scampicat

Hi all, hope you can help.

We bought our house in July 2003, moved out in September 2004, became resident in early 2005.

We have never sent in any tax returns (wealth/income tax) as we didn't know we had to as my husband pays his income tax to the UK (Governmemt Pension so has to be paid in UK) and I don't have any income. We didn't know about the wealth tax at all. We have a house in the UK and one in Spain (both teraced houses).

We have recently found out that we should have sent these returns. Somebody on here very kindly estimated that we were below the threshold for both income and wealth tax and therefore probably won't have to pay any tax.

We are going to ask our Gestor to do these returns for us, but what I want to know is, if we have to pay any fines for not submitting them before, does anyone know how much they are likely to be?

Some friends of ours who were in a similar position have just had theirs done through a lawyer and they managed not to have to pay any fines - they recommended that we use this lawyer but she charges E150 per hour - so we'd rather our gestor did it . But if the fines are likely to be more than the E300 that the expensive lawyer charged our friends, then we may as well use them.

Sorry for waffling, hope someone can help!

Fred James

Don't panic Scampicat.

From what you have said you have no problems at all.

If your joint income from those tax years was under 8000 euros you do not have to file a tax declaration for income tax.

The same applies for wealth tax, so long as your wealth is over the starting point for wealth tax which is effectively about 500000 euros for a couple owning a house.

That said you will have to submit a zero declaration next year as the rules have changed and the exempt limit is now only 1000 euros.

The advantage of submitting a declaration, even though there is no tax to pay, is that you are classed as tax resident and only then will you be able to claim the various exemptions and allowances against CGT and IHT. Also, if you have an interest bearing account or savings account you will be able to reclaim the tax that is deducted by the bank.

You will not need a lawyer or even a gestor. You can make an appointment at your local tax office and they will prepare your tax declaration for free.

Hope this helps.

scampicat

Thank you so much Fred for your speedy, informative and re-assuring reply!

Should I take copies of deeds of both our houses and proof of my husband's Teachers' pension to the tax office? We earn no income in Spain.

Fred James

It's always better to go prepared with everything they might want - it saves another trip!

A copy of your IBI recepts will show what the catastral value of your house is. The value for wealth tax is supposed to be either the price on the escritura or the current value. In fact they often just mulitiply the catastral value by a factor (usually 2 or 3 times) to arrive at a value. Also your Spanish bank will normally send you a summary statement for tax purposes which shows your average account balances.

In theory they are supposed to totally disregard your government pension so you do not actually need to show it, however they might wonder what you are living on!

You can make an appointment at the tax office by calling 901 200 345. The service is available from March 1 to June 30.

Mitzyboy

Alternatively if you aint got the bottle to face Spanish beaurocracy is to use a Gestoria - for about 50 - 60 euros they will do the whole thing for you hassle free

EsuriJohn

Hi Fred James,

The danger is that if you declare it the smaller office that has not met this before might add it to any other income to produce a tax qualifying amount ie State Pension + Government Pension gives sufficient for tax to be levied. State Pension on its own does not and it could take months to unravel. The double tax treaty is clear that Government Pensions (includes teachers pension) are taxed in the country where they arise (with appropriate allowances) and totally ignored in Spain.

Therefore when you get your State Pension you can export that untaxed and exchanged by the DWP (very good rate) to your Spanish bank account declare it in Spain and you will get the Spanish allowances as well.

It is likely that you will continue to pay tax in UK but not pay tax in Spain.

Regards,

John.

Hillybilly

...whilst remembering that, as a tax resident of Spain, you are supposed to declare your worldwide assets which would inlcude the UK property still owned....

scampicat

Thanks all for your advice. We have decided to use the Gestor as the tax office is in Granada, 2 hours drive away and the Gestor is only down the road if we forget anything.

Neither of us have a State Pension yet, but my husband does receive Incapacity Benefit, which we will declare in Spain but it is below the amount you mentioned. THe DWP have very kindly sent us a statement for tax purposes and a bilingual form to fill in to get the IB taxable in Spain instead of UK (I don't understand the English bit, let alone the Spanish!)

We will also declare our house in the Uk , but both our houses together probably come to less than the amount mentioned.

Thanks once again

Ex-pat

you said your husband recieves incapacity benefit.My husband recieves this benefit and has been told that when we move to spain he will lose it.is this right? We are in the process of selling our house to move permanately,does this make a difference?

EsuriJohn

Hi scampicat,

I am not sure and Fred will correct if I am wrong but I think the allowances for houses against wealth tax are for your main home in Spain. If you have a second property in Spain or UK they are not covered and you may have to pay tax on them if declared in Spain. Also if you let the UK house out then HMRC will want to tax the income after allowances and again the Hacienda will also want to tax that income but after allowing for tax paid in UK you would probably not owe them anything.

Regards,

John.

scampicat

Although we still have a house in the UK, we are permanent residents in Spain. Incapacity Benefit can be received here. Any correspondence they send here. We had to fill in a form to give them various details (dates etc) when we moved here.

I don't know why they are saying your husband can't receive it. The only thing I can think of is that there is short- and long- term IB. My husband is on long-term. Don't know whether that makes a difference. Also he is under State Retirement age.

Oh yes, something else that may make a difference - is he actually on IB or is he on Income Support with an addition for Incapacity?

I would query this, because if you are allowed to carry on claiming it, you also get a Form E121 which covers you for Healthcare.

Try your local CAB (Citizens' Advice Bureau). Good luck!

scampicat

Thankyou John.

The house is lived in by our son and his two friends, their rent pays the bills/maintenance, we don't make any money from it. The HMRC in the UK know this and accept it.

We also have a tiny derelict unliveable house in Spain (next door to our main one). There is no way we could rent that out, it is completely derelict!

If we have to pay any tax, sobeit, but we'd rather not!

Thanks everyone for your advice.

zims500

[QUOTE=Fred James;5336874]Don't panic Scampicat.



If your joint income from those tax years was under 8000 euros you do not have to file a tax declaration for income tax.

The same applies for wealth tax, so long as your wealth is over the starting point for wealth tax which is effectively about 500000 euros for a couple owning a house.

That said you will have to submit a zero declaration next year as the rules have changed and the exempt limit is now only 1000 euros.

Hope this helps.[/QUOTE


Is the 1000 euros per person or couple ?
Sounds much to low - did they bring it down.?
Sorry about my ignorance!
Andrea

Fred James

It is fer couple and includes the income (if any) from children living with them.

Yes, it has been reduced for this tax year - it used to be 8000.

If you are working and paying PAYE then the limit is 22000 but it must be from only one source.

The upside is that some tax bands have been reduced and the personal allowances raised considerably so that most people will pay less tax this year.

Ray51

"Got what you meant now".. thanks..