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More tax questions

More tax questions

Old Jun 18th 2020, 7:57 pm
  #1  
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Default More tax questions

After searching both here and on the Google, I still haven't been able to find definite answers on several tax questions;

For Modelo 720, it seems like most foreign private pension principal amounts do not need to be declared - however - if the type of pension scheme does not meet the criteria of what the exact Spanish tax law wording / definition of what a pension is, then it seems that it does need to be included in the declaration. Since many foreign countries have different rules, it appears that perhaps some do in fact need to be declared.

I understand that actual periodic pension payments will be taxed as income, and I am not so concerned about declaring the principal amount of pension. What I am worried about is if the principal amount of pension pot grows over the course of a year, does that growth (possibly capital gains and dividends of shares, etc) then attract taxation? Example - if the pension pot grows from 100,000 to 110,000 over the course of a year, does the 10,000 increase attract taxation? In my case the gains are not taxed in my country - they are sheltered in a tax wrapper. The question is if Spain would recognize the sheltered nature of the pension scheme, possibly through the DTA?

The next question is with respect to wealth tax. If you do declare pension principal amount, how does this affect your total tax bill? If you don't have to declare pension principal amount as part of overall wealth, it seems possible that the tax bill total will be lower. Does the declaration for wealth tax push you in to a higher tax bracket for income tax on periodic pension?

With the above on mind, is there an online income tax calculator that takes these things in to account? Trying to get a rough idea of tax on ~ 50,000 / year pension income (excluding growth of principal amount of pension pot)

And finally, can anyone recommend an English speaking tax accountant / lawyer with experience in this? Is it possible to go directly to the Spanish authorities and ask for a ruling on how they view a particular countries' retirement pension scheme, or have the accountant do this for you? I would want this in advance, before becoming resident. Reply or DM. For what it is worth I am looking at the Malaga region.

Any help appreciated. Thank you

Last edited by Vinny17; Jun 18th 2020 at 8:05 pm.
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Old Jun 18th 2020, 9:11 pm
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Default Re: More tax questions

Hola

For financial advice I use Blevins Franks and have done so since 2002; usual disclaimer, I have no association with Blevins Franks except as a satisfied customer

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Old Jun 19th 2020, 7:49 pm
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Default Re: More tax questions

Back of a fag packet, an income of €50k will give rise to a tax bill of around €17k.
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Old Jun 19th 2020, 8:30 pm
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Default Re: More tax questions

Thank you for the responses - I welcome advice on the pension declaration
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Old Jun 21st 2020, 8:31 am
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Default Re: More tax questions

Originally Posted by Dxf View Post
Hola

For financial advice I use Blevins Franks and have done so since 2002; usual disclaimer, I have no association with Blevins Franks except as a satisfied customer

Davexf
Indeed BF certainly appear knowledgeable but it may be advisable to use caution before using any financial tax consultant. Frequently for every glowing review there are others who are certainly not convinced of getting fair deals or unbiased advise. Example:

Last edited by Tweedpipe; Jun 21st 2020 at 8:33 am.
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Old Jun 21st 2020, 10:50 am
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Default Re: More tax questions

I approached BF a while back and was told that they weren't interested in clients with less than a quarter million in assets.
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Old Jun 21st 2020, 5:47 pm
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Default Re: More tax questions

I approached BF 7 years ago, filled in an online questionnaire, then they wanted £2,500 up front for a report with no guarantee of tax savings. I never pursued the matter .

Last edited by stevesainty; Jun 21st 2020 at 5:49 pm. Reason: Can't spell questionnaire
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Old Jun 23rd 2020, 10:41 pm
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Default Re: More tax questions

Thank you to all who have responded. I had contacted the firm mentioned in several of the responses and after the initial contact felt I should proceed with caution. I also have had some emails and pm responses from some mentioned in the highlighted threads, suggesting the same.

I guess this is why I feel like I need to go directly to the Spanish tax authorities for a ruling. Not me personally, but a firm with the ability to do this on my behalf. Tax is not and should not be the main reason for a decision on where to retire - but knowing in advance what to expect as far as taxation does seem reasonable to me.

Again - anyone with a solid reference on a Spanish firm with expertise on international expat taxation would be welcome.

Thank you
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Old Jun 24th 2020, 3:41 am
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Default Re: More tax questions

Originally Posted by Vinny17 View Post
Thank you to all who have responded. I had contacted the firm mentioned in several of the responses and after the initial contact felt I should proceed with caution.

Thank you
Hola
Whenever you contact anyone about your personal finances; you MUST act with caution and take a step back and look at your circumstances, at what is proposed, and whether the direction is one you are happy with.

You have to sleep well in your bed of a night without having to worry; I have had many financial advisors over the years and many experiences with them. Quite a number were only interested in getting a commission and moving on to the next client.

The problem with all these things is "over thinking it through" and making an irreversible step. Over my 17 years in Spain, many things have changed on the tax and inheritance front. If I had known then what I know now, i may well have done things differently. For example, back in 2002, any gain made while selling a house by a foreigner was subject to 35% tax. Along came the EU which said you must treat all EU citizens the same si it was reduced to 18%. Years later Inheritance tax was raised to around a million euros starting point.

Good luck with your deliberations

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Old Jun 24th 2020, 8:17 pm
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Default Re: More tax questions

What do you mean that inheritance tax was moved to a millón euros?
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Old Jun 29th 2020, 10:40 pm
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Default Re: More tax questions

Thank you DxF - wise words. I appreciate the comment.
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