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Tax return question - help please?

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Posted: Fri May 5, 2017 11:54am
8 replies40 views6 members subscribed
operationdinnerout

operationdinnerout

Forum Ambassador for Altea, Beniarbeig, Benidoleig, Denia and Ondara

Posts: 217

Location: Beniarbeig

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I moved permanently to Spain in June last year, secured my Residencia in October.

Should I file a tax return now to cover those 7 months, or could I wait until next year at this time and file for the whole of 2017?

Also, can anyone tell me what the going rate should be at a Gestoria for this service?

Thanks, Steve

jimtaylor

jimtaylor

Forum Ambassador for Almoradi

Fri May 5, 2017 4:54pm

Posts: 705

Location: Almoradí

696 helpful posts

Posted: Fri May 5, 2017 4:54pm

I'm always willing to try and help someone who wants to do the job properly.

The transition year when becoming a tax resident can be a bit messy to understand, and without going into details, my recommendation is that you file your first tax return here for 2017.

What you need to do is submit a Modelo 030 to register for tax, and I suggest you do that asap.

Once you've (in twelve months) submitted a tax return here, you can the follow the necessary procedure to get out of the Inland Revenue system. They'll still issue a Notice of Coding, but the code will be NT - no tax (unless you've been in Government employment, in which case that income will still be taxed in the UK, but taken into account in calculating your tax rate here).

For the first tax return, you'll have paid tax in the UK, but this is declared in your Spanish tax return, and the tax paid is offset against the tax due here.

I very strongly suggest that you bring yourself up to speed on the tax system here. I've been doing tax returns for ourselves and for friends for some years. During that time, the friends have given me details of previous tax returns prepared by 'experts', and every one I've seen has been wrong in at least one aspect.

Doing your own tax return is now quite easy. In the early days you used to have to buy a paper 100 from a newsagent and fill it in; or if you wanted to do it online you needed an electronic certificate. However, over the last few years it's got a lot easier. If you've got what I call normal income, in the form of pensions, and annuities and/or savings, there are actually only two boxes on the tax return that you need to enter figures into. 

The Spanish Ministry of Finance don't publish the exchange rate to be used for converting sterling to euros. I recently spoke to Agencia Tributaria and they confirmed that one needs to take the average figure for the year, but this isn't published in Spain. For a few years I've been using the average for the year rate published by the European Central Bank, and AEAT agree with this.

As an aside, I do tax returns for friends in exchange for a menu del dia for my wife  and myself, and the value of that meal should be declared in my tax return as a payment in kind. For some reason, I always forget to declare it!

I always submit our tax returns as soon as the system goes live early in April, and whilst doing so I do write up of what you need to do and what the relevant AEAT links are. When the time comes, ask and I'll post the procedure.

Also, if you wish to next year send me a PM giving your income details, I can work out the tax that will be due.

operationdinnerout

operationdinnerout

Forum Ambassador for Altea, Beniarbeig, Benidoleig, Denia and Ondara

Original Poster

Sat May 6, 2017 11:06am

Posts: 217

Location: Beniarbeig

97 helpful posts

Posted: Sat May 6, 2017 11:06am

Hi Jim, thanks so much, that's very helpful indeed, and I appreciate the time and detail you took in the reply. I'll register, as you suggested and maybe we can be in touch next April when the new window opens.

Best regards, Steve

Jmma

Sat May 6, 2017 12:13pm

Posts: 9

Location: Orihuela Costa

2 helpful posts

Posted: Sat May 6, 2017 12:13pm

jimtaylor wrote:

I'm always willing to try and help someone who wants to do the job properly.

The transition year when becoming a tax resident can be a bit messy to understand, and without going into details, my recommendation is that you file your first tax return here for 2017.

What you need to do is submit a Modelo 030 to register for tax, and I suggest you do that asap.

Once you've (in twelve months) submitted a tax return here, you can the follow the necessary procedure to get out of the Inland Revenue system. They'll still issue a Notice of Coding, but the code will be NT - no tax (unless you've been in Government employment, in which case that income will still be taxed in the UK, but taken into account in calculating your tax rate here).

For the first tax return, you'll have paid tax in the UK, but this is declared in your Spanish tax return, and the tax paid is offset against the tax due here.

I very strongly suggest that you bring yourself up to speed on the tax system here. I've been doing tax returns for ourselves and for friends for some years. During that time, the friends have given me details of previous tax returns prepared by 'experts', and every one I've seen has been wrong in at least one aspect.

Doing your own tax return is now quite easy. In the early days you used to have to buy a paper 100 from a newsagent and fill it in; or if you wanted to do it online you needed an electronic certificate. However, over the last few years it's got a lot easier. If you've got what I call normal income, in the form of pensions, and annuities and/or savings, there are actually only two boxes on the tax return that you need to enter figures into. 

The Spanish Ministry of Finance don't publish the exchange rate to be used for converting sterling to euros. I recently spoke to Agencia Tributaria and they confirmed that one needs to take the average figure for the year, but this isn't published in Spain. For a few years I've been using the average for the year rate published by the European Central Bank, and AEAT agree with this.

As an aside, I do tax returns for friends in exchange for a menu del dia for my wife  and myself, and the value of that meal should be declared in my tax return as a payment in kind. For some reason, I always forget to declare it!

I always submit our tax returns as soon as the system goes live early in April, and whilst doing so I do write up of what you need to do and what the relevant AEAT links are. When the time comes, ask and I'll post the procedure.

Also, if you wish to next year send me a PM giving your income details, I can work out the tax that will be due.

Hi I also became resident in October last year.  My solicitor is requesting I do my tax returns this April for the months Oct, Nov, Dec 2016 they charging €145 (just myself) Is this normal?

John56

John56

Forum Ambassador for Cabo Roig and La Zenia

Sat May 6, 2017 4:18pm

Posts: 360

Location: La Zenia

194 helpful posts

Posted: Sat May 6, 2017 4:18pm

jimtaylor wrote:

I'm always willing to try and help someone who wants to do the job properly.

The transition year when becoming a tax resident can be a bit messy to understand, and without going into details, my recommendation is that you file your first tax return here for 2017.

What you need to do is submit a Modelo 030 to register for tax, and I suggest you do that asap.

Once you've (in twelve months) submitted a tax return here, you can the follow the necessary procedure to get out of the Inland Revenue system. They'll still issue a Notice of Coding, but the code will be NT - no tax (unless you've been in Government employment, in which case that income will still be taxed in the UK, but taken into account in calculating your tax rate here).

For the first tax return, you'll have paid tax in the UK, but this is declared in your Spanish tax return, and the tax paid is offset against the tax due here.

I very strongly suggest that you bring yourself up to speed on the tax system here. I've been doing tax returns for ourselves and for friends for some years. During that time, the friends have given me details of previous tax returns prepared by 'experts', and every one I've seen has been wrong in at least one aspect.

Doing your own tax return is now quite easy. In the early days you used to have to buy a paper 100 from a newsagent and fill it in; or if you wanted to do it online you needed an electronic certificate. However, over the last few years it's got a lot easier. If you've got what I call normal income, in the form of pensions, and annuities and/or savings, there are actually only two boxes on the tax return that you need to enter figures into. 

The Spanish Ministry of Finance don't publish the exchange rate to be used for converting sterling to euros. I recently spoke to Agencia Tributaria and they confirmed that one needs to take the average figure for the year, but this isn't published in Spain. For a few years I've been using the average for the year rate published by the European Central Bank, and AEAT agree with this.

As an aside, I do tax returns for friends in exchange for a menu del dia for my wife  and myself, and the value of that meal should be declared in my tax return as a payment in kind. For some reason, I always forget to declare it!

I always submit our tax returns as soon as the system goes live early in April, and whilst doing so I do write up of what you need to do and what the relevant AEAT links are. When the time comes, ask and I'll post the procedure.

Also, if you wish to next year send me a PM giving your income details, I can work out the tax that will be due.

Excellent advice, I will be saving this for later in the year when we make the permanent move to Spain.

jimtaylor

jimtaylor

Forum Ambassador for Almoradi

Sat May 6, 2017 6:18pm

Posts: 705

Location: Almoradí

696 helpful posts

Posted: Sat May 6, 2017 6:18pm

Thanks - it's nice to be appreciated. 

I am a member of the original Costa Blanca Forum and in its heyday put on multiple posts about what's involved in Spanish income tax and how to do your returns, but unfortunately all that information was lost when the forum was re-hashed. I still have all that information and could update it and post it on this forum, if and when I have time to do that.

If you'll excuse me, I'm now going to have a little rant, in the hopes it might encourage people who aren't doing tax returns to do so in the future.

Not submitting a tax return is illegal - you are legally required to pay tax on your worldwide income in the country in which you are resident. Not doing returns isn't just a matter of diddling the tax man, it's also defrauding the people who do comply with the law. To explain this simply, if you live on a community of 100 residents, and it costs €1000 to run that community, then everyone should pay €10. If 50 people don't make that payment, then those 50 that do pay would have to pay €20 each. It's exactly the same with income tax - the tax dodgers result in those of us who do pay tax having to pay more than if everyone paid tax.

Rant over, and congratulations to Steve and John who want to do the job properly.

Dem3

Sat Jun 17, 2017 10:11pm

Posts: 6

Location: Beniarbeig

3 helpful posts

Posted: Sat Jun 17, 2017 10:11pm

Jmma wrote:

Hi I also became resident in October last year.  My solicitor is requesting I do my tax returns this April for the months Oct, Nov, Dec 2016 they charging €145 (just myself) Is this normal?

Hello there. 

I can't positively say that fee is excessive, because I don't know how much work is needed. 

However, all Spanish taxpayers receive free advice if they book an appointment with the AEAT employees. You should be able to do so on the AEAT website. 

As another member said, once you have done your first tax revenue, it won't be very hard to repeat the same process, as long as the income sources are the same. 

 I hope this information is helpful. 

Kimmy11

Thu Oct 5, 2017 11:56am

Posts: 124

121 helpful posts

Posted: Thu Oct 5, 2017 11:56am

jimtaylor wrote:

Thanks - it's nice to be appreciated. 

I am a member of the original Costa Blanca Forum and in its heyday put on multiple posts about what's involved in Spanish income tax and how to do your returns, but unfortunately all that information was lost when the forum was re-hashed. I still have all that information and could update it and post it on this forum, if and when I have time to do that.

If you'll excuse me, I'm now going to have a little rant, in the hopes it might encourage people who aren't doing tax returns to do so in the future.

Not submitting a tax return is illegal - you are legally required to pay tax on your worldwide income in the country in which you are resident. Not doing returns isn't just a matter of diddling the tax man, it's also defrauding the people who do comply with the law. To explain this simply, if you live on a community of 100 residents, and it costs €1000 to run that community, then everyone should pay €10. If 50 people don't make that payment, then those 50 that do pay would have to pay €20 each. It's exactly the same with income tax - the tax dodgers result in those of us who do pay tax having to pay more than if everyone paid tax.

Rant over, and congratulations to Steve and John who want to do the job properly.

Just catching up with topics of interest that pre-date me joining this forum and I'd like to offer my sincere thanks to Jim for his posts.  I wish I'd discovered all the fantastic work he's done when my husband and I moved to Spain last year.

We are keen not to evade paying tax and so I have engaged a tax "expert" to complete our Declaration of Assets (fee: Eu 70) and then complete our tax returns (fee: Eu 144 per year for both of us).  However, I also look forward to getting up to speed with all the information and guidance which Jim has posted, in the hope that I can do our own tax returns in due course.

I also concur with Jim's view on tax evaders.  I'm staggered by the number of British people, some of them friends of mine, who think it's acceptable not to make tax declarations in Spain.  Often they are the same types who I hear complaining about 'Johnny Foreigner' living in the UK, taking advantage of our 'free' health and social care services, but not paying for them by way of tax contributions.  If you're evading paying tax in Spain, you're doing the same thing: defrauding the Spanish system and the neigbours living alongside you who do comply with the law.

When it comes to each of us wanting to continue living in Spain once the Brexit "divorce" is final on 29 March 2019, I'm sure the full application process, which those of us who do not have "settled" status will have to go through to remain here, will include enquiries of whether we have paid all our taxes in Spain.  Tax evaders may not be required to leave Spain, but in addition to paying their back taxes, they risk a fine of 150% of the unpaid sums.  And before anyone starts complaining about the Spanish authorities "Brit bashing", earlier this week I was reading an article about a resident who hadn't declared Eu 300,000 which he held in a savings account outside of Spain - he's Spanish and was fined Eu 450,000!

jimtaylor

jimtaylor

Forum Ambassador for Almoradi

Thu Oct 5, 2017 2:07pm

Posts: 705

Location: Almoradí

696 helpful posts

Posted: Thu Oct 5, 2017 2:07pm

Thanks for your support, Kim

Of all the people I know, only one of them is fully legal as regards tax, and I know that because I see all her income details and do her tax returns. All the rest either don't do returns at all, or only declare part of their income.

I know that the people at the coal face in Agencia Tributaria don't have time to do follow up checks on people. However, if AEAT set up a dedicated squad to, for example, check out details of expat residents and the information that's available to AEAT by virtue of their having access to the Inland Revenue computer, then the income they could generate by demanding four years back tax plus a swingeing fine would pay for the costs of that squad many, many times over.

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