Uk property tax

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07 Oct 2017 17:20 by johnand Star rating. 3 posts Send private message

Hi I’m looking to move to Spain in the very near future, I will be renting out my Uk property, this will be my family’s only income. Does anyone know if I will have to pay any Spanish tax. Thanks





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07 Oct 2017 17:47 by steone Star rating in Santiago de la Riber.... 387 posts Send private message

As with all countries, if you are a resident then you have to pay tax on your world wide earnings. Some countries offer a reduction if tax has been paid in country of origin of earnings and then either say no tax here on those earnings or you just pay the difference between tax paid in country of origin and the country of residence. In other words yes you do have to declare your income from renting.



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07 Oct 2017 20:19 by DuncanThickett Star rating. 55 posts Send private message

steone is correct, Spain is like most countries, you have to declare your world wide earnings. However there are loads on the diddle who declare nought to anyone. It’s illegal but they don’t care about the risks. It may be in your case that your personal allowances exempt you from tax liability, you need check.angry



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07 Oct 2017 20:49 by windtalker Star rating. 1204 posts Send private message

I am not to sure how much you intend renting your house out for ...but you will have no option other than to pay tax on income generated. If it is just you and your wife that is going to live in spain you will need a minimum of €1,500.00 per month to just get by ...factor in €500.00 per month for rent ....by the time you pay gas /electric/water/council tax..you should get by if you are careful the only thing's you will find cheaper in Spain ..are none branded alcohol and fags .

 


This message was last edited by windtalker on 07/10/2017.



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08 Oct 2017 11:05 by johnzx Star rating in Spain. 4736 posts Send private message

http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf

Under the Double Taxation Agreement 2013, between Spain and UK (see Article 6 above) rental income is taxed in UK.

 

 It must also be declared in Spain as they might be a top-up tax in Spain.

 



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08 Oct 2017 14:04 by Roberto Star rating in Torremolinos. 4129 posts Send private message

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Assuming the income from your house in the UK will amount to the figure Windtalker mentioned (which seems a fairly reasonable minimum figure to live on, especially if it is to include rent), then although you would be well below your UK allowances, the personal allowances in Spain are pretty paltry (€5,550 I think), so there's a good chance as John says that you'll end up paying some tax in Spain.

Also, assuming your UK house is worth more than £50K, you'll have to declare it as an overseas asset on modelo 720 - and any other assets you may have. Search the forum for "720", there's plenty about it.



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08 Oct 2017 15:12 by briando55 Star rating in Yorkshire. 1746 posts Send private message

It's worth investigating, I thought the personal allowance in Spain was 11500.00. 



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08 Oct 2017 15:26 by johnzx Star rating in Spain. 4736 posts Send private message

Roberto   "        so there's a good chance as John says that you'll end up paying some tax in Spain."

 

 

Not quite what I said, "It must also be declared in Spain as there might be a top-up tax in Spain." 

I have no idea in what circumstances, iof any, that would apply



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08 Oct 2017 15:43 by DuncanThickett Star rating. 55 posts Send private message

No Brian, I think £11,500 is the UK. Spain is 5,550 euro, that’s 15 euro a day to live on, rent, rates, elec & food. Anything over that the Spanish government want 19% of it. It sounds a bit mean and harsh but the establishment requires enough revenue to maintain their standard of living. Low earners can join the queue to eat out of the bins at the back of LIDL. Spain is a socialist country.



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08 Oct 2017 16:23 by johnzx Star rating in Spain. 4736 posts Send private message

If Spain assess any extra tax on rental income along the same lines as they euphemistically ‘take Crown Pensions into consideration’ which are taxable only in UK, then the tax free allowance in UK is in effect ignored.

Also, if gestors are as efficient in dealing with tax declarations with rental income involved, as the they are with declarations when Crown Pensions are (I know of 8 people with crown pensions and not one of the eight gestors involved got it right)  then it is anyone’s guess what might happen.  

 


This message was last edited by johnzx on 08/10/2017.


This message was last edited by johnzx on 08/10/2017.

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08 Oct 2017 17:17 by Roberto Star rating in Torremolinos. 4129 posts Send private message

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Not sure what you mean by "top-up tax" and how that differs from what I said (i.e. you may have to pay some tax in Spain).

If your rental income falls below UK allowances, you won't pay any tax on it in the UK. If it's more, and tax has already been levied in the UK, you can offset that against any liability in Spain. But otherwise anything over €5,550 (each) will be taxed in Spain. If you haven't already paid tax on the rental income in the UK, then there won't be any allowance made - your UK personal allowance is irrelevant since you're a Spanish tax resident now.

At least, that's how I understand it - but as John says, it's really anybody's guess. Go to Haciedna and ask two different people; you'll get at least three different answers!



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08 Oct 2017 17:30 by Team GB Star rating. 1233 posts Send private message

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There is no topping up or offsetting !!

UK rental Income needs to be declared and tax paid in the UK wherever you are resident!

If you are a Spanish tax resident it needs to be declared and tax paid in Spain as well (worldwide income)

If there is a case of double taxation it needs to be claimed back in the UK



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08 Oct 2017 17:40 by Roberto Star rating in Torremolinos. 4129 posts Send private message

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But if you don't pay tax on your rental income in the UK, for example if it's less than the UK allowance, you still have to declare it in Spain, and if it's more than your Spanish allowance, it will be taxed. You can't claim that back from the UK.



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08 Oct 2017 17:42 by johnzx Star rating in Spain. 4736 posts Send private message

Team  If you are a Spanish tax resident it needs to be declared and tax paid in Spain as well (worldwide income)

 

Is that you way you read the DTA  ?

 

http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/507409/spain-dtc_-_in_force.pdf

Extract  

"Article 6 INCOME FROM IMMOVABLE PROPERTY
 
1. Income derived by a resident of a Contracting State from immovable property .......     situated in the other Contracting State may be taxed in that other State.
 

 


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08 Oct 2017 18:04 by briando55 Star rating in Yorkshire. 1746 posts Send private message

Perhaps the answer is to get an accountant's advice.

I did think the personal allowance in Spain was also 11500.00 but looking online it seems to be 5150 plus 3100 (ish) for a joint married couple allowance.  



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08 Oct 2017 18:17 by johnzx Star rating in Spain. 4736 posts Send private message

Brian  Perhaps the answer is to get an accountant's advice.

 

Good luck with that.  

II did say;     Also, if gestors are as efficient in dealing with tax declarations with rental income involved, as the they are with declarations when Crown Pensions are (I know of 8 people with crown pensions and not one of the eight gestors involved got it right)  then it is anyone’s guess what might happen.

 

Tax free allowances are also AGE adjusted

 


This message was last edited by johnzx on 08/10/2017.

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08 Oct 2017 18:53 by Roberto Star rating in Torremolinos. 4129 posts Send private message

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"Tax free allowances are also AGE adjusted,"

Don't know what you mean by age adjusted, but the personal allowance increases at 65 and again at 75. This presumably isn't relevant to the OP though, since they clearly are not 65 yet ( otherwise they would probably be receiving state pensions as well, which they haven't mentioned)



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08 Oct 2017 18:53 by briando55 Star rating in Yorkshire. 1746 posts Send private message

Yes well, with such a complicated system (show me a tax system that isnt ha), at least if an accountant signs your declaration off, they come after them rather than the individual when there are mistakes.

I dont think the argument that 'well the guys on EOS or Fred down the pub told me this was how to do it' would be acceptable in the final shake up!



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08 Oct 2017 18:57 by Roberto Star rating in Torremolinos. 4129 posts Send private message

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Brian, the tax payer is responsible for their declarations, regardless of who completed and submitted them. 

And it's Tony down the pub you need to talk to, not Fred. Everyone on EOS knows that



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08 Oct 2017 20:18 by Roberto Star rating in Torremolinos. 4129 posts Send private message

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Team GB: "If there is a case of double taxation it needs to be claimed back in the UK"

I don't read it that way. I don't believe the UK will refund any tax paid, rather, you can offset it against any tax liability in Spain. See Article 22 ELIMINATION OF DOUBLE TAXATION on the document linked by John.



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