Some advice on where to move to in Spain (tax avoidance and much more)

I really recommend people intending to move to Spain consider this (please give it a chance and you will see why, and this post does not just apply to the rich);

1) Consider moving to a border area of Portugal and Spain. We live in Galicia (Spain) / Vale of the Minho (Portugal).

2) Buy your primary (tax resident) property just (literally just) across the border in Portugal and then buy or rent somewhere else in Spain. By tax residing in Portugal, you can get "non-habitual tax residency status" and save a LOT of money in income tax (you pay reduced income tax or even no income tax on your earnings outside Portugal, for example any dividends you earn as a director in your home country, and if you are delcared non-resident there, you will not likely pay any tax anywhere on dividends).

3) Base your business in Spain. Spain has much more favorable (lower) taxes for business. This way you pay social security in Spain and are entitled to free state health care in both countries (and schooling for your children in both countries).

4) Buy your cars in your business name in Spain (you will save thousands and then you can legally use the vehicles in Portugal FOR PRIVATE USE only).

5) By being tax resident outside Spain, Spain does not have any claim to your worldwide savings or earnings (Spain has quite aggressive tax laws, including wealth tax).

If you are an employee, earnings are higher in Spain than in Portugal, though income tax for the lower paid workers is ultimately (after allowances) higher in Portugal (but not for you as a non-habitual resident or even just under normal double taxation rules), though property taxes and cost of living items tend to be lower (caveat: white goods are generally cheaper in Spain). You can rent an apartment oin Spain for very little and the money you pay is  not only partially tax deductibe, but also the amount you will save in taxes will more than pay for the rental / mortgage payment.

We spend virtually all of our time in Spain. Our children go to school in Spain. We drive Spanish registered cars. We do the vast amount of our shopping in Spain (though Portugal is really useful for some things, like decent bottled water and tropical fruits). The views from our property in Portugal (across the River Minho) are of Galicia in Spain. 5 Minutes drive from our house and we are in Spain. The fact our house is in Portugal does not change the fact we "live" in Spain. We simply pay a lot less tax doing it this way. And we love our tax deductible apartment in Spain; we spend weekends there so we can eat and drink in town (a lovely town called Ponteareas) without having to drive (careful, the blood alcohol limit in Spain is very low).

Perhaps because of people like yourselves using legal but still "Tax avoidance" schemes, is the reason the low paid workers pay more than there fair share in Spain and other countries. If for example in the UK, Mick Jagger, Gary Barlow Starbucks and Amazon all paid their obligatory UK taxes without "avoidance," the NHS, schools and police force could be better funded. So the next time that poor Spanish/Portugese waiter(ess) who works 12 plus hours a day (because they have to pay ALL their obligatory taxes), brings you your food and drink.  Then I hope you have a "pique" of conscience and leave a very large tip.

I was always under the impression that if you spent more than 183 days in any country especially eu then you are automatically tax reisident in that country and you should declare your worldwide income for tax purposes in that country 

Sounds like another tax fiddle and taking advantage of the honest tax payers in Spain after all it sounds like Spain is providing education for your kids at the Spanish tax payers expense 

golfinjim,

Places such as Starbucks, MacDonalds, KFC etc, pay the National Minimum Wage in the full knowledge that the government will top this up with tax credits, derived from taxation. This is totally legal but very questionable when it comes down to morality, it's a good thing that these guys do pay their taxes, otherwise there would be nothing to subsidise their staff wages with. 

what a strange posting ? what if people dont want to live in that area ? or are you expecting hundreds of wannabie retirees flooding the area that would be impossible to cater for.

sox Strange posting??!! Retirees?? It is for people who want to avoid paying income tax and lawfully so. If they do not like the area, then oh well. The area is actually one to most beautiful on the Iberian Peninsular, has the best seafood and a high quality of life.

Tadd1966 It is where you sleep more than 183 days (nights) that counts. We sleep around 150 nights in Spain, the rest in Portugal. So we are tax resident in Portugal. And excuse me for your insults, you are way out of order. There is no tax fiddle at all, and we do not expense Spanish tax payers at all, thank you. I pay business taxes and personal social security in Spain. I pay IVA in Spain. We have private health care insurance in Spain. We pay (not a lot, but still pay) for our children's schooling.

golfinjim We are not super rich and the notion you have to be is faux. There are quite legitimate tax avoidance (not evasion) methods and if you do not want to save 50% or more on how much you pay in tax, that is up to you. Again the insult that we are somehow robbing the Spanish is false and unwarranted and, with respect, simply shows your jealousy at getting it wrong.

This thread was for people considering moving to Spain. Not for aggrieved expats already stuck in the wrong part of Spain and thus paying too much tax :-)

Rio, you posted this in March this year.

You also appear to be Travlur?

Hello blueeyes

Well, I / my wife actually posted something connected with it, not the same. This posting is specifically for people who are considering moving to Spain, as the forum is for.

This message was last edited by RioMino on 27/10/2015.

BTW Tax Avoidance

I do not know why so many people have an issue with tax avoidance; it is legal and perfectly moral! When you cross the English Channel to stock up with French wine, etc, this is tax avoidance. When you apply for Tax Credits in the UK, this is tax avoidance. When you claim your tax allowances in Spain, this is tax tax avoidance. When you buy fresh foods (lowest rate of IVA) and cook them yourselves so that you do not pay the highest IVA rate for preprepared foods, this is tax avoidance. It should not have a negative effect on people, only the term "Tax Evasion" should.

I understand expats already in Spain may not appreciate that others are enjoying legitimate tax avoidance measures that they can not, but that does not make what I and others do unlawful or immoral. And, anyway, again; this forum section is for helping people who are considering moving to Spain, which my post certainly does!

RioMino

We spend virtually all of our time in Spain.

or

We sleep around 150 nights in Spain, the rest in Portugal.

Which is it?

If it is the latter then fair enough.

However I suggest, if you are going to recommend a way of life best be a bit more specific

Please note the OECD's article 15 clearly states 183 days (6 months) not nights sleeping and is known as the 183 day rule!!!

BTW I am happy with my tax status and what I pay and do not need to look at alternatives and keep moving my family between 2 houses just to save few quid

"We spend virtually all of our time in Spain. Our children go to school in Spain. We drive Spanish registered cars. "

You do realise that the 183 day rule is not the only one used for determining residency? Where your "centre of vital interests" lie is also used to determine residency. In this case, this is clearly Spain. In addition, the 183 day rule doesn't specifically specify that a day is counted by where you spend the night (as it does in the UK). A day could be considered each day you cross the border (even if it is for a few minutes).

You shouldn't be boasting about this in a public forum, and encouraging others to do the same (especially as you appear to be unaware of the full law). Tax avoidance (and evasion) has massively hurt the Spanish economy (probably more than stealing by politicians), and is one of the major causes of the "crisis" in Spain. I'm sure johnx has already taken your IP address and forwarded it anonymously to his friends in the Hacienda .

Tadd1966 This forum section is for people considering moving to Spain. You are already in Spain.

Also, I recommend that you get your advice from a tax attorney (as we did) before you give it out. Yes, it describes the methodology in days, BUT it is actually determined by nights, or actually where you are at Midnight (which is funky, because if I drive across from Portugal to Spain at 11:01 to 11:59 Portuguese time, I am not in either country at midnight in either because Spain is one hour ahead). But anyway, I do not need to do that!

I can not post links on this forum for some reason, but if you look at the taxation co uk website, I think the section called it-s-small-world covers most of it. It is based on a points system and I can assure you that we have just slightly more points for Portuguese tax residency than we do for Spanish tax residency, so we are tax resident in Portugal. We have residency in Spain as we are legally obliged to, as we spend more than 90 days (nights) there. And we have residency in Portugal. Anyway, both the Spanish and Portuguese tax authorities agree with us, sorry that you do not!

** EDITED - Against forum rules **

theline "You shouldn't be boasting about this in a public forum, and encouraging others to do the same (especially as you appear to be unaware of the full law)." And you are an expert??!! PS I am not boasting, I am trying to help others who are thinking of moving to Spain to lawfully avoid paying taxes they do not need to. I would be the first to recommend that they consult with a tax lawyer, preferably an International one, before they committ to anything.

But, theline, here it is; another unhappy expat living in the wrong area / who did not do their research. Again, please read; WHAT WE DO IS 100% LEGAL AND WE TOOK PROFESSIONAL TAX ADVICE AND WE DECLARE OUR EARNINGS AS REQUIRED BY LAW. Sorry you could not be bothered to read what I said. But I am glad that you are paying more tax then you need to. And please report me to whoever you want; I declare taxes in both Portugal and Spain and their tax authorities concur what I do is 100% lawful.

Lord Clyde “No man is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue”

                            Lord Clyde Lord Justice General of Scotland1916-20

Pleaes keep this thread under control and avoid insulting and losing respect for one and other. The topic is potentially interesting so please stay on the topic and try and discuss it without  attacking others...

thank you

Thread locked

This message was last edited by eos_moderators on 28/10/2015.