New income tax regulations ?

Are there any new tax regulations for ex pats regarding the annual income tax declaration? On a different forum an ex pat was told by the tax office that he did not have to make a declaration, as he was a foreign resident and had no taxable income in Spain.He may have misinterpreted what they said.The reaction was one of scepticism!

Are there any new tax regulations for ex pats regarding the annual income tax declaration? On a different forum an ex pat was told by the tax office that he did not have to make a declaration, as he was a foreign resident and had no taxable income in Spain.He may have misinterpreted what they said.The reaction was one of scepticism!

What was he? an ex-pat who lived in Spain...or a foreign resident, meaning someone who perhaps owned a house in Spain but lived, say in the UK with no taxable income in Spain, because I never once filled in the annual tax declaration either.

He is an ex pat living in Spain.

Surely anyone living here needs to do a declaration, even if it's a zero one.only needed when you sell your house to prevent 3% being retained,  or it may be needed to prove your status.

Anyway isn't it a legal obligation?

He is an ex pat living in Spain.

Surely anyone living here needs to do a declaration, even if it's a zero one.only needed when you sell your house to prevent 3% being retained,  or it may be needed to prove your status.

Anyway isn't it a legal obligation?

Yes he needs to do the yearly tax return, I have just come back from Spain and I was with one of my friends on Thursday who has just done his yearly returns.

I didn't live in Spain or was a full time resident that's why I asked, so I didn't need to do the return, just the two yearly one.

No it isn't a legal obligation if you have no income, income below certain amounts &  depending on where it comes from. It can be quite complex . It is only necessary to do a nil return once, if you want to & if they'll accept it,then If the circumstances do not change year on year then no further declaration  is required.

Yes it is worth doing a return for the cgt retention but this can be done when you need it.

 I have a UK Gov employee pension which is of course taxed at source in UK

and under the new Double Taxation Agreement, whch has been signed but not approved yet, will be included by Spain in your total income to arrive at your average rate of tax next year.

According to my calculations if you are on the basic state pension and a  UK governement pension of around €10,000, you will start paying tax next year.. This assumes they retain the reduction of  €400 for low income  of earnings plus interest ( €8,000, reducing to zero around €12,000) It was due to be scrapped this year, but has been retained. If it is scrapped next year, then you will pay tax on a governement pension of over €3,100.

This is based on the current (2012) padre model, and assumes they don't tinker with the earned allowance etc.

This is the requirements written by a Spanish tax advisor & in her own words.

" Many people think that Residents are always obliged to fill in a tax return (even if it is a Nil return), and this is not true.

To be honest I think that some companies give wrong advise just to get a fee and this makes me very angry because we have to give the correct information, even if this means that we have less income.

You have asked about the income limit of  € 22.000  a year.

This limit is just for income that comes from Spain.
For instance Spanish pensions or for instance my income from work. I am working in Spain and if I just have one income my limit is € 22.000 a year.

If I have more than one income in one year (from Spanish work and also from the unemployment office, maternity leave, etc.), the limit goes down to € 11.200.

If your income comes from outside of Spain (for instance UK pensions, rental income from the UK, etc.), the limit goes down to € 8.000 per year  per person.

For all the income (Spanish and UK income) you are obliged to fill in a tax return if you have for  two incomes and both are over € 2.000  (even if it is under  € 8.000.

Examples:
- Total UK income € 7.000 :-
€ 6.000 one UK Pension, and 1€ .000 another private pension =
You ARE NOT obliged because it is under € 8.000 and the second pension is not over € 2.000.

- Total UK income 5.000 Euros:-  
€ 2.500 One  pension, and € 2.500 another private pension =
You ARE obliged to do a tax return because both pensions are over € 2.000, even the total pensions are under € 8.000.

- Total UK income over € 8.000 = you are obliged to fill in a tax return but it does not mean that there will be a tax payment.

Furthermore there is also the income from interests from savings accounts

There is a limit of € 1.500  If you have interest that is  over € 1.500 you are obliged to fill in a tax return.

As you can see, the limit for income that comes from outside of Spain is much less, and it seems to be unfair, but the reason is that Spanish income is liable for tax at source as well.

Because the Spanish tax office gets no "Retenciones"  { benefit } from UK income, the limit goes down.   Anyway if you have already paid taxes on UK income, this tax payment is mentioned in your Spanish tax forms so that you don´t have to pay twice.

To be honest I can´t understand why so many people are doing Nil Returns.

First of all we must have a look if those people are obliged to fill in a tax return or not.      We have many clients that are not obliged to do tax return and the only thing we do each year is call the tax office to make sure that they are still registered as fiscal tax residents.

If this is the case we wait another year, and as we don´t charge for advise - we also don´t charge for this, because it is just a quick telephone call to the tax office to ask about the tax situation of each client.

So again as a little summary: first of all we have to see how high the income is and if it is under the limit and there is no obligation to fill in a tax return we check with the tax office if these clients are still registered as tax residents and that’s all we have to do each year for clients that are not obliged to fill in tax returns.

I Have worked  for almost 9 years in this office and none of my residents that don´t fill in tax returns have been unregistered as fiscal tax residents, anyway it is better to check.

To be registered as a fiscal tax resident is very important for instance for the inheritance tax that you have mentioned.

As long as you are registered as a fiscal tax resident you will never loose the allowances (even if you have not done your tax returns).

If the tax office wants to have a proof it is enough to present a Padron from the town hall and also proof of your income to show that you were under the limit of taxable income.

Another advantages to be a fiscal tax resident are the allowances you get if you sell your property and also if the tax office has registered you as a non resident you will be liable for the non residents tax which is based on the value of your property and there is always a tax to pay."

I hope this helps.