Trying to choose where to become a resident - UK or Spain!
 

Hello - I'm new to this site. I am Canadian with dual British nationality. Trying to figure out where to become a tax resident - UK or Spain. I recently sold my house in Canada and bought in Casares, maybe I am completely mad! Or maybe I was having a reckless moment but here I find myself with the keys this week and wondering whether I should stay on in the UK as a TAX resident (have friends I can stay with here) and stay as a Spanish non resident for now. I work for a Canadian company (mine) so that should not influence the situation either way.

Has anyone purchased a property in Spain and decided to stay as a non resident to avoid the higher tax rates in Spain?

I have a lot of questions about how to cope with my new life in Spain especially since I chose an area with little English. I am probably quite mad and will need some friends to help me cope. :)

Re: Trying to choose where to become a resident - UK or Spain!
 

You don't have a choice. If you spend more than 183 days in Spain in one calendar year you are deemed to be tax resident.

Re: Trying to choose where to become a resident - UK or Spain!
 

Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst BEVS moderates Europe. Moderators are there to ensure that the site runs smoothly within the rules of BE. This is so that members gain the information that they are looking for and find their experiences on the forums to be friendly and worthwhile.

Problems and complaints should always be addressed to a moderator who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are usually friendly and helpful with a wealth of knowledge about the issues of living in Spain. I hope that you enjoy your time participating in the forums.

Please let me know if you need any further help.

Rosemary

Re: Trying to choose where to become a resident - UK or Spain!
 

Yes, yes I understand the residency rules. The question is whether anyone has made a comparison in terms of tax liabilities and other financial reasons. I can choose which country to be classed as a resident in and wonder if others have gone through the process and can provide their thoughts. Thank you.

Re: Trying to choose where to become a resident - UK or Spain!
 

Question, how can you choose? You either live in a place or you don't. It's a different story if you register a business but if you are living in Spain permanently you are tax resident in Spain: Here also the rules for UK.




Work out your residence status

Whether you’re UK resident usually depends on how many days you spend in the UK in the tax year (6 April to 5 April the following year).
You’re automatically resident if either:

• you spent 183 or more days in the UK in the tax year
• your only home was in the UK - you must have owned, rented or lived in it for at least 91 days in total - and you spent at least 30 days there in the tax year

You’re automatically non-resident if either:

• you spent fewer than 16 days in the UK (or 46 days if you haven’t been classed as UK resident for the 3 previous tax years)
• you work abroad full-time (averaging at least 35 hours a week) and spent fewer than 91 days in the UK, of which no more than 30 were spent working

Re: Trying to choose where to become a resident - UK or Spain!
 

So by choice, do you mean that you will choose to spend less than 183 days in Spain?

It's impossible to compare the two tax systems as it will depend on your personal circumstances. For example, I pay far less tax in Spain that I would in the UK but my wife pays far more.

Re: Trying to choose where to become a resident - UK or Spain!
 

By choosing where you spend your time - wealthy people often do it, and documenting days spent in different places becomes a really big deal. If you spend most of your time split fairly evenly between country A and country B, then if you spend two months each year traveling on business to several countries and another month on holiday in one or more countries, then it is quite easy to arrange your affairs so that you are taxed in either country A or country B, so long as you don't meet the mandatory residency requirement for either one.
But I think that is exactly what he/she is asking - why you pay more in one country that the other.

Re: Trying to choose where to become a resident - UK or Spain!
 

Remember that you will have to pay non-resident tax on your house in Spain.

Rosemary

Re: Trying to choose where to become a resident - UK or Spain!
 

I know that and it's not just wealthy people. As you say, meet the requirements. If you don't meet the requirements, you can't choose.

Re: Trying to choose where to become a resident - UK or Spain!
 

Very true, but the Spanish tax law will also deem you resident if your center of interests is in Spain, irrespective of how long you spend there. If your family lives permanently in Spain, you work abroad so don't meet the 183 day rule, you will still be deemed tax resident in Spain unless another country has a better claim on you.

The one thing that is very difficult to achieve is to be a tax nomad and not be resident anywhere.

Also one thing that many forget is that in most countries, almost all income arising in that country is taxed in that country irrespective of tax residency in that country.

Re: Trying to choose where to become a resident - UK or Spain!
 

Agreed, but without family/children, or if you send your children to boarding school, it is actually fairly easy to be a tax nomad who chooses where to be tax resident - this is pretty much why/how so many wealthy people choose to "live" in Monaco. In practice, and also during races ;), they spend much of the year in various countries around the world, but are still tax resident in Monaco.

Re: Trying to choose where to become a resident - UK or Spain!
 

I should have qualified my statement with the fact that "unless you are seriously wealthy"!! :lol::lol:

Re: Trying to choose where to become a resident - UK or Spain!
 

I have the same dilema at the moment. I've recently returned to make Spain my base. I have my own apartment here but I travel a lot so its very easy to be in Spain less than 183 days. I'm coming down on the side of retaining my tax residency of Australia. It would be less complicated, and there'd be less tax to pay. And I'm not a wealthy man, by any means! Living on a reasonable UK pension.

Re: Trying to choose where to become a resident - UK or Spain!
 

Hello all, interesting discussion and why I posted this. SteveDW - you sound like me. Definitely not wealthy but in a position to more or less choose where to be classed as a tax paying resident. I have to check with tax accountants in the UK and Spain, which I will be doing. I know I have to pay property tax on my home in Spain but given that my company is Canadian based and clients are global (not specifically anywhere). I believe, since the personal allowance is much lower in Spain, that Spain would be more expensive personal tax wise. If ONLY we could be "tax nomads" - that sounds like a perfect goal to pursue. Ha ha.. Thanks again for all the feedback.

Re: Trying to choose where to become a resident - UK or Spain!
 

When I was looking into moving to Spain, I came across the possibility of having to pay capital gains tax on the "profit" of the sale of my home in the UK, if I became tax resident at the wrong time.

As you have recently sold your home in Canada, something worth checking on.

Re: Trying to choose where to become a resident - UK or Spain!
 

WOW, now that is worth checking on. Thanks Lincoln. Spain seems like a tax hungry country. Well ....which western country isnt but Spain seems particularly bad. I presume they have sunshine to sell and they take advantage of that. But my curiosity is what do they do with all the tax funds? I dont believe they have the social system of the UK. Can anyone share thoughts on that?

Re: Trying to choose where to become a resident - UK or Spain!
 

Funding absurdly generous pensions for government employees seems to be a common failing of most Mediterranean countries. :nod:

Re: Trying to choose where to become a resident - UK or Spain!
 

I knew I made a mistake not getting into politics! :)

Re: Trying to choose where to become a resident - UK or Spain!
 

For any but the low paid or those with vast numbers of kids Spain is a very high tax country. Savings are taxed punitively, and the personal "allowance" is a joke (£5,000 vs £11,500 i think).

Whereas in the UK you pay tax at 20% on the first £33,000 (approx) of income over the PA, in spain its 19%, then 24%, then 30%. Then you can face regional taxes. Even if you don't work you can save £2,880 into a pension in the UK and have that topped up by HMRC to £3,600. Subject to age you can then make withdrawals.

In the UK a couple can shelter £40,000 a year in ISA accounts and pay no tax on interest, dividends or CGT. If you are tax resident in Spain you pay tax on all world wide income. If you are non tax resident you still have to pay tax on any income earned in spain.

Buy a smaller place in both the uk and spain and spend 184 days in the UK. Unless you're on less than, say €12,000.

Re: Trying to choose where to become a resident - UK or Spain!
 

THAT is exactly the conclusion i have come to. I cannot buy a place in both countries which is the unfortunate part but i have a place to live in the UK for now. Spain is incredibly tax unfriendly it appears. I will not earn income in Spain so there is no problem with that. I can become a tax resident in the UK or Canada and spend the winters in Spain. Sounds like a plan. Thanks for your comment. Very useful.

Re: Trying to choose where to become a resident - UK or Spain!
 

That is a VERY good plan. Enjoy!

Re: Trying to choose where to become a resident - UK or Spain!
 

They do in fact tax the sun, beat that!

Re: Trying to choose where to become a resident - UK or Spain!
 

There are moves to abolish this ridiculous law, but the fossil fuel miners are very powerful, with their deep pockets they support moves to tax solar energy everywhere.

Re: Trying to choose where to become a resident - UK or Spain!
 

Yes, crazy. 320 days of sun a year and not one roof has solar panels in our street. Unbelievable stupidity.

Re: Trying to choose where to become a resident - UK or Spain!
 

I'll try and beat that. 150 days of rain and people still pay for water:lol:.

Re: Trying to choose where to become a resident - UK or Spain!
 

Thanks to everyone who jumped into the discussion and brought some humour along with them! I have enjoyed getting to "meet" some members and hope to participate myself as I learn something that might be of use to others. Probably have a bunch more questions as i tentatively step into this new journey of mine. Best wishes to all...

Re: Trying to choose where to become a resident - UK or Spain!
 

We should be clear for the benefit of the OP. In Sept 2006 the building regs were changed to insist that any new approvals for domestic dwellings must have solar hot water panels, of course such was the volume of overhang of building and approvals not many have yet been built with solar water (I am one of the lucky ones). Solar electricity has been much more problematic first it was encouraged by the socialist government with feed in tariffs and subsidies. The incoming PP government in hock to big electricity cancelled all that and imposed tax on both domestic and commercial solar electricity generation. So few people install solar electric unless they cannot connect mains electricity.