jogger

When we move over next year, it'll be after June. We will register say in July as a resident. Then in 2017 after 183 days I'll register for tax purposes, so that'll be after June 2017 then in June 2018 I will fill out my tax form for 2017? Now, where do I pay my tax in the meantime? UK?

Also although the company pension is paid to me, would it be better to have our UK rent paid to my wife so we can get a couple's tax allowance which I hear is better than a single person's allowance?

Thanks

Roy

Fred James

When you do become tax resident in Spain you are tax resident for the whole year. When you leave the UK you cease to be tax resident when you leave.

In other words, you will not be tax resident anywhere between June 2016 and Jan 1 2017. You need to make sure that you sort this out with HMRC and you might save six months tax.

jogger

Thanks Fred

marcbernard

I believe that HMRC will not relieve you of liability to UK tax until they have received the form which Hacienda will sign once you have registered with them. Not as straightforward as you think!

Fred James

True, if we are referring to UK sourced income, but once they get confirmation from Hacienda that you are tax resident in Spain they will send you a rebate - they certainly did in my case.

They then pay the UK pension income without deducting tax (unless it's a UK Govt pension). UK rental income remains taxed in the UK, but it is also taxed in Spain, but the usual double taxation rules apply.

ElaineGon

Jogger_ When we move over next year,

From what I understand if a person moves to Spain they become tax resident immediately.

If they come as visitors they can stay for 3 months permanently before they become tax resident.

If they stay for less than 3 months but return several times and stay in total for 183 days in a year then they also become tax resident-

snikpoh

I'm sorry but quite a lot of this is wrong.

You do not (necessarily) become tax resident straight away. It is normally after having been in Spain for more than 183 days in any one calendar year.

Within 3 months (90 days) you are obliged to sign on the list of foreigners (aka get your 'residencia').

Tadd1966

snikpohaccording to the advice I have been given once you declare residency you are tax resident from that point. The 183 day rule is NA as it is an intention to stay (more than 183 days) as a resident - any taxes due in the UK can be offset via the dual tax treaty between UK & Spain and vice versa

snikpoh

Not quite - there are still some taxes that MUST be paid in UK and some that can be simply paid gross in UK and the tax paid here.

Regarding when you become tax liable - it all depends on where your "centre of economic interest" is deemed to be. For most people, the 183 day rule applies - it's also much less complicated.

Fred James

Definitely not true. No one "declares" residency - they just sign onto the register of EU foreigners after 90 days. That in no way makes them tax resident. It merely gives them the right to remain in Spain for more than 90 consecutive days, which is all you are allowed to do, as a tourist, under EU law.

Tax residency occurs when you spend more than 183 days in Spain in one calendar year and there is no requirement to declare tax residency - it is a matter of physical presence. Usually the first time that you are officially entered onto the hacienda list of tax residents is when you submit your first tax return. As Snikpoh pointed out, there are also other situations which can result in you being deemed tax resident over and above the 183 day residency rule.

In the year that you become tax resident, you are treated as being tax resident for the whole of that calendar year. It does not start from the date that you exceed 183 days.

It is perfectly possible for someone to be deemed tax resident in Spain and never be required to sign on the register of EU foreigners and it is equally possible for someone to be on the list of foreigners and not be tax resident.

Whether your income is taxed in Spain or the UK depends on the type of income. UK state pensions and company/personal pensions are taxed only in Spain as HMRC will allow them to be paid gross in the UK so there is no question of having to offset UK tax as no UK tax should be deducted. Government pensions remain taxed in the UK and are not directly taxed in Spain, although the amount of that pension is taken into account when calculating the rate of tax paid in Spain on other income that is taxed in Spain.

Other UK generated income, such as rental income is taxed in both countries and then the tax offset rule applies.

Bigmomma1

I find this all a bit confusing !! When we spoke to our Spanish Lawyers, who obtained our NIE numbers on our behalf, they informed us that as 'Temporary Residents' we could reside in Spain for 183 days in any one Calander Year, this did not have to be consecutive days. We were still UK residents and therefore our earnings, pensions, were taxed at source from the UK. however, if we were to become 'Permanent' residents then we would have to declare our incomes through the Spanish System. That seemed straightforward, but now, reading this, I am confused !!

Fred James

It's pretty simple. Less than 183 days = not tax resident = pay tax in UK.

More than 183 days = tax resident = pay tax in Spain.

I don't think I can make it simpler than that.

Rosemary

Rosemary

Bigmomma1

Now that is so much easier for my simple brain to understand, less words, less if's, but's and maybe's. It concurs with the legal information, thank you Fred