lic

Hi,
I'm not a tax resident in Spain. I have my own home in England. I visit Spain regularly, but spend no more tha 183 days per year there.
I am concerned that should I overstay the 183 period I would be liable to completing a form 720. I've researched (on the web) this and cannot find the calculation the Hacienda might use. I understand that as I'm married 2 forms 720 would be required (which means 2 X 30,000€ fines), should we overstay.
The obvious answer is don't overstay. However I would be obliged if someone with the correct knowledge could tell me the formula used by the Hacienda.
Thanks

Fred James

I think Hacienda days are much the same as ordinary days

183 days in one calendar year, not necessarily consecutive is about as simple a formula that you can get.

lic

Thanks for your reply Fred.
I fully understand the 183 day rule. Obviously I'd become a tax resident of Spain if I spent longer than 183 days there. What I really want to know is what formula they use to calculate what tax On my house in England, government pension, and other income. E.g. If my house was worth £500,000 how much would they tax me on it etc.

Fred James

For 720 is an asset declaration, it has nothing to do with tax directly. If you fail to declare your assets, then the consequences are dire, you can end up paying 150% of the asset value in fines.

If you have assets worth more than around €1m euros approx (including your family home) then Spanish wealth tax might apply, but that has nothing to do with Form 720 as such - you are supposed to declare your wealth (if it exceeds the limits) every year and pay the tax every year.

So, your house in the UK will not be taxed under wealth tax as the allowances will probably cover it. Your pensions and other income will be taxed in Spain. Your UK Govt pension will continue to be taxed in the UK, but it will be declared in Spain, which will affect the tax you pay on any other income such as your UK State pension.

lic

Hi,
Thanks Fred.

teejaydee

And the EU investigation into the legality of this law is not going to be resolved for quite some time .

Eu Probe Into Spanish Expat Fines Delayed Blevins Franks - International Adviser

snikpoh

... but he will, presumably, have to pay imputed rental tax on that property. What's the calculation used for that?

Fred James

The valuation of the property is the one declared on Form 720 which is normally the original purchase price as there is no official Catastral value for a foreign property.

The imputed income tax is based on 50% of that value multiplied by 1.1%.

As a tax resident, that imputed income is added to other income on your tax declaration and taxed accordingly.

Tadd1966

This is NOT a black and white rule only a guide for example you can have dual residency


Speak to HMRC and a tax advisor in Spain as individual circumstances can vary

snikpoh

I didn't know you could have dual TAX residency?

I know you can pay tax in multiple countries but you always (I thought) have a MAIN tax location.

Fred James

That's correct. 183 days in Spain trumps all other claims, however, as the rule in the UK is 90 days or less, it is technically possible to be dual resident, but the DTA says that you will be resident in Spain.

You should never confuse the fact that you may have to pay tax in the UK with being tax resident. Any income arising in the UK will be taxed in the UK irrespective of tax residency unless it is specifically exempt such as pensions and royalties.

This is what HMRC say about dual tax residency.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of
both Contracting States, then his status shall be determined as follows:

a) he shall be deemed to be a resident only of the State in which he has a
permanent home available to him; if he has a permanent home available
to him in both States, he shall be deemed to be a resident only of the
State with which his personal and economic relations are closer (centre
of vital interests);

b) if the State in which he has his centre of vital interests cannot be
determined, or if he does not have a permanent home available to him
in either State, he shall be deemed to be a resident only of the State in
which he has an habitual abode;

c) if he has an habitual abode in both States or in neither of them, he shall
be deemed to be a resident only of the State of which he is a national;

d) if he is a national of both States or of neither of them, the competent
authorities of the Contracting States shall settle the question by mutual
agreement.