PROPERTY CAPITAL GAINS TAX LIABILITY

HI ALL

Just some clarification required

We are Spanish residents and have been for 6 years

We have a second home in the UK and understand that as we have been non resident in the UK for more than 5 fiscal years we are not liable to pay UK capital gains tax on the sale of our second home there.

Can anybody advise if we have a Tax liability in Spain for the sale of our home in the UK ?

U have probably guessed that on specific legal matters people on forums are reluctant to answer, U may get a pm

The complex rules etc mean that even two diferent accountants will give u two different answers let alone us mortals although some of the advice i have seen on forums is better than that from the so called prof's!.

For what its worth i think if you qualify to not pay tax in the UK then as I believe your worldwide assets / profits are taxable in Spain but the British tax office will try and have a slice first.     If u have had rental income etc and the UK tax office know about it I would ask the UK tax in writing and then declare in Spain once I see there answer as the world is becoming a smaller place thats for sure.

I think this type of situation came up at a tax presentation I went to recently.

You are liable in Spain to pay tax on your world wide assets, so I susppect you will be liable. 

I don't think the rules on this are complicated,  so you should get the same advice from all comptetent lawyers.

I believe rental income on a property in UK is taxed in UK.  It is one of the vey few exceptions.

The rules are probably not complicated; the interpretation of them will be. Ask 3 different tax "experts" and compare the 3 different answers you get. Then go to Hacienda and ask for their version, which WILL be different again.

My personal take on it is that you are a tax resident in Spain therefore declare all your income (including capital gains) in Spain. There are a few exceptions, such as UK government employee pensions I think, which are taxed at source in the UK - although you presumably still have to declare them on your Spanish return, even if you don't have to pay tax on them again. If you are not asked to fill out a tax return in the UK, then you shouldn't worry about it further, just include it on your Spanish declaration. If you are asked, you will have to get a certificate of fiscal residency from Hacienda to send to HMRC. Good luck with that. Persistence and quite a bit of shouting and foot stamping usually gets the required result. If you haven't actually filed annual declarations here though, you're going to have problems. When and if you do manage to procure one and send it to the UK, they seem surprisingly quick to ackowledge receipt of such and accept your non-UK tax-resident status. In my personal experience, even if it contains errors such as the wrong year on the date stamp, they are quite understanding. They are clearly aware of their own pitifull inadequacies, but somewhat smug in the knowledge that their Spanish counterparts are an even bigger bunch of incompetent *%"&$*s

But that's just my opinion.

P.S. "competent lawyer" = oxymoron!

Thanks all for your advise so far,

I suppose one benefit I have is that I do not earn any money in Spain and therefore during the 6 years we have lived here have not completed a Spanish Tax return, only time I have paid tax is through a property sale transaction.

Depsite John's confidence (!!!) I think your situation may be somewhat more complicated now. You are tax resident in Spain so should have been declaring all your worldwide income here and paying any resulting tax here. You will not now be able to get a fiscal residency certificate from Hacienda, so cannot prove to HMRC that you are not UK tax residents, therefore you may have to pay CGT in the UK.

The important question is Are you a tax resident in Spain or have you just registered in the Town Hall? You say that you haven't made a declaration in 6 years so how could you proove Tax residency? You say that you have only paid tax through a property transaction. Was that as a buyer , or as a seller?.  If it was as a seller you would have had to declare it on your anual declaration as a tax resident  or leave a porcentage of the price as a non resident.  These are all factors that could establish your tax status,  tax liabilities, and where you should be paying.  There are things that would need to be clarified before any proffessional advice could be given.