Tax Advice

[chris(madrid)]

Originally Posted by Stravinsky

But again, I'm still confused because as I said, working on advice from many different sources for many different people that says that you have to pay tax here if you live here, why is your advice different

YOU WILL HAVE TO DECLARE INCOME IN BOTH PLACES. I pay tax on one or two things in the UK. This is then deducted from my Tax bill here.

Spain is not a bad place to be taxed. BUT for all those of us who have UK income, even if we are non UK resident and Spanish resident, we will be taxed in the UK on our earned UK income. True, we will have to account for it here but the double taxation agreement will mean that we do not have to pay it twice. In a simple example, if we have UK tax deducted at source of 100 € and our Spanish tax on that income is 100€ there will be no more to pay. If our Spanish tax bill is 101€ we will pay just 1€ tax in Spain, the rest being a credit from the UK.

[Barry Davys]

Originally Posted by chris(madrid)

YOU WILL HAVE TO DECLARE INCOME IN BOTH PLACES. I pay tax on one or two things in the UK. This is then deducted from my Tax bill here.

Thanks Chris.

My reply above was in response to Tina's question. Stravinsky, You are quite right though that the Spanish want their share. The question that comes from your comment is "Don't the UK Revenue want their share too?". They do, which is why there is the double taxation agreement.

This thread highlights an issue with tax planning. Each person's circumstances are different and whilst, on the surface, things may appear similar you should have someone look at your own, particular, situation.

To help out your professional adviser tell him or her fully what your circumstances are. Try to avoid jargon because what you mean by "domicile" for example and what your professional adviser knows to be the definition can often be very different. On the flip side an adviser worth his salt should spend time getting to know your circumstances before advising you.

I will add some definitions to this thread later which may help. I will also do a separate part on Domicile and Inheritance Tax later too.

Regards

Barry

[Barry Davys]

Following on from the previous posts here are a few pointers. They are no more than that but they may help to clarify some points regarding residency.

Spain

• You can be resident if you spend more than 183 days in Spain in any one year. They do NOT have to be consequtive days

• BUT if you move to Spain and show an intention to stay permantly you will be treated as resident from the day after your arrival

• If your centre of interest is in Spain you will be resident. Ie, do you get your main income in Spain, do you have a house here, does your spouse live in Spain

• Residency is used to determine liability to all taxes including inheritance tax

UK

• If you spend more than 183 days in the UK in any one year. They do NOT have to be consequtive days

• If you spend on average 91 nights a year in the UK in any 4 year period.

• If you do not demonstrate by your actions that you will be out of the UK for at least 3 years

• If it appears to the UK Revenue that you have not severed your links with the UK, including, do you still have a house in the UK

• If your primary source of earned income is still in the UK

• Residency for the UK ONLY covers liability to income tax and capital gains tax but NOT inheritance tax (IHT). Domicile, a completely different concept, determines liability to IHT

Points to Note

• You CAN be resident in both UK and Spain at the same time

• You can not rely upon the number of days only to determine residency

• Each person's situation is different which is why both Spain and UK determine residency on a case by case basis.

• When seeking advice, get advice about BOTH countries not just one

These are only general pointers and if you are unsure of your situation you should seek qualified advice.

Barry

[chris(madrid)]

Originally Posted by Barry Davys

Following on from the previous posts here are a few pointers. They are no more than that but they may help to clarify some points regarding residency.

Spain

• You can be resident if you spend more than 183 days in Spain in any one year. They do NOT have to be consequtive days

• BUT if you move to Spain and show an intention to stay permantly you will be treated as resident from the day after your arrival

• If your centre of interest is in Spain you will be resident. Ie, do you get your main income in Spain, do you have a house here, does your spouse live in Spain

• Residency is used to determine liability to all taxes including inheritance tax

UK

• If you spend more than 183 days in the UK in any one year. They do NOT have to be consequtive days

• If you spend on average 91 nights a year in the UK in any 4 year period.

• If you do not demonstrate by your actions that you will be out of the UK for at least 3 years

• If it appears to the UK Revenue that you have not severed your links with the UK, including, do you still have a house in the UK

• If your primary source of earned income is still in the UK

• Residency for the UK ONLY covers liability to income tax and capital gains tax but NOT inheritance tax (IHT). Domicile, a completely different concept, determines liability to IHT

Points to Note

• You CAN be resident in both UK and Spain at the same time

• You can not rely upon the number of days only to determine residency

• Each person's situation is different which is why both Spain and UK determine residency on a case by case basis.

• When seeking advice, get advice about BOTH countries not just one

These are only general pointers and if you are unsure of your situation you should seek qualified advice.

Barry

That deserves a sticky IMO.

When I left the UK - for a while I was classified as NOT RESIDENT FOR THE PURPOSES OF TAXATION. Had to do this this, as 'twas at the start of the infamous poll-tax.

Yet was still accepted as resident for the purposes of marriage 3 years later.

[Trevor Titterton]

You would be better to visit a Spanish tax adviser as it is complicated, at least you would get proper advice.
Trevor

[Barry Davys]

OK, so now I am showing my ignorance. What is a sticky IMO?