Reporting of Assets Outside Spain and UK Rental Income.

 I believe the first reporting date will be the 30th April 2013, presumably because they haven't yet issued the form.

As of 5th Jan the new form had not yet been issued, and yes wealth tax is being extended to include 2013. The deadline for reporting this year has also been extended until the end of April (normally end of march)

So yes KathysLad you have hit the nail on the head, this new reporting law has been introduced to increase the tax take on wealth tax. The 700,000€ threshold and the 300,000€ exemption for your own home is quite generous and not bringing in enough money. This new law could well change all that, it's been well thought out (unusual) the penalties for non compliance are harsh.

NB: Maximum premuim bond holding is £30,000 per person so no need to worry about including these

Lad

depends upon the value of your total assets - it was €700,000 per person.

Just to make it clear to those who may not be sure:

The 700,000 euros allowance applies to those who own a property in Spàin but who are are not Tax Resident .  Patrimonio tax has to paid on any amount over that figure. So property valued at say 900,000  would attract tax on 200,000 €

 But remember;   the Non Residents Property Owners Tax must always be paid on the whole value of the property, in addition to any patrimonio liablity.

For Tax residents: Patrimonio Tax,   it on worldwide wealth in excess of 1 million euros in total.     So total wealth of 1,500.000, tax payable on the 500,000

Team GB

John

I do not believe your last post regarding wealth tax is correct, it is certainly at odds with my source of information. Tax residents and non residents now share the same 700,000€ threshold, A tax resident gets the benifit of the 300,000€ allowance for thier main home

http://www.advoco.es/advice/8-personal-tax/101-spanish-wealth-tax-2012-guide.html

http://www.advoco.es/advice/8-personal-tax/94-is-spain-bringing-back-the-wealth-tax.html

Non-residents get the same annual allowance as residents, because the EU would find it discriminatory otherwise (they have already made Spain treat non-residents more fairly on non-resident income tax on rental income and capital gains tax). However, they do not get the principal home relief because by definition their holiday home is not their main residence.

Team 

Regarding bonds and which class they belong to(assume its shares and equities) I am referring to bonds held with baks or insurance companies, not premium bonds.

There seems to be confusion about this new requirement. It is separate from the wealth tax and income tax. It is a list of all your assets held outside of Spain, reporting assets in any class over 50,000 euros.

The main advantage to the Spanish Tax office, as far as I can see is that when inheritances tax is payable, they have a nice ready made list to work out the tax from!

 Poppyseed wrote

http://www.advoco.es/advice/8-personal-tax/75-taxation-of-rental-properties-in-spain.html

Just to add to the confusion this website says if tax is paid in the country the property is in then it doesn't have to be declared in Spain.............I have no idea which is correct. If I were in this position and declaring it in the UK I wouldn't declare it in Spain

This has now been amended, and makes is clear that it is also taxable in Spain, less any tax paid in the UK. It also makes the point that following the new law, even if there is no tax to pay, they recommend it should be declared this year. This relates to my point about them having information on income generating assets, so if you don't declare any, they may ask you for information.

If the property is abroad then the same rules apply - deductions are allowed as above. If the property has already been taxed in the country where it is situated and this tax is more than the tax you would pay in Spain, it has in the past been common to leave it off your Spanish tax return, as no tax would be due. The has been the traditional approach for UK property, due to the complications introduced by the different tax year ends in the UK and Spain. However, in the light of the new overseas asset reporting requirements introduced in 2012, it may be advisable in future to include the income and the tax paid on your return, even if no tax results.

 Johnzx

I have now posted about how the DTA doesn't support your position, that UK Rental Income is taxable ONLY in the UK, and provided evidence to support my understanding from two sources.

I presume you will now agree that your position is now untenable.

on the subject of pensions in this new law:

I have not seen anything about pensions mentioned in articles in expat press-which category would they fall lnto?

The pension pot at the time of taking the pension many years ago. will not be the same as now now. How on earth can anyone know what value it is now, and how can it be assessed as an asset? Do crown pensions also have to be included, as before there was no need to declare them, the income tax payable only in Spain.

If the hacienda want such detailed information, how can accountants sort all this before the deadline.

Mr and Mrs Average will feel persecuted in Spain, while Mr and Mrs Not registered on the Spanish tax system will   not be hunted down

Is there a tax accountant out there that could clarify the situation and can say what needs to be included/not included?.

Kathy's lad-just another point about bonds;surely if you have one with a bank it isn't included i the first class which is Bank accounts. The thing about bonds is the interest is only declared when they are cashed in.

You need to read the actual law which sets out the different classes, and as I said before, if it makes a difference you should seek professional advice.

In my opinion, for what its worth, I think it depends upon the type of bond. If its a fixed rate interest bond, then I think its class 1, if its an investment bond with the return linked to the performance of the stock market, then its debatable. As I said, I think corporate bonds would be class 2.

It would be more helpful if you described the type of bond you are talking about.

 I have now posted about how the DTA doesn't support your position, that UK Rental Income is taxable ONLY in the UK, and provided evidence to support my understanding from two sources.

I presume you will now agree that your position is now untenable.

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Thank you

I have now posted about how the DTA doesn't support your position, that UK Rental Income is taxable ONLY in the UK, and provided evidence to support my understanding from two sources.

I presume you will now agree that your position is now untenable. 

As Johnzx has not replied, I'll leave it to others to draw their own conclusions. I think this part of the discussion has run its course.

has anyone filled in this new form modelo 720. for reporting assets held outside of Spain, or had it done by their tax accountant? I see the deadline has been extended to April 30th now, not surprised with all the info that's needed. I did email one of the firms who write in the free press about diffferent types of bond, but of course they want my business before imparting any more info! I don;t like to keep pesterin g my tax accountant;I think she is already fed up with my questions and is overburdened with work and still finding out about this new law herself..,

I am of the opinion that the first class of assets is only to record bank/ building society  accounts, and that a savings bond held with them is part of the other class -shares, equities etc. A bond held with an insurance company would also come into this category?. Someone out there must know!

Also surely it is difficult to know the balance of accounts etc as at 31st December 2012, as many account statements are issued days before or after this date and bonds have a yearly statement, often far from this date..We don't bank on line, and don't want to, so do we really have to phone the bank and ask for the exact figure on that day?

I found the form, modelo 720, here:-

http://www.agenciatributaria.es/static_files/AEAT/Contenidos_Comunes/La_Agencia_Tributaria/Normativas/Normas_tramitacion/Anexo.pdf

I have not read it yet.

 The link posted by johnzx is the form I mentioned the other day. Its more an analyst specification than a form to complete. I can't see the form has been issued yet, so I don't think anyone will have completed one.

I've already given my view on bonds , so i'm not going to comment on this, except to say I'd be interested to know how you think savings bonds fit into class 2. (translation below)

With regard to the balance in class 1, you also have to provide the average balance over the last quarter. Also I thought you said the other day that interest was only declared when they were "cashed in", so wouldn't you know the balance then.

"Article 42b. Information obligation securities, rights, insurance and annuities deposited, managed or obtained abroad.

1. Individuals and legal entities resident in Spanish territory, permanent establishments in the territory of non-resident persons or entities and entities referred to in Article 35.4 of Law 58/2003 of December 17, General Tax, shall supply the tax authority by submitting an annual statement, information on the following assets and rights located abroad that are holders of or in respect of which are considered to be beneficial owner as provided in paragraph 2 of Article 4 of Law 10/2010, of April 28, 2010, for the prevention of money laundering and financing of terrorism, to December 31 of each year:

i) The securities or rights representing participation in any type of legal entity.

ii) The securities transferred to third parties for capital.

iii) Securities used for management or administration of any law, including trusts and "trusts" or bodies of assets, however they lack legal status, to act in the course of trade.

2. The taxpayers referred to in the preceding paragraph shall provide information to the tax authorities by filing an annual statement of the equity interests in the capital or endowment of collective investment institutions located abroad of which they own or for which are considered to be beneficial owner as provided in paragraph 2 of Article 4 of Law 10/2010 of 28 April 2010, for the prevention of money laundering and terrorist financing.

The information shall include the name or full name of the collective investment scheme and address, and the number and class of shares and interests and, where appropriate, they belong compartment and its net asset value at 31 December.

The obligation of regulated information in this section 2 extends to any taxpayer who had been the holder or beneficial owner of the shares and any time of the year to which the statement relates and that he had lost that status at 31 December of that year. In these cases, the information to be provided shall correspond to the date on which such termination occurred.

3. The taxpayers referred to in paragraph one of this article shall provide information to the tax authority by an annual statement:

a) Life insurance and disability resulting from the decision to December 31 of each year when the insurance company is located abroad, indicating their surrender value at that date.

b) Income from temporary or annuities for their benefit at December 31, following the delivery of a money capital, of economic rights or property or real estate, to entities located abroad, indicating its market capitalization at that date.

A yearly statement of bond value is sent out,  obviously does not show value as of Dec 31st.How on earth would I know the value on Dec 31st?

The first category is for bank/building society accounts only.

Someone out there with greater knowledge than us must know which category, savings or inurance bonds fit in. The other categories eg property, life insurance aren't applicable to bonds, so what is left?