Spanish tax holoiday home and residence status

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27 Jan 2012 12:00 AM by paulsimkiss Star rating in Thailand & Spain. 58 posts Send private message

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Hello, like everyone, I got the eye on Spain email about some sort of warning letter from the Spanish authorities about tax on holiday homes.

I know Spain seems to have laws and rules that no other country in the EU has. 

My understanding is that if you are a UK resident and UK tax payer, you are taxed on you worldwide income in the UK by HMRC. End of. So you have a Spanish holiday home, you let it out to Mrs xyz. She pays you in £s sterling into your UK bank account. You have to declare that to HMRC. Whats it go to do with the Spanish tax authorities? Its beyond me. Would be very interested to know.


Also, I have never got my head round this Spanish residence thing. All this about you can only stay in Spain so long nonsense. As far as I am aware if you hold an EU member state passport, you can go where you like within the EU for as long as you like.

Very interested to hear all comments.

Paul in Benferri

Turned Out Nice Again

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27 Jan 2012 10:14 AM by bobaol Star rating. 2253 posts Send private message

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 No, if you have a holiday home and have not registered as living in Spain, you will be stopped non-resident income tax on the value of your property.  Approximately (and there is a table on the rates somewhere) 1% of the value of the property.  There is a form to fill out every year and this tax is taken regardless of whether you rent it out or not.  If you do rent it (and you are now supposed to be on a register of landlords with a certificate of suitability for rental, although not many people do) you are liable for tax on that rental income.  If you can prove you paid tax on that income to the HMRC then you will not have to pay the tax to Spain.  If you can't prove it, the Spanish tax people can charge you income tax on it (reciprocal agreement).  If, as in your instance, you let it out to Mrx xyz and don't tell anyone (in Spain or UK)  then you are breaking the law in both those countries.  There's a bit on the tax return in UK that asks for income from property abroad.

If you register as living in Spain (as has been pointed out, it is not taking out residency although it is still called that) then you get the benefits that accrue with that, like not paying non-resident bank account fees (which they take to fill in a form stating you are non-resident) and you don't pay the non-resident income tax on your property.  There are also benefits on tax when you sell your property and Inheritance Tax.  The difference is in simply living in Spain or becoming a "resident" for tax purposes.  

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27 Jan 2012 11:39 AM by lostagain Star rating. 57 posts Send private message

 paulk as bobaol says there are benefits to getting your nie and you need it in order to work legally i suppose it is the same as needing a national insurance number in the uk to work

if you dont work and are willing to pay extra taxes it would seem you dont need to do it but i am not sure about that 


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27 Jan 2012 12:51 PM by TheGuru Star rating. 35 posts Send private message

** EDITED - Against forum rules **

This message was last edited by EOS Team on 27/01/2012.

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27 Jan 2012 1:20 PM by paulsimkiss Star rating in Thailand & Spain. 58 posts Send private message

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 Hi bobaol

Thanks for the info. I might be wrong in a lot of my comments, but I only try to apply common sense to things. I think Spain pleases itself what it does, and in many cases breaks EU law. I suppose niether you or me will ever change that.

The whole idea of income tax, is down to the word ''income''. If you do not let out your property you have no income. So how can you willy nilly be taxed on nothing. Zero % of nothing is nothing. To me its all just made up.

Its the same about being a resident or not. I could and sometimes feel like using strong words, but better not. Its just a bit of paper that anybody can get. Just fill in a form and bingo, you have a residence document. I think this deemed property letting tax in EU law is ilegal, and the Spanish government are using this residence thing as a get out. If Mr Spanish wants a holiday home in UK, or anywhere in the EU for that matter, there is no deemed letting tax, and residence certificates don't exist.

Put bluntly, a EU passport holder can go throughout the EU, stop where he or she wants, for as long as they want without nothing.

Furthermore as far as I am aware, no where in the EU are you taxed, unless you have actualy received an income and it can be proved that you have received xyz £s or Euros. I think the whole job lot stinks and is ilegal. Human rights in the EU says every member of the EU has to be treated the same. So that makes this resident or non resident situation illegal. It was the same about the different rate of withholding tax on a house sale by a so called non resident. Spain got fined by the EU and was told to pay it back. Millions were involved, Guess what, only one guy has ever got his money back, and he was a solicitor that had to go through every Spanish court in the land.

I think the whole job stinks, but the Brits have little or no say in Spain. Maybe I have got it all wrong, but I will listen to any comments with an open mind.



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