). This new law seems to be a much more far-reaching version of that, with far bigger stick to beat you with. As for other stuff (house, rent, etc...) I'm not going to say anything because it doesn't apply to me and I haven't looked at it.

So I imagine, in order to "regularise" accounts under the law as it currently stands (which as those of us who have been here for a while know, everything can be regularised in Spain, given the right form and possibly the appropriate amount of money), you must officially declare non-residency in the UK, put the interest earned on accounts in your declaración de la renta from this year onwards, and form DD1 must be filled in for each account opened from 2006 onwards. That can be done right away, if only to later argue that you've done everything in good faith (not that it'll make much difference) should the man from Hacienda come knocking on your door. If you've closed any accounts since 2006, I imagine the best thing is not to bother officialdom with them.

Now back to this new draft law. It's very easy for Hacienda to find out who has an account abroad, all they need to do order banks is look for people who have done an international transfer and put their own name as the person receiving the transfer or who has received international transfer from someone with the same name and the easiest thing will be to start with those who have a NIE instead of a NIF. Lots of lovely fines, which will on reading this draft law will be at least 15000 euros (10000 euros for 'hiding' something and 5000 euros for the item that was not declared). As for the other things mentioned above, again I'm not going to say anything because I haven't looked at it as it doesn't apply to me.

And as for double-taxation agreements between Spain and the UK, I haven't looked at that either yet.

Now, looking towards the future, this new law also makes it very easy to a) come up with taxes which disproportionately affect people who have assets abroad (imagine how desperate Britain got in the 1970s and extrapolate that to Spain) and b) should the eurozone go to pot, make it very easy to "repatriate" money and covert them to neo-pesetas as part of an EU-wide agreement to contain capital flight.

Discuss.

amideislas

It is increasingly assumed that everyone is a tax evader, so rather than find out the root causes why everyone apparently tries to evade taxes (in their opinion), just add more and more regulation and restrictions which not only give hacienda more power to make citizens' lives miserable (even if they've done everything perfectly) but make it even more necessary for citizens to find more creative ways to evade increasingly oppressive taxes, or simply make it undesirable to reside, conduct business, and pay taxes here.

This is the entire problem with our brainchild social system - discourage legitimate prosperity, encourage the black economy. Then spend billions fighting the black economy.

Domino

never worked in Accounts ?
every customer is going to come up with some excuse as to why they can't pay it this week/month/quarter/year.

there is a very fine line between Tax Avoidance and Tax Evasion, so why shouldnt tax authorities take the attitude everyon will try to evade tax at some point, even if they are as squeeky clean as you, me and all those on BE ??

nogard

New to Forum. What is BE?

jimenato

The forum - British Expats.

nogard

Never mind; just clicked!

nogard

Thanks.

Domino

one way of getting a haircut for free
just let the words go straight over your head


sri, although there are alot of TLA's floating around

teuchterpete

As somebody who is moving towards retirement, and residency in Spain next year, should I make the jump, or live 6 months UK, 6 months Spain and avoid all the complex tax problems!
Pete

amideislas

Why do people engage in the black economy? Because the "legitimate" economy is too complex and expensive. Simple matter of risk/benefit/reward. Simpler and cheaper to do things "unofficially". "Tax avoidance" is a basic necessity.

For even low income Germans, it's a basic necessity to hire a tax accountant to find any possible means to cut their tax burden. Many, if not most routinely go a bit over the line, but it's a basic necessity for them, and represents nothing less than yet another burden to add the the already long list the public has to live with.

The point is that we are overtaxed and over-regulated, which only encourages the black economy.

When things aren't over-taxed and over-regulated, there is a lot less reason to engage in the black economy - whether tax avoidance/evasion, or doing some sort of trade outside of legal means. If the burden is low, then why not just do everything above the table?

Instead, we tax more, regulate more, which only further encourages people to find "alternative" means at every turn (legal or not), then we spend another fortune to fight it, which only requires us to raise taxes and encourages more innovation in avoiding it.

DLC

I posted this because I don't think it's come up in the forum before.

My main concern was the chance of a completely disproportionate fine for something which I think many expats are probably are guilty of (keeping a current account open in their home country which also happens to pay a pathetic amount of interest and not including it on the tax return so it doesn't make the tax return much more complicated) and what possible use this info could be put to use to in the future if Spain gets more desperate or the eurozone goes up in smoke. It wasn't a post extolling the virtues of working in the black economy.

snikpoh

We hold accounts in UK to pay endowment policies (less that £10/month so too expensive to pay from here on a monthly basis). They pay about 3% interest and so is not a lot.

We asked our gestor to add this interest onto our annual tax return here in Spain and she simply laughed. She stated it was not necessary and not worth the effort - should I have insisted?

DLC

Well after this new law comes into effect it seems that you should.

Fred James

You need to think this new law through in the context that it was intended.

It is not there to chase up a few poor expats who happen to have an account in their home country.

It is part of a major anti-fraud initiative to catch very wealthy Spaniards who are investing in offshore tax havens where there is no withholding tax or disclosure.

The last people they are interested in are a few expats who will almost certainly have UK bank accounts.

If you have income in the UK from any investment accounts or property rental you are already obliged to declare them for tax in Spain.

It's certainly not worth losing sleep over unless you are a major tax evader!

EsuriJohn

This is what HMRC are doing in UK chasing up any UK resident taxpayer who has offshore accounts and they are becoming more aggressive about it buying list of names from disgruntled bank employees in Switzerland and Luxemburg.