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Non lucrative visa

Non lucrative visa

Old Sep 20th 2021, 3:21 pm
  #31  
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Default Re: Non lucrative visa

Originally Posted by Fred James View Post
There is no doubt that the best option is the “Golden” visa which you can get if you buy a property for over €500k. You still need the same income requirements etc but the whole family is covered and there is no requirement to spend more than 6 months in Spain, hence no tax implications. I did read recently that it can now be applied for retrospectively. Before you had to apply and then buy.
You piqued my curiosity with this one Fred. Does this mean you can get the visa to come and go as you please without becoming a tax resident? So could you spend 182 days in Spain, and 183/4 days elsewhere (more than one country and not exceeding 90/180 anywhere of course) to become a tax nomad, or would you need to pay tax in Spain as it's your main residence? I mean legally.
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Old Sep 20th 2021, 7:16 pm
  #32  
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Default Re: Non lucrative visa

I wanted to check my understanding of the tax implications of the NLV.

In applying you are automatically committing to becoming tax resident in Spain? However, if you maintain a permanent residence in both the UK and Spain, it is possible to have dual residency (as distinct from dual nationality)? In which instance a dual tax agreement between the UK and Spain means that you cannot be taxed twice on the same income? In my case, I'm referring to both occupational and state pensions.

Have I got this correct? How does it work in practice? Do you end up paying a 'full' tax bill in both UK and Spain but then reclaim the duplicate element from HMRC? Or do you simply pay your normal UK bill but 'top up' any extra required in Spain?

Also, I read that any UK public service occupational pension is only ever taxed in the UK. How is this factored in?

Apologies in advance if this is a bit technical but would be grateful for any steer on this.
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Old Sep 20th 2021, 8:00 pm
  #33  
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Default Re: Non lucrative visa

As far as I am aware, if you are applying for a non lucrative visa since 1 january 2021, you are only allowed to be outside Spain for a maximum of 10 months in the first 5 years, whilst you are a temporary resident.
So whilst you are a temporary resident you cannot be a dual resident and all your income, is taxed in Spain, apart from Crown pensions which are only taxed in UK but declared as exempt income in Spain to determine your tax band.
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Old Sep 20th 2021, 9:09 pm
  #34  
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Default Re: Non lucrative visa

Ah, I thought the only requirement was that you had to undertake residency for at least 183 days per year? I haven't come across the 10 months/5 years requirement.

So, for someone looking to spend roughly equal time in both the UK and Spain or holiday home owners looking to avoid the 3 month restriction, the NLV doesn't really offer a solution then?
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Old Sep 20th 2021, 9:56 pm
  #35  
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Default Re: Non lucrative visa

Originally Posted by Andalus View Post
Ah, I thought the only requirement was that you had to undertake residency for at least 183 days per year? I haven't come across the 10 months/5 years requirement.

So, for someone looking to spend roughly equal time in both the UK and Spain or holiday home owners looking to avoid the 3 month restriction, the NLV doesn't really offer a solution then?
No, I am afraid not, the 183 days is for temporary residents who became resident before 31 December 2020, not new residents from 1 January 2021.
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Old Sep 20th 2021, 10:20 pm
  #36  
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Default Re: Non lucrative visa

Can you tell me where you found this 10 months in 5-years requirement set out please?
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Old Sep 20th 2021, 11:47 pm
  #37  
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Default Re: Non lucrative visa

Originally Posted by Paul Bass View Post
Can you tell me where you found this 10 months in 5-years requirement set out please?
https://spainresidency.com/blogs/wha...ency-in-spain/

What is “continued residency” in Spain, for the purposes of maintaining or renewing Spanish residency?

Spain Continued residency in Spain implies that any foreigner in Spain cannot be absent from the country for a given period of time, if he or she wishes to benefit from the right to maintain or renew his residency status.

But just how long are these periods? The law envisages various scenarios, which can be summarized as follows.

For standard non-EU residency applicants:
  • On Temporary residency authorizations (both for 1 and 2-year cards), applicants must be in Spain at least six months in a period of one year. If not, residency authorizations will be extinguished. Where Spain continue residency provide you given period of time in residency.
  • Long-term residency authorization (5-year cards), applicants will be required to prove that they have not been out of Spain during continuous periods of 6 months, provided those absences do not exceed 10 months in the initial 5-year period.
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Old Sep 21st 2021, 7:37 am
  #38  
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Default Re: Non lucrative visa

That's really helpful, thank you. I notice it also goes on to say:
Generally, applicants who have been out of the country for more than 10 months in the initial 5 years, or 12 in case work reasons -provided they have not exceeded been out of Spain for more than 6 months continuously-, can still renew for 2-year temporary periods, indefinitely, if they do not qualify for the 5-year card.

So, it appears as it is possible, at least initially, to maintain some form of dual residency until such time as one decides to commit more fully to a more permanent move.
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Old Sep 21st 2021, 8:35 am
  #39  
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Default Re: Non lucrative visa

Originally Posted by Andalus View Post
I wanted to check my understanding of the tax implications of the NLV.

In applying you are automatically committing to becoming tax resident in Spain? However, if you maintain a permanent residence in both the UK and Spain, it is possible to have dual residency (as distinct from dual nationality)? In which instance a dual tax agreement between the UK and Spain means that you cannot be taxed twice on the same income? In my case, I'm referring to both occupational and state pensions.

Have I got this correct? How does it work in practice? Do you end up paying a 'full' tax bill in both UK and Spain but then reclaim the duplicate element from HMRC? Or do you simply pay your normal UK bill but 'top up' any extra required in Spain?

Also, I read that any UK public service occupational pension is only ever taxed in the UK. How is this factored in?

Apologies in advance if this is a bit technical but would be grateful for any steer on this.
I went through the process of reclaiming tax paid in the UK on my occupational pension. I could not do this until I had made my first tax return in Spain and paid the tax there. Any UK Crown Pension income goes on the Spanish Declaración de la Renta in a separate box to other income, as Renta Exenta (exempt income) although it can affect the rate of tax paid if that income, when added to the taxable pension income, would put you in a higher tax bracket. After that I needed to download the Spain (Individual) Double Taxation form from the HMRC website. It comes in two versions, Spanish and English, so the Spanish version is quite easy to complete as you can see from the English version what information is required and where it needs to be filled in.

The completed Spanish version has to be sent to the Agencia Tributaria (and I was told by my local office to send it to the main provincial office in Málaga as they could not deal with it at local level). I sent a brief covering letter with it asking them to issue me with a Certificado de Residencia Fiscal en España (Convenio) - there is another kind of fiscal residence certificate which is used, for example, to avoid having the 3% retention in respect of CGT when selling a property as a Spanish resident, but that one will not suffice for this purpose. My certificate arrived through the post one week later.

The certificate, along with the English version of the Spain (Individual) Double Taxation form then needs to be sent to HMRC, who then refund the tax paid in the UK (apart from any tax paid on Crown pensions which are only taxable in the UK). At the time I did it they were still insisting on paying refunds to non UK residents by sending a cheque through the post (don't know if that has changed now) and the one they sent me did not arrive. I contacted them and asked for a replacement which took a further two months to arrive after they allowed time to cancel the first cheque. HMRC then gave me an NT (no tax) code to be used against my occupational pension income, plus a UK personal allowance which is used against my Civil Service pension, and I just continue to pay my tax in Spain each year.

I understand that when I start to receive my state pension next year, I will need to submit a new double taxation form once that gets declared on my Spanish tax return the followinig year, because of the additional source of income, which is a bit of a pain.
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Old Sep 21st 2021, 8:39 am
  #40  
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Default Re: Non lucrative visa

Thanks Lynn, that's fully answered my question.
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Old Sep 21st 2021, 8:55 am
  #41  
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Default Re: Non lucrative visa

In applying for Visa and then registering in Spain you are automatically becoming a resident in the full sense of making Spain your centre of financial interest. So you can not avoid having to make a tax declaration. You , as said, are limited to time you can spend out of Spain until you are a permanent resident.
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Old Sep 21st 2021, 9:21 am
  #42  
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Default Re: Non lucrative visa

Originally Posted by stevesainty View Post
provided those absences do not exceed 10 months in the initial 5-year period.
10 months is really a really short period of time, to be allowed out of Spain. That is quite restrictive! For someone who is retired they may want to stay with family and friends outside of Spain for extended period. Even the 12 months which applies to working is quite restrictive. I've had jobs in the past which involved a lot of travel and I would have hit that 1 year limit, well before I reached the 5 year period.
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Old Sep 21st 2021, 9:27 am
  #43  
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Default Re: Non lucrative visa

Originally Posted by Chipmonk View Post
In applying for Visa and then registering in Spain you are automatically becoming a resident in the full sense of making Spain your centre of financial interest. So you can not avoid having to make a tax declaration. You , as said, are limited to time you can spend out of Spain until you are a permanent resident.
Just to be clear, I wasn't looking to avoid making a tax declaration in Spain, I simply wanted to understand how the process between HMRC and the Spanish tax authorities worked.

I've no problem with the principle that, in exchange for residency, you should be expected to contribute to the country in which you're resident.
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Old Sep 21st 2021, 9:38 am
  #44  
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Default Re: Non lucrative visa

Originally Posted by agree_to_disagree View Post
10 months is really a really short period of time, to be allowed out of Spain. That is quite restrictive! For someone who is retired they may want to stay with family and friends outside of Spain for extended period. Even the 12 months which applies to working is quite restrictive. I've had jobs in the past which involved a lot of travel and I would have hit that 1 year limit, well before I reached the 5 year period.
When you are a permanent resident, ie after 5 years, you can be absent for 2 years without affecting your residency.
Let´s be clear the residency visas are just that, you wish to become a permanent resident, there is no visa, at the moment, that can get around the 90 days in 180 in Schengen area.
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Old Sep 21st 2021, 9:43 am
  #45  
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Default Re: Non lucrative visa

Originally Posted by Lynn R View Post

I understand that when I start to receive my state pension next year, I will need to submit a new double taxation form once that gets declared on my Spanish tax return the followinig year, because of the additional source of income, which is a bit of a pain.
I don´t believe you have to that, especially as you will be applying for your OAP from abroad. My wife has a Civil Service pension in UK and also an OAP, all her personal allowance is used on her Civil Service pension.
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