Question about Tax Return
Oct 30th 2013, 3:59 pm
#1
BE Co-Founder
Thread Starter
Joined: Feb 2000
Location: Florida
Posts: 25,928
Question about Tax Return
Ok, you wonderful folk 
I wonder if you would be able to help with this. I was asked this question today, but am unable to help as I don't know the first thing about it:
"I have lived in Spain permanently since Dec 2005. I am a retired UK Police officer aged 60yrs & my sole income is my UK Police pension. The house I live in was bought & paid for and is mine without any mortgage, etc. My house is fully registered at the town hall & the property registration office & I pay my annual 'town taxes' on time. I do not own any other property anywhere in the world nor do I have any other form of income.
Because my UK Police pension is classed as a UK government pension, I have to pay my Income Tax in the UK - no other choice.
On arrival in Spain I checked with the Hacienda regarding my tax obligations here & was told that I was not eligible to pay income tax here nor did I need to submit annual tax returns here as all of this was covered by the double taxation agreement with the UK. However, I have been told recently that in fact I should be submitting a tax return annually as my tax status is 'non-resident' because I pay my taxes in the UK. I am now officially confused & wonder whether anyone can tell me my exact position regarding all of this!
Where am I tax resident and should I be submitting a tax return here even though I submit a UK tax return annually?"
I wonder if you would be able to help with this. I was asked this question today, but am unable to help as I don't know the first thing about it:
"I have lived in Spain permanently since Dec 2005. I am a retired UK Police officer aged 60yrs & my sole income is my UK Police pension. The house I live in was bought & paid for and is mine without any mortgage, etc. My house is fully registered at the town hall & the property registration office & I pay my annual 'town taxes' on time. I do not own any other property anywhere in the world nor do I have any other form of income.
Because my UK Police pension is classed as a UK government pension, I have to pay my Income Tax in the UK - no other choice.
On arrival in Spain I checked with the Hacienda regarding my tax obligations here & was told that I was not eligible to pay income tax here nor did I need to submit annual tax returns here as all of this was covered by the double taxation agreement with the UK. However, I have been told recently that in fact I should be submitting a tax return annually as my tax status is 'non-resident' because I pay my taxes in the UK. I am now officially confused & wonder whether anyone can tell me my exact position regarding all of this!
Where am I tax resident and should I be submitting a tax return here even though I submit a UK tax return annually?"
Oct 30th 2013, 4:07 pm
#2
Concierge
Joined: May 2006
Location: ex ex-pat, in Taunton
Posts: 27,203
Re: Question about Tax Return
Ok, you wonderful folk
I wonder if you would be able to help with this. I was asked this question today, but am unable to help as I don't know the first thing about it:
"I have lived in Spain permanently since Dec 2005. I am a retired UK Police officer aged 60yrs & my sole income is my UK Police pension. The house I live in was bought & paid for and is mine without any mortgage, etc. My house is fully registered at the town hall & the property registration office & I pay my annual 'town taxes' on time. I do not own any other property anywhere in the world nor do I have any other form of income.
Because my UK Police pension is classed as a UK government pension, I have to pay my Income Tax in the UK - no other choice.
On arrival in Spain I checked with the Hacienda regarding my tax obligations here & was told that I was not eligible to pay income tax here nor did I need to submit annual tax returns here as all of this was covered by the double taxation agreement with the UK. However, I have been told recently that in fact I should be submitting a tax return annually as my tax status is 'non-resident' because I pay my taxes in the UK. I am now officially confused & wonder whether anyone can tell me my exact position regarding all of this!
Where am I tax resident and should I be submitting a tax return here even though I submit a UK tax return annually?"
I wonder if you would be able to help with this. I was asked this question today, but am unable to help as I don't know the first thing about it:
"I have lived in Spain permanently since Dec 2005. I am a retired UK Police officer aged 60yrs & my sole income is my UK Police pension. The house I live in was bought & paid for and is mine without any mortgage, etc. My house is fully registered at the town hall & the property registration office & I pay my annual 'town taxes' on time. I do not own any other property anywhere in the world nor do I have any other form of income.
Because my UK Police pension is classed as a UK government pension, I have to pay my Income Tax in the UK - no other choice.
On arrival in Spain I checked with the Hacienda regarding my tax obligations here & was told that I was not eligible to pay income tax here nor did I need to submit annual tax returns here as all of this was covered by the double taxation agreement with the UK. However, I have been told recently that in fact I should be submitting a tax return annually as my tax status is 'non-resident' because I pay my taxes in the UK. I am now officially confused & wonder whether anyone can tell me my exact position regarding all of this!
Where am I tax resident and should I be submitting a tax return here even though I submit a UK tax return annually?"
Oct 30th 2013, 4:09 pm
#3
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
Re: Question about Tax Return
If you live in Spain for more than 183 days in one calendar year you are tax resident in Spain irrespective of where your income comes from.
If you have no income in Spain then in theory, you would not need to make a tax declaration but if you have a UK government pension which is covered by the double taxation agreement you are obliged to do so even though it is taxable only in the UK. Any other income is taxable in Spain as it is your worldwide income (except Crown pensions) that is taxable in Spain.
Even if you were in a situation where you did not have to submit a tax declaration then it is in your interests to do so to make sure that you are officially recognised as tax resident. This is because if you get involved in paying CGT or IHT, residents get better allowances and exemptions than non residents.
It is easy enough to submit a zero tax return each year although you will find that many financial advisors say you don't need to and often Hacienda says the same as neither of them are often au-fait with all these "foreign" tax situations.
If you have no income in Spain then in theory, you would not need to make a tax declaration but if you have a UK government pension which is covered by the double taxation agreement you are obliged to do so even though it is taxable only in the UK. Any other income is taxable in Spain as it is your worldwide income (except Crown pensions) that is taxable in Spain.
Even if you were in a situation where you did not have to submit a tax declaration then it is in your interests to do so to make sure that you are officially recognised as tax resident. This is because if you get involved in paying CGT or IHT, residents get better allowances and exemptions than non residents.
It is easy enough to submit a zero tax return each year although you will find that many financial advisors say you don't need to and often Hacienda says the same as neither of them are often au-fait with all these "foreign" tax situations.
Last edited by Fred James; Oct 30th 2013 at 4:12 pm.
Oct 30th 2013, 5:19 pm
#4
Just Joined
Joined: Oct 2013
Posts: 3
Re: Question about Tax Return
If you live in Spain for more than 183 days in one calendar year you are tax resident in Spain irrespective of where your income comes from.
If you have no income in Spain then in theory, you would not need to make a tax declaration but if you have a UK government pension which is covered by the double taxation agreement you are obliged to do so even though it is taxable only in the UK. Any other income is taxable in Spain as it is your worldwide income (except Crown pensions) that is taxable in Spain.
Even if you were in a situation where you did not have to submit a tax declaration then it is in your interests to do so to make sure that you are officially recognised as tax resident. This is because if you get involved in paying CGT or IHT, residents get better allowances and exemptions than non residents.
It is easy enough to submit a zero tax return each year although you will find that many financial advisors say you don't need to and often Hacienda says the same as neither of them are often au-fait with all these "foreign" tax situations.
If you have no income in Spain then in theory, you would not need to make a tax declaration but if you have a UK government pension which is covered by the double taxation agreement you are obliged to do so even though it is taxable only in the UK. Any other income is taxable in Spain as it is your worldwide income (except Crown pensions) that is taxable in Spain.
Even if you were in a situation where you did not have to submit a tax declaration then it is in your interests to do so to make sure that you are officially recognised as tax resident. This is because if you get involved in paying CGT or IHT, residents get better allowances and exemptions than non residents.
It is easy enough to submit a zero tax return each year although you will find that many financial advisors say you don't need to and often Hacienda says the same as neither of them are often au-fait with all these "foreign" tax situations.
Oct 30th 2013, 5:23 pm
#5
Just Joined
Joined: Oct 2013
Posts: 3
Re: Question about Tax Return
And how is sunny B'mth these days?? I see they're gradually getting rid of all the old 'nicks' there. Shame. Some happy days spent 'coppering' in Kinson and Boscombe, among other places!
Oct 30th 2013, 5:26 pm
#6
MODERATOR
Joined: Mar 2007
Location: Costa Valencia
Posts: 14,795
Re: Question about Tax Return
BE is a very large expat website, so if you have problems finding your way around we have concierges who will try to direct you. The moderators for the Spanish forums are Mitzyboy and Fred James, moderators are there to ensure that the site runs smoothly within the rules of BE. Problems and complaints should always be addressed to a moderador who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are friendly and helpful with a wealth of knowledge of the issues of living in Spain. At the top of the page you will find a quirkily named thread called Free Beer which is full of important and useful information. Hope you enjoy your time participating in the forums.
Please let me know if you need any further help.
Rosemary
Oct 30th 2013, 5:30 pm
#7
Just Joined
Joined: Oct 2013
Posts: 3
Re: Question about Tax Return
As Concierge for the Spanish section of BE I would like to say hello and welcome.
BE is a very large expat website, so if you have problems finding your way around we have concierges who will try to direct you. The moderators for the Spanish forums are Mitzyboy and Fred James, moderators are there to ensure that the site runs smoothly within the rules of BE. Problems and complaints should always be addressed to a moderador who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are friendly and helpful with a wealth of knowledge of the issues of living in Spain. At the top of the page you will find a quirkily named thread called Free Beer which is full of important and useful information. Hope you enjoy your time participating in the forums.
Please let me know if you need any further help.
Rosemary
BE is a very large expat website, so if you have problems finding your way around we have concierges who will try to direct you. The moderators for the Spanish forums are Mitzyboy and Fred James, moderators are there to ensure that the site runs smoothly within the rules of BE. Problems and complaints should always be addressed to a moderador who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are friendly and helpful with a wealth of knowledge of the issues of living in Spain. At the top of the page you will find a quirkily named thread called Free Beer which is full of important and useful information. Hope you enjoy your time participating in the forums.
Please let me know if you need any further help.
Rosemary
Oct 30th 2013, 5:57 pm
#8
Lost in BE Cyberspace
Joined: May 2009
Location: Alicante province
Posts: 5,753
Re: Question about Tax Return
I hate to say this, but since Spain has asked for foreign assets to be declared by expat residents, via the infamous modelo 720, those assets seem to include civil service pensions, and it appears the dual taxation agreements may no longer be honoured by Haciendo.
It seems they want all world wide earnings to be declared and Spanish tax paid on all of them, stating that the expat should claim back the amount from their government. HMRC do not agree to this course of action.
But it's early days.
It seems they want all world wide earnings to be declared and Spanish tax paid on all of them, stating that the expat should claim back the amount from their government. HMRC do not agree to this course of action.
But it's early days.
Oct 30th 2013, 6:12 pm
#9
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
Re: Question about Tax Return
I hate to say this, but since Spain has asked for foreign assets to be declared by expat residents, via the infamous modelo 720, those assets seem to include civil service pensions, and it appears the dual taxation agreements may no longer be honoured by Haciendo.
It seems they want all world wide earnings to be declared and Spanish tax paid on all of them, stating that the expat should claim back the amount from their government. HMRC do not agree to this course of action.
But it's early days.
It seems they want all world wide earnings to be declared and Spanish tax paid on all of them, stating that the expat should claim back the amount from their government. HMRC do not agree to this course of action.
But it's early days.
How can you say that Hacienda won't honour the DTA when they have just signed a new one!
All pensions except UK Crown pensions MUST be declared in Spain under the existing treaty so if they have incorrectly paid tax on it in the UK then Hacienda is quite correct and if you have ended up paying tax twice it is a problem between you and HMRC and nothing to do with Hacienda.
Oct 30th 2013, 6:29 pm
#10
Lost in BE Cyberspace
Joined: May 2009
Location: Alicante province
Posts: 5,753
Re: Question about Tax Return
Pensions that have started to be paid do not have to be declared on form 720.
How can you say that Hacienda won't honour the DTA when they have just signed a new one!
All pensions except UK Crown pensions MUST be declared in Spain under the existing treaty so if they have incorrectly paid tax on it in the UK then Hacienda is quite correct and if you have ended up paying tax twice it is a problem between you and HMRC and nothing to do with Hacienda.
How can you say that Hacienda won't honour the DTA when they have just signed a new one!
All pensions except UK Crown pensions MUST be declared in Spain under the existing treaty so if they have incorrectly paid tax on it in the UK then Hacienda is quite correct and if you have ended up paying tax twice it is a problem between you and HMRC and nothing to do with Hacienda.
We're in good company, most of the supposedly highly competent financial advisors haven't got a clue either. Blevins Franks have changed their advice on the topic several times in recent months, and the Spanish tax experts have given up on advising expats.
Even hacienda don't know what's going to happen next.
Oct 30th 2013, 7:58 pm
#11
Forum Regular
Joined: Sep 2008
Location: Las Alpujarras
Posts: 218
Re: Question about Tax Return
Sue, I am in exactly the same situation as you but with a military pension. Fortunately I was advised at the outset to complete an annual tax return (which I have been doing for the last four years) even though no tax is due and have now been able to get my Fiscal Certificate, which recently helped me obtain my Spanish Medical Card....
Oct 30th 2013, 10:03 pm
#12
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
Re: Question about Tax Return
What has changed?
Oct 31st 2013, 2:41 am
#13
Lost in BE Cyberspace
Joined: Jun 2005
Location: Puente Esuri
Posts: 6,903
Re: Question about Tax Return
Sue, I am in exactly the same situation as you but with a military pension. Fortunately I was advised at the outset to complete an annual tax return (which I have been doing for the last four years) even though no tax is due and have now been able to get my Fiscal Certificate, which recently helped me obtain my Spanish Medical Card....
Oct 31st 2013, 6:49 am
#14
Joined: Jun 2006
Location: Granada Costa
Posts: 10,898
Re: Question about Tax Return
It is a certificate issued by Hacienda to say that you are registered as a Spanish tax resident and have been paying taxes (if appropriate) in Spain.
This is often used where the HMRC FD9 procedure has failed and you need to prove to HMRC that you have paid tax in Spain and want any tax paid on the same income in the UK to be refunded.
It might also be required if there was any dispute about your tax residency status when paying CGT or IHT.
Usually the existence of a current tax declaration, even if it is a nil return, is sufficient proof.
This is often used where the HMRC FD9 procedure has failed and you need to prove to HMRC that you have paid tax in Spain and want any tax paid on the same income in the UK to be refunded.
It might also be required if there was any dispute about your tax residency status when paying CGT or IHT.
Usually the existence of a current tax declaration, even if it is a nil return, is sufficient proof.
