Tax on property owned outside Spain

"The tax man is stupid, or so some think."

A friend of mine, tax resident in Spain, ‘forgot’ to inform Hacienda that he had a holiday property in Ireland.    He has just had a fine for not doing so and has to pay back tax with interest added.

He never told them but they found out.

For those who are not ware:  If one lives in Spain they must pay imputed tax (often called second home or holiday home tax) on all properties they own, which are in additon to their main home in Spain. That applies no matter where in the world the property/properties are, i.e. in Spain or say UK.

Example: My wife has a house in Philippines and I have a lock-up garage in Spain, we pay imputed tax on them in Spain

Totally correct. The Tax Man is not forgiving or forgetting anything. If you are a tax resident in Spain you need to declare in your tax declaration all your assets in the world!

Hacienda must have had some sort of reason to check on him, either he hasn't filled in tax returns, or income to high against tax to pay to low, maybe he has given them grief and opened a can of worms for himself, why did they single him out of the many thousands, English and I dare say Spanish doing the very same....Don't sound right somehow.

The taxman has an easy cross check with the Modelo 720 asset declaration form! 

If you enter a second property on there as an asset (which you should if over 50k€)they are going to be looking for an income to be declared on your tax return or a second home tax payment

valentinaradu   If you are a tax resident in Spain you need to declare in your tax declaration all your assets in the world!

I do not believe that is as you state it.

One must declare all income worldwide and pay imputed tax on property as I described, in June of each year.

One must also declare on a form 720 assets  located outside Spain if they amount to 50,000€ in any of the three categories specified by law, by end of March each year.

They are separate declarations.

See here for more specific info re  720 declarations.

https://www.blevinsfranks.com/News/BlevinsFranks/Article/spains-form-720-what-do-you-need-to-do-in-2015

Team GB. My friend does not have an income from his property in Irelands.   As I said, it was imputed tax which he was fined for not declaring and  paying.

Baz. The friend (tax resident)  of whom I spoke, I know has been declaring and paying tax on an apartment which he lets in Spain and on all his other income, pensions and investments etc.,  in UK and Ireland,  and has made tax declarations (paying around 18,000 €  p.a.) all the years he has lived on Spain.

Knowing him well and his financial situation I know it would be very unlikely he would have come up as a potential tax dodger.   I believe as we have been told, that with the exchange of information countries are now making, his error came to light just as a now routine matter.    

I posted this as a warning to all those not making full declarations or none at all, believing they can ‘live under the radar’ and escape detection.  I believe those days are no more

John's friend "‘forgot’ to inform Hacienda that he had a holiday property in Ireland", so presumably he either didn't include it on his 720, or never filed a 720. Either way, if the fines etc. that were reported at the time the 720 was introduced are true / correct, I think he's in big trouble.

How much is the fine in relation to the value of the property, if you can tell us, John?

Out of interest,the automatic exchange of financial information will not go live until mid to late 2017. That's if there are no more delays!

The friend (tax resident)  of whom I spoke, I know has been declaring and paying tax on an apartment which he lets in Spain and on all his other income, pensions and investments etc.,  in UK and Ireland,  and has made tax declarations (paying around 18,000 €  p.a.) all the years he has lived on Spain.

Your friend pays about 350€ a week in tax to Spain declaring all his income in the UK and Ireland yet his rental property wasn't covered by this large amount of weekly tax, very unlucky I should say your friend is.

Team GB  Out of interest, the automatic exchange of financial information will not go live until mid to late 2017. That's if there are no more delays!

But we know Hacienda and Inland Revenue, now HMRC have been exchanging  info for years.