Brano77

2009 will be our first Spanish fiscal tax year. We dropped into our local Hacienda just to confirm our understanding of what is required, well armed with information, some from a thread I posted a year ago.

Having explained that I was tax resident, an early retiree and receiving income comprising of a UK company pension (paid tax free) and rental on a UK house (subject to UK tax) I spent the next 30 minutes trying to convince them I should make a declaration!! The guy kept insisting that as my total income was less than 22,000 euros and the UK house was taxed in the UK there was no need for a declaration!!
Comments like “I thought I had to declare my worldwide income” or “the 22,000 euro figure assumes Spanish withholding tax has been applied” had little effect. He was getting quite frustrated and clearly thought I was slightly mad wanting to make a declaration!! Perhaps I am and I ask myself is it honesty or a fear of being caught!!

Is bad information from supposed professionals common?

Anyway, a couple of questions associated with the Spanish tax return I will make!

My UK pension is paid monthly (no UK tax) into a UK bank account. Is there an accepted method for converting this into Euros for the declaration.

UK rental income -what is asked for / should be declared on my Spanish tax return? I’m assuming I will only be subject to an additional 4% (difference 20%UK-24%Spain) on the taxable rental income (gross income, less personal allowance, less expenses) - not a lot.

Am I correct in assuming that the Spanish tax free allowances for a 2009 joint declaration are 5151 (single person) +3468 (family allowance) +2448(earned income relief)? Am I missing any further allowances?

Many thanks.

HBG

I can't answer your specific questions, but I also visited Hacienda years ago and employed an abogado and got roughly similar advice. I've accepted it and pay my main tax in the UK, apart from Suma and the others over here. Under EU laws, you can't be taxed twice anyway.

Fred James

Unfortunately, yes, even people like Hacienda give incorrect advice, particularly with regard to foreigners paying tax on non Spanish income..

There is an accepted conversion rate, based on the average interbank rate for the year. This year (2009 declaration) it is 1.12241

Tax on UK rental income has to be paid in the UK but personal allowances etc are normally allowed. As far as I am aware, it also has to be included in your "worldwide income" for Spanish tax purposes. There are certain allowances and deductions allowed against rental income and you can deduct any tax paid in the UK.

The allowances are 5151 plus the family allowance of 3400. The "earned income relief" is on a sliding scale, depending on your income, of between 4080 and 2652. There are also age allowances of 918 if over 65 and an additional 1122 if over 75. For the current year there is also a special deduction of 400 taken off the tax due. This is being phased out for the 2010 tax year.

spainrico

"There is an accepted conversion rate, based on the average interbank rate for the year. This year (2009 declaration) it is 1.12241"

Fred,
Is this something new this year? - in prior years it seems to have been luck of the draw and who you dealt with as to what exchange rate was used. Which always struck me as very odd that they did not implement the same rate across the board (OK this is Spain)

Fred James

No, as far as I know this has always been the case. I am not sure if Hacienda issue a rate but the rate I quoted came from a Gestor who, as far as I know, got it from Hacienda.

It’s just the average interbank rate which you can easily look up on the Internet.

In theory, you should use the rate that applied on the date that you received the income. If you have a monthly, fixed income, then it makes no difference if you use the average. If your income is variable then you should use the rate on the day.

Personally, for income that is remitted in Euros to my Spanish bank account, I use the actual amounts deposited – for income paid into my UK account I use the rate on the day.

In reality, you just have to declare your income in Euros – how you arrive at that is down to you – you do not need to justify the calculation.

If you use a Gestor/accountant to do your tax declaration he will want all the details, P60s etc and he will apply a rate.

When he comes to enter the details into the PADRE program he will just enter the total figure in Euros – all the information you supplied to him stays in his files – it is not submitted with your declaration.

It is perfectly possible to do the declaration yourself using the same program that you pay a Gestor to use. For a simple declaration it takes about 10 minutes to compile it and print out the forms. The Gestor will happily take €100 or more to do it for you.

I have done my own declarations for the last 8 years and saved a lot of cash!

Brano77

Thanks Fred for the information.

With regard to completing a declaration oneself, is this online and a similar concept to using the Government Gateway for a UK return, or printing off forms to complete manually?

Is a good working knowledge of Spanish required? Could be a good way to improve my Spanish but mistakes/misunderstandings could be costly!!

Do you have a link to the area required to either download forms or complete a declaration online?

Many thanks again.

spainrico

You have to download PADRE from AEAT but it is rather complicated to use and requires a good knowledge of Spanish and the system. It may be possible to have a go using a previous years forms as the template. But going DIY can lead to mistakes both for and against you.

Many cajas ( and some banks?) offer this service for free.

Fred James

As Spainrico says, it is complicated. It's not so much a knowledge of Spanish as an understanding of the system that is needed. If you have last years declaration then it is just a question of filling in the same boxes with the current data.

The most complicated section is filling in all the personal data and details of your property etc although if you use your previous declaration it isn't difficult.

As for the income details there are very few boxes to complete - if you just have a simple income such as pensions there is only one box to fill in.

The PADRE program is available from http://tinyurl.com/ydvczjp

The PADRE 2009 guide is here http://tinyurl.com/y8ww88u

The full tax guide is here http://tinyurl.com/yco97s6

If you really want to have a crack at it, I have written a simple guide to using PADRE - PM me if you want a copy.

Brano77

Thanks again. This will be my first return so I may well try my bank in the first instance. However, as it will be useful to know the information required and how it is applied I will take up your kind offer Fred.

With regard to language it can only be a help in progressing my knowledge. Having told a local carpenter recently “Me gusta, prefiero cojones grandes” when discussing a kitchen layout I have some way to go. Cojones/cojines/cajones!!

lynnxa

well the builders will tell you it's the first one

ForHotspot

Hi Fred,
Those sites are in Spanish. It looks like you need an understanding of Spanish in order to be able to fill in the tax return yourself. How much will it cost to get a gestor to do the personal tax return?
Thanks.

Fred James

It varies. Anything from €50 to €150 depending on who you go to.

You can make an appointment at your local tax office and take all your details with you and they will do it while you wait for free.

You have to make an appointment by calling a central number - 901 22 33 44 and they will tell you which office to go to.

ForHotspot

Thanks very much Fred. I didn't know there's such a thing as free service.