My initial financial report
#1
My initial financial report
Hi
On an earlier thread, I promised I would report the findings given to me by a well known international finance/tax specialist, so if anyone is in the same boat they can maybe use the info to help them with their plans.
Well,
My story is I always wanted to live in Spain, so I built up a portfolio of properties in the north of England to fund a lifestyle in Spain, all very good.
Since 2012 with the form 720, mutual tax disclosure from UK to Spain, it has become a very different world from pre 2012.
Now I do have to disclose some personal details here (I have to or it is a pointless exercise)
I have 350,000 euros in two properties in Spain, a villa and an apartment,
I have 800,000 pounds worth of UK properties all paid up.
I have cash ammounts over the 50k limit.
Now I spoke to the well known firm and the findings of the initial consultation are that:-
My income which is around 30k from these properties would not be an issue tax wise if I was to go cards in with the Spanish tax system, ie I would be taxed at source in the UK of course but thAt would offset the extra tax to be paid in Spain and I would pay a little more maybe £1500 or so to the hacienda.
The big shocker is the wealth tax, my properties are all in my name as my wife and I are separate financially, estimated to be around €10,000 per annum.
These are rough guides to give me an idea, the follow up report which I will probably commission estimated price between 800 and a 1000 pounds, would give me the crunched numbers and advice on how to maybe avoid some of the taxes, ie put some properties in my wife's name as there is a joint amount before wealth tax is applicable.
The only good thing that was mentioned is that wealth tax is rumoured to be scrapped may be next year.
I have older parents who are not short of money and I think although this will be a good exercise in finding out my position, I think the stringent inheritance taxes in Spain will ultimately stop me ever being fully tax resident in Spain.
So 6 months it is, sadly. Booked my ferry to return to UK for all June, then I will return to Spain in early July to enjoy several sets of guests then after August back to the UK til next year.
Any comments welcome, as I know some people on here are very clued up tax wise.
Best regards
Al
On an earlier thread, I promised I would report the findings given to me by a well known international finance/tax specialist, so if anyone is in the same boat they can maybe use the info to help them with their plans.
Well,
My story is I always wanted to live in Spain, so I built up a portfolio of properties in the north of England to fund a lifestyle in Spain, all very good.
Since 2012 with the form 720, mutual tax disclosure from UK to Spain, it has become a very different world from pre 2012.
Now I do have to disclose some personal details here (I have to or it is a pointless exercise)
I have 350,000 euros in two properties in Spain, a villa and an apartment,
I have 800,000 pounds worth of UK properties all paid up.
I have cash ammounts over the 50k limit.
Now I spoke to the well known firm and the findings of the initial consultation are that:-
My income which is around 30k from these properties would not be an issue tax wise if I was to go cards in with the Spanish tax system, ie I would be taxed at source in the UK of course but thAt would offset the extra tax to be paid in Spain and I would pay a little more maybe £1500 or so to the hacienda.
The big shocker is the wealth tax, my properties are all in my name as my wife and I are separate financially, estimated to be around €10,000 per annum.
These are rough guides to give me an idea, the follow up report which I will probably commission estimated price between 800 and a 1000 pounds, would give me the crunched numbers and advice on how to maybe avoid some of the taxes, ie put some properties in my wife's name as there is a joint amount before wealth tax is applicable.
The only good thing that was mentioned is that wealth tax is rumoured to be scrapped may be next year.
I have older parents who are not short of money and I think although this will be a good exercise in finding out my position, I think the stringent inheritance taxes in Spain will ultimately stop me ever being fully tax resident in Spain.
So 6 months it is, sadly. Booked my ferry to return to UK for all June, then I will return to Spain in early July to enjoy several sets of guests then after August back to the UK til next year.
Any comments welcome, as I know some people on here are very clued up tax wise.
Best regards
Al
#2
Re: My initial financial report
Well, I took the 6 months decision within a very short period of time after the Modelo 720 issues. It didnt take a genius to assess the possible "risks" for the future.
Just happened that the villa got sold very quickly, so the 6 month thing became less likely
I hear various things about wealth tax. No one seemed sure. I see no reason for the government to scrap it. They can just keep it there in the wings, for if they ever need to up the rate or widen the catchment area
Based on what you say, I reckon youve made the right decision. In my experience the people who disagree are generally those that dont have any significant UK assets
Just happened that the villa got sold very quickly, so the 6 month thing became less likely
I hear various things about wealth tax. No one seemed sure. I see no reason for the government to scrap it. They can just keep it there in the wings, for if they ever need to up the rate or widen the catchment area
Based on what you say, I reckon youve made the right decision. In my experience the people who disagree are generally those that dont have any significant UK assets
#3
Lost in BE Cyberspace
Joined: Apr 2009
Posts: 7,749
Re: My initial financial report
Podemos want to increase the wealth tax and reduce the amount for when it starts to kick in. They also have hinted about taxing all offshore assets heavily
The key question is if and where Podemos get into power. If any coalition is just made of PP/PSOE or Ciudadanos then things will probably remian similar to the current situation
#4
Re: My initial financial report
It depends on who wins the municipal elections later this month, and the general election later this year
Podemos want to increase the wealth tax and reduce the amount for when it starts to kick in. They also have hinted about taxing all offshore assets heavily
The key question is if and where Podemos get into power. If any coalition is just made of PP/PSOE or Ciudadanos then things will probably remian similar to the current situation
Podemos want to increase the wealth tax and reduce the amount for when it starts to kick in. They also have hinted about taxing all offshore assets heavily
The key question is if and where Podemos get into power. If any coalition is just made of PP/PSOE or Ciudadanos then things will probably remian similar to the current situation
I still remember the scorn I got on here when I was brazen enough to suggest that this might happen one day in the future
#5
Re: My initial financial report
If they increase wealth tax then yes, the tax on assets will increase but this is nothing new.
The wealth tax thresholds went up significantly a few years ago. It was never abolished. Having it increased was always a risk of being tax resident.
The Form 720 process didn't change that - it just imposed bigger penalties for not declaring assets that should have been liable to wealth tax in the first place. Clearly, it succeeded in scaring away some tax evaders who had somehow illegally failed to declare their offshore assets for wealth tax for some time.
The wealth tax thresholds went up significantly a few years ago. It was never abolished. Having it increased was always a risk of being tax resident.
The Form 720 process didn't change that - it just imposed bigger penalties for not declaring assets that should have been liable to wealth tax in the first place. Clearly, it succeeded in scaring away some tax evaders who had somehow illegally failed to declare their offshore assets for wealth tax for some time.
Last edited by Fred James; May 15th 2015 at 3:51 pm.
#6
Re: My initial financial report
If they increase wealth tax then yes, the tax on assets will increase but this is nothing new.
The wealth tax thresholds went up significantly a few years ago. It was never abolished. Having it increased was always a risk of being tax resident.
The Form 720 process didn't change that - it just imposed bigger penalties for not declaring assets that should have been liable to wealth tax in the first place. Clearly, it succeeded in scaring away some tax evaders who had somehow illegally failed to declare their offshore assets for wealth tax for some time.
The wealth tax thresholds went up significantly a few years ago. It was never abolished. Having it increased was always a risk of being tax resident.
The Form 720 process didn't change that - it just imposed bigger penalties for not declaring assets that should have been liable to wealth tax in the first place. Clearly, it succeeded in scaring away some tax evaders who had somehow illegally failed to declare their offshore assets for wealth tax for some time.
No, it didnt scare me away because I was a tax evader. I didnt have assets that were, at that time, subject to wealth tax
#8
Re: My initial financial report
update:
I have just come from my gestor, who I have used for years, apparently:
I would pay no more income tax, as this would be offset by my UK tax payment.
Wealth tax I would pay around 2000 € per annum.
And strangely she said to my disbelief that if I was in the tax system here, I would not pay inheritance tax on any inheritance that I may gain from my parents in the future, as according to her "you are taxed in your home country for this"
Yet again mystified!!
Regards
Alan Riley
I have just come from my gestor, who I have used for years, apparently:
I would pay no more income tax, as this would be offset by my UK tax payment.
Wealth tax I would pay around 2000 € per annum.
And strangely she said to my disbelief that if I was in the tax system here, I would not pay inheritance tax on any inheritance that I may gain from my parents in the future, as according to her "you are taxed in your home country for this"
Yet again mystified!!
Regards
Alan Riley
#9
Re: My initial financial report
Al, I'm also mystified by her comments regarding IHT and I'm certain that she is wrong.
I'd find another gestor if I were you.
I'd find another gestor if I were you.
#10
Re: My initial financial report
Agreed. She is talking rubbish. Sadly this is not uncommon with Spanish gestors as most of them have no idea about the complications of being subject to both UK and Spanish tax rules.
#11
Re: My initial financial report
Yet some people here suggest it's OK using a gestor to look after your house purchase, instead of a solicitor
#12
BE Enthusiast
Joined: Mar 2012
Posts: 487
Re: My initial financial report
The role of gestoria was introduced by Franco so that the common peasant (his words not mine) had someone who could read and write and therefore pay their taxes. Although there is an official body who represents them there doesn't seem to be any mandatory requirement for them to be a member nor does there seem to be a minimum academic requirement for joining. That means that whilst there are a number of competent gestoris there are also a number of enthusiastic amateurs who know little more than the expert in the pub. I think you have found one of the latter group.
Last edited by rspltd; May 19th 2015 at 7:35 am. Reason: Typos
#13
Lost in BE Cyberspace
Joined: Apr 2009
Posts: 7,749
Re: My initial financial report
The role of gestoria was introduced by Franco so that the common peasant (his words not mine) had someone who could read and write and therefore pay their taxes. Although there is an official body who represents them there doesn't seem to be any mandatory requirement for them to be a member nor does there seem to be a minimum academic requirement for joining. That means that whilst there are a number of competent gestoris there are also a number of enthusiastic amateurs who know little more than the expert in the pub. I think you have found one of the latter group.
You need to speak to an accountant. And if you use a gestor, use one that is attached to a lawyers/accountants offices i.e. they are constantly in touch with professionals
#14
BE Forum Addict
Joined: Jul 2006
Location: london/gandia
Posts: 1,163
Re: My initial financial report
Thank you to rspltd and cricketman that is well worth knowing, as I had got the impression that a Gestor was some kind of qualified individual that had a broad remit.
#15
BE Enthusiast
Joined: Aug 2007
Location: Los Martinez
Posts: 858
Re: My initial financial report
Makes you wonder about all that paperwork they shuffle to and from traffico etc for expats wanting car transfers and suchlike