9535martin

Can I have people views on my situation please and the best way to go about things?

I have recently moved to Spain and currently in the process of obtaining my NIE & registering with the town hall etc.... I have been told by somebody that if I obtain a resident certificate here I can then be held liable to pay tax on any income I have both here in Spain and back in the UK? My problem is that I still have a rental property back in the UK and pay tax via the self cert route and don't want to pay again over here. Is this true or am I being told a pack of lies? I'm happy to pay tax on my Spanish income however I don't want to pay twice if i'm already paying back in the UK.

I look forward to any advice offered.

HBG

I must warn you that this is not the correct advice and someone, more knowledgeable, is bound to come along to give it, but your post has reminded me of a favourite song of mine from the past.

I think it was sung by Brian Poole and the Tremoloes, I know the tune but hardly any of the words, apart from ‘Silence is Golden’.

snikpoh

As HBG has stated, you've been given 'rubbish' advice.

Whether you obtain a 'resident certificate' or not, you will be liable for Spanish tax. If you live in Spain, you MUST pay Spanish tax.

Any tax paid elsewhere can be offset against Spanish tax so that you should not end up paying twice.

Mitzyboy

Well ... you maybe must make a tax declaration after you become a tax resident having lived here for the required period of time, but it doesn't necessarily mean you will pay any tax

I dont pay tax in either country

snikpoh

Agreed. I generally end up getting a tax rebate

HBG

I wish I had seen this post 20 years ago!

Mitzyboy

I wish I'd done a lot of things 20 years ago

fionamw

*ahem* just overlooking the ramifications of signing up to that one....

I received an email from my abogados today confirming the advice of a pueblo notario that in my circumstances......... interest on investments only, on UK held accounts, less than 22k€ threshold.... & no earned income anywhere (I wish..) ......... I need not even make a tax return.
Were they in turn wrong as well?

EsuriJohn

Are you worried about inheritance tax?

Fred James

Yes they were wrong.

The 22k rule only applies where Spanish tax has been deducted at source - like UK PAYE.

I have lost count of the times I have seen that 22k figure wrongly quoted. Since when would you expect a lawyer to be a tax expert?

I suggest you look at this site which has a very good item about who should declare for tax.

http://www.advoco.es/home/22-latest/...ax-return.html

fionamw

Not really.... we have the Spanish/English identical will thing done & with 3 children between us it's something we think we have sorted.

Having checked out the link in Fred's post I might still fall foul cos even though my interest-only is well below the threshhold it's from two (miniscule) accounts in the UK. Maybe just shut one & put it all in the one place.

snikpoh

Please be warned that if you still have ties to UK (like accounts, no matter how small) then you (or your children) will be liable for both Spanish succession tax and UK inheritance tax on all Spanish assets!

However, if you were Spanish domiciled .....

Fred James

Having a couple of savings accounts in the UK is unlikely to affect your domicile one way or another.

As for having Spanish domicile rather than UK domicile, it is not something that you can voluntarily change. It only becomes an issue when you have some sort of tax transaction that could be liable for UK tax based on your domicile (such as IHT) when HMRC will then give a ruling on whether you are still UK domiciled or not.

There is no such thing as "Spanish Domicile" as such - it is a concept not used in Spain.

You are either UK domiciled or you are not and HMRC make that decision based on unpublished criteria.

snikpoh

Not according to one of the largest financial advisers in Javea. Having bank accounts is the most certain way of HMRC believing that you are STILL domiciled in UK.

Whilst, on the whole, I agree with you Fred, you can certainly do a lot to help HMRC make that decision. Not least of which is to close all UK bank accounts and sell any UK property. In that way you are showing that you have definitely moved out of the UK and have no real ties.

There is also, for certain, a five-year rule. That is, you must be able to show that you have been tax-resident outside of UK for at least that long before they will even entertain the idea of you not being UK domiciled.

I have been advised by by a number of tax 'experts' - one of which has been mentioned on here before (not sure if I can mention them but they have initials of B F and have an office in Javea) and they believe that one can provide the necessary proof so that HMRC do not try and take IHT.

I guess only time will tell!

Fred James

It depends on the reason for having the UK account. I have a UK account so that my UK company pension can be paid into it - there is no other option available. The money is then transferred to Spain as and when I want to do so.

That in no way would affect my domicile!

Having property is clearly a problem - so is having golf club memberships etc.

As I said, there are no rules - HMRC make them up depending on the actual circumstances at the time the tax becomes an issue.

From my experience "Financial Advisors" in Spain just give advice based on what services they want to sell you and that advice is frequently flawed or incomplete! I have seen websites from large companies giving out tax rates and allowances which are clearly wrong.

I have lost count of the times that people have said that they were advised that they didn't have to make a tax return if their income was below €22000.

The internal HMRC guidance on domicile issues is changing all the time - quite recently they changed it so that they would only argue about domicile issues if the expected tax payout was above a certain significant figure. In other words it is not efficient to chase little people - they just want to nail the "fat cats".

As you say - only time will tell - and that time is when the actual inheritance takes place.