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Discussion Starter · #1 ·
Hi,
I’m really hoping someone can clarify some information I have just received from a Gestor that my husband and I saw yesterday regarding 720 liability and also something about resident tax returns.

We’ve been told that we don’t need to make any declaration under 720 because we haven’t spent the requisite time here to qualify as residents (we moved here mid Aug 2012 and started working/paying ‘PAYE’ tax etc September 2012). However we also spent about 6 weeks in Spain during May and June 12 on a sort of fact finding holiday (attending job fairs/having interviews to find teaching work for September and to have a holiday). The gestor assured us that this initial 6 week period wouldn’t count toward the total time for residency because we were tourists here and not actually ‘living’ in Spain (we don’t own property here, we just rented a holiday apartment for 1 month and stayed with friends for 2 weeks). She said that she also spoke to the International dept of Hacienda who agreed with her assessment of our residency status. This sounds completely reasonable to me but I’m a little concerned because if you include those 6 weeks, we were here exactly 183 days during 2012 which I know is the threshold for residency. Could that make us liable for 720 or only more than 183?

The Gestor also said that if we stay in Spain, next year we will have to complete resident tax returns and we will certainly be liable for 720. (Again sounds completely reasonable). During our conversation I mentioned the issue of declaring worldwide income because I assumed that’s what was required once you become a resident. However she said that (outside of the 720 declaration liability), you are only liable for tax on income earned or generated in Spain, or monies transferred to Spain from overseas sources. A cursory glance around the internet suggests either the gestor misunderstood me or I misunderstood her or perhaps she was referring to the double taxation treaty or more worryingly, maybe she got it wrong! She came highly recommended from a colleague but she isn’t a foreign tax specialist (I don’t live in an expat area, my Spanish is still basic and she speaks pretty good English, so my options are limited given the time frame). I’m not worried about this point per se because I have all year to sort it out but I’m quite concerned that if she was wrong about this, can I trust her assessment of our residency status for 2012 and therefore our 720 liability? Quite concerned as time is almost up.

Can anyone clarify either/both points. Thanks very much.
 

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Hi,
I’m really hoping someone can clarify some information I have just received from a Gestor that my husband and I saw yesterday regarding 720 liability and also something about resident tax returns.

We’ve been told that we don’t need to make any declaration under 720 because we haven’t spent the requisite time here to qualify as residents (we moved here mid Aug 2012 and started working/paying ‘PAYE’ tax etc September 2012). However we also spent about 6 weeks in Spain during May and June 12 on a sort of fact finding holiday (attending job fairs/having interviews to find teaching work for September and to have a holiday). The gestor assured us that this initial 6 week period wouldn’t count toward the total time for residency because we were tourists here and not actually ‘living’ in Spain (we don’t own property here, we just rented a holiday apartment for 1 month and stayed with friends for 2 weeks). She said that she also spoke to the International dept of Hacienda who agreed with her assessment of our residency status. This sounds completely reasonable to me but I’m a little concerned because if you include those 6 weeks, we were here exactly 183 days during 2012 which I know is the threshold for residency. Could that make us liable for 720 or only more than 183?

The Gestor also said that if we stay in Spain, next year we will have to complete resident tax returns and we will certainly be liable for 720. (Again sounds completely reasonable). During our conversation I mentioned the issue of declaring worldwide income because I assumed that’s what was required once you become a resident. However she said that (outside of the 720 declaration liability), you are only liable for tax on income earned or generated in Spain, or monies transferred to Spain from overseas sources. A cursory glance around the internet suggests either the gestor misunderstood me or I misunderstood her or perhaps she was referring to the double taxation treaty or more worryingly, maybe she got it wrong! She came highly recommended from a colleague but she isn’t a foreign tax specialist (I don’t live in an expat area, my Spanish is still basic and she speaks pretty good English, so my options are limited given the time frame). I’m not worried about this point per se because I have all year to sort it out but I’m quite concerned that if she was wrong about this, can I trust her assessment of our residency status for 2012 and therefore our 720 liability? Quite concerned as time is almost up.

Can anyone clarify either/both points. Thanks very much.
Firstly, the 183 days issue. Given that there are (usually) 365 days in a year, Half of that is about 182 days. So, if you spend 183 days or more in Spain, then you here more than anywhere else - hence the residency bit. I would assume that the prior two weeks were holiday.

If you did understand her correctly about income from Spain only, then she's wrong. It's world-wide income that you will need to declare next year.

Hope this helps.
 

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Discussion Starter · #3 ·
Hi,
Just to be clear, if the 6 weeks we were here in May and June are defined as holiday, then we were here for only 135 days in 2012. If the 6 week holiday is considered as part of our residency, then it amounts to 183 days exactly.

However the more i think about it, I really can't see how that this 6 week period could count toward residency because we were on holiday. We didn't work, we rented a holiday flat, all our tax affairs and finances were based in the UK. We had no Spanish ties at that time, no property, no bank account, no NIE numbers, nothing to do with taxes, social security etc.

I guess I'm just being paranoid but it's a pretty big mistake to make if we and the gestor get it wrong!
 

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It's a big risk to make that assumption. I think I would be seeking more professional advice, based on the advice you have received about the tax you have to pay, which Snikpoh has already commented on.

This is from a non-resident publication by Hacienda


INDIVIDUALS
Individuals shall be deemed to have their principal
residence in Spain if they meet any of the
following conditions:

• They spend more than 183 days per calendar
year in Spain. Occasional absences shall be
taken into account to calculate the period
of residence, except when said individuals
prove they have their tax residence in another
country. In the case of countries or territories
classified as tax havens, the Spanish tax
authorities may request proof of residence
in the tax haven for 183 days per calendar
year.

• Calculation of the period of residence shall
not take into account any temporary stays
in Spain that are the result of obligations
arising from cultural or humanitarian
collaboration agreements entered into with
the Spanish public administration with no
payment involved.

• Their main or central place of business is
directly or indirectly located in Spain.


INDIVIDUALS
Individuals shall be deemed to have their principal
residence in Spain if they meet any of the
following conditions:

• They spend more than 183 days per calendar
year in Spain. Occasional absences shall be
taken into account to calculate the period
of residence, except when said individuals
prove they have their tax residence in another
country. In the case of countries or territories
classified as tax havens, the Spanish tax
authorities may request proof of residence
in the tax haven for 183 days per calendar
year.

• Calculation of the period of residence shall
not take into account any temporary stays
in Spain that are the result of obligations
arising from cultural or humanitarian
collaboration agreements entered into with
the Spanish public administration with no
payment involved.

• Their main or central place of business is
directly or indirectly located in Spain.

I thought this was relevant because it specifically talks about temporary stays. I would be very surprised if they allow you to say they were holidays, and don't count.
 

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Discussion Starter · #5 ·
Have decided I'm filing 720 tomorrow morning, it's not worth the risk.

Quick question about assets. I think I only have to declare in the cash category.

I don't own a property, so nothing to declare under that.

I have cash from a house sale a couple of years ago. I assume cash ISAs come under the cash category too?

I also have stocks and shares ISAs and a few other small amount of shares, nowhere near the threshold. I assume these come under the second category of shares (including the stocks and shares ISAs?). I think in total it's about 14K today's value and they were less in December 12, so just to be absolutely clear there is no obligation to declare these shares because they are under 50K - is that correct?

Thanks
 

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savings tax

Some people are not aware that in addition to paying tax in Spain on their income from UK, including pensions(not crown ones) they have to pay Tax on the interest on their savings in UK banks! This new asset reporting law has really put some people off moving to Spain, and some are returning to UK, not because of hiding things, but because of the tremendous private and intrusive details required, and the worry of how they will be used.



Hi,
I’m really hoping someone can clarify some information I have just received from a Gestor that my husband and I saw yesterday regarding 720 liability and also something about resident tax returns.

We’ve been told that we don’t need to make any declaration under 720 because we haven’t spent the requisite time here to qualify as residents (we moved here mid Aug 2012 and started working/paying ‘PAYE’ tax etc September 2012). However we also spent about 6 weeks in Spain during May and June 12 on a sort of fact finding holiday (attending job fairs/having interviews to find teaching work for September and to have a holiday). The gestor assured us that this initial 6 week period wouldn’t count toward the total time for residency because we were tourists here and not actually ‘living’ in Spain (we don’t own property here, we just rented a holiday apartment for 1 month and stayed with friends for 2 weeks). She said that she also spoke to the International dept of Hacienda who agreed with her assessment of our residency status. This sounds completely reasonable to me but I’m a little concerned because if you include those 6 weeks, we were here exactly 183 days during 2012 which I know is the threshold for residency. Could that make us liable for 720 or only more than 183?

The Gestor also said that if we stay in Spain, next year we will have to complete resident tax returns and we will certainly be liable for 720. (Again sounds completely reasonable). During our conversation I mentioned the issue of declaring worldwide income because I assumed that’s what was required once you become a resident. However she said that (outside of the 720 declaration liability), you are only liable for tax on income earned or generated in Spain, or monies transferred to Spain from overseas sources. A cursory glance around the internet suggests either the gestor misunderstood me or I misunderstood her or perhaps she was referring to the double taxation treaty or more worryingly, maybe she got it wrong! She came highly recommended from a colleague but she isn’t a foreign tax specialist (I don’t live in an expat area, my Spanish is still basic and she speaks pretty good English, so my options are limited given the time frame). I’m not worried about this point per se because I have all year to sort it out but I’m quite concerned that if she was wrong about this, can I trust her assessment of our residency status for 2012 and therefore our 720 liability? Quite concerned as time is almost up.

Can anyone clarify either/both points. Thanks very much.
 
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