Porth

For the avoidance of doubt I am not an angel! However when we move to Spain within a month we are renting a villa and have had the contract sorted by an Abogado and recommended to us by our bank Deutsche Bank.

The payment was due in euros but it has now been suggested to me that it is beneficial to both parties that we pay in £. The owner is not resident in Spain but fiscally resident in the UK.

A rate has been suggested that is marginally below what we are currently being offered by Moneycorp.

What I do not want to happen is to 'fall out' with the Hacienda or any related body in Spain. Head above the parapet and to sleep well at night.

Is this suggestion please of an alternative payment method legitimate please?

I have to get back to the owner this evening and I am hopeful of a response ahead of that. So many thanks

amideislas

Well, you abogado should be better qualified at answering this than forum posters, but...

The price (in Euros) is the price isn't it?

Whatever means or currency the owner wants you to pay in, all you care about is that the price condition is what you pay, right?

The pound or Euro may vary greatly. It's likely the pound will only rise against the Euro, but there's no perfect crystal ball. If the pound rises against the Euro, then you'll be paying more. Unpredictably.

On the other hand, I reckon the 'advantage' is the savings in transfer and exchange fees, and the overall convenience. Which is the owner's advantage, really.

Hacienda will probably question it to some degree or another, but I don't believe that's foul of any law. It may make Spanish tax declarations a bit more complicated >>>for the owner<<<.

I'd expect the owner to have all the burden. You're just an innocent party. You're living up to your contract and that's all there is to it.

But I'd say pay in Euros. It will keep things nice and tidy for you, and after all, it's the owners desire to have it in pounds, right?

snikpoh

To me it's very obvious that the owner is not declaring the rental to Hacienda and is probably not paying non-resident tax. If they were, then these funds could be paid into their bank in euros and would go against the ongoing bills and tax liabilities.

There should be no come-back on you BUT be careful. It it a holiday rental or a long-term let?

If it's a long-term let, then the contract MUST be in Spanish and the deposit (breakage security) SHOULD be lodged with the appropriate authorities. If this is held in sterling in the UK, then it might be difficult to get it back. Also, what happens when the rates change, as they do. Does the monthly rental figure keep changing?


Mmmmm.... for me, I'd want to pay it into a Spanish bank and have receipts.

missile

Whether owner is fiscally resident in Spain or not, he must declare the income using modelo 210. Taxation of rental properties in Spain

The owner may wish to avoid declaring the income and avoid paying tax in either Spain or the UK? I would not be happy being party to that.

I don't know if you may become liable as you could in the UK, if an absentee landlord does not pay his tax. PIM4800 - Overseas landlords

Porth

Thanks it is a long term rental and the bond has been paid in euros!

My feeling is to pay in euros and that has always been our thought process. This is the first time the owner has rented out his villa and used it exclusively for holidays in Spain. He is not resident in Spain and all his furniture has been shipped out of the UK.

It is a bit fiddly to move money every month but Moneycorp will give me a twelve month lock in.

The £ rate will be fixed on a rate to be agreed and that is it. It will not change monthly it is fixed for twelve months.

I am not sure on this departure from the norm!

Porth

The contract is in Spanish with a side by side English translation

thanks again

la mancha

Have you already signed a contract to pay in euros?

missile

I would suggest you speak to an Abogado / Gestor to get advice.

amideislas

But honestly, you have nothing to gain, and frankly, it's not your burden.

Just out of curiosity, does your income come from the UK (in Sterling) or from Spain (in Euros)? Of the two of you, You have the least liability. You are the payer, and the owner is receiving the income. He has the tax liability.

So, having said that, I don't see much of a problem (for you) by transferring the money in sterling from your UK account to his UK account - if that's more convenient for you.

But again, if the Euro falls against the pound, you'll be paying more, unless you agree to terms solely in Euros, and calculate the amount in pounds on that basis of the day's exchange rate.

If the Euro rises against the pound, well, no matter what you'll suffer a loss if paying in Euros (presuming your income is in sterling) so that's not worth considering.

Porth

Yes contract in euros

rdgs

Porth

We simply wish to be legitimate and not to damage our residency or entry into the Health System. Our income is £ based and it would be simpler for us to xfer to his UK bank account and thus we have 'receipts' The owners suggestion is that we agree a figure based on last years average £ to euro.

However thinking it through the contract has to be amended - of course it does. Now starts to get messy.

But have concerns.

la mancha

Then it is your choice. Whatever you feel comfortable with. Bear in mind that if all the money is going to the UK, how do repairs, for example, get paid for? I would phone the owner and ask him? Just a thought; could there be an embargo on the owner's bank account?

Tell you what, phone the owner and tell him you prefer to pay in euros, as in the contract and see how he takes it. If he refuses, well, you signed a contract in euros.

amideislas

It's not your problem.

But it's silly to transfer sterling from the UK, convert to Euros, then send it back and re-convert to sterling (but again, this is the owner's request, not yours).

I can't see any legal issues (for you) with you paying directly in Sterling from you UK account to his UK account. I just can't see where that would cause you any problems whatsover.

The contract is in Euros. If you choose to pay the equivalent of that in Sterling, calculate the exchange rate on each day you pay, and send it in pounds at that rate. Simples. It's his problem, not yours.

Yes, get proper legal advice, but I really don't see how this could be a problem (for you). But it could be a problem for the owner, if he's avoiding tax in Spain.

cricketman

Do it in euros from your Spanish back account.

And ask the landlord who will be managing the property while he is in the UK. Lots of things can go wrong in villas especially if they have been empty a while. Who will be sorting all this out, getting responsive and quality tradespeople and paying for it?

I am not a fan of non-resident landlords

amideislas

We have a rental property in Germany. Good long-term tenants, all is OK, very few problems.

We don't have a "property manager". If something needs attention (and it's our responsibility), we ask the tenant to call a local tradesman and fix it, and we pay for it. Or if an appliance goes kaput, get it fixed or buy a new one. Simples.

Like most landlords, we simply ask them to deduct those costs from the rent, and they've been happy to do that so far. If it's something the insurance covers, then we submit it to the insurance company. That's it.

I presume you have all the usual responsibilities written in the contract. I'd expect that if something that's the owner's responsibility needs attention, then the owner will ask you to get it fixed and take it off the rent, like most do.

Honestly, if your contract covers all the usual stuff, I believe you haven't much to worry about - with the payments in sterling or maintenance or much else. You have all the advantages and the least risks. No need to make it all more complicated than necessary, or worry yourself into making it more complicated.

Also - there can be some tangible advantages to not having your landlord anywhere near you.