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Paying Tax in Spain for the first time

Posted: Fri Mar 10, 2023 2:55pm
7 replies255 views7 members subscribed
Dave101b

Posts: 86

14 helpful points

Location: Benidorm

Joined: 30 Jan 2022

I moved to Benidorm in December 2022. I am here on a Non Lucrative visa from the Uk. I am in my 60's but below retirement age. My income is predominantly from an occupational pension and property rental. I'm just about to formally notify the letting agent of my spanish address but advised that I will need to fill-in a form to say I am a non UK based landlord and HMRC will take tax at the point.

I have no problem contributing to Spain, as it's my new home, but unsure of what I need to do and the order in which I need to do it.Happy to accept direct responses.

Thank you in anticipation.

Dave

John123456

Posted: Fri Mar 10, 2023 5:25pm

John123456

Super helpful member

Posts: 1431

1041 helpful points

Location: Benidorm

Joined: 27 Feb 2021

Posted: Fri Mar 10, 2023 5:25pm

I have attached a couple of links that you may find informative but with important issues such as taxation it might be best to employ an expert, if you are not confident in completing the returns yourself.:

https://n26.com/en-es/blog/filing-tax-return

https://taxsummaries.pwc.com/spain/individual/tax-administration

UK information/requirements

https://www.gov.uk/moving-or-retiring-abroad

https://www.gov.uk/tax-uk-income-live-abroad#:~:text=You%20usually%20have%20to%20pay,rental%20income

Kimmy11

Posted: Sat Mar 11, 2023 8:18pm

Kimmy11

Legendary helpful member

Posts: 6869

12554 helpful points

Joined: 8 Aug 2017

Posted: Sat Mar 11, 2023 8:18pm

Hi Dave,

The link to apply to HMRC for Non-resident landlord status can be found here:

https://www.gov.uk/tax-uk-income-live-abroad/rent

You'll need to declare your rental income in the UK, either via the Self-assessment system, or engaging a company to do this for you:

https://www.gov.uk/tax-uk-income-live-abroad

In Spain, you'll also need to declare the rental income, but under the terms of the Dual Taxation Agreement, any tax due will be payable to the UK, rather than Spain.

Regarding your occupational pension, all pensions are taxable in Spain unless they are classified as "Crown" pension, e.g. military, civil service, some NHS and teachers' pensions.

The key mechanisms for being tax compliant in Spain are:

-  Modelo 720 Declaration of (worldwide) Assets: if you have assets worth a minimum of €50,000 in at least of 1 of 3 asset classes (bank/savings accounts, investments and pensions, and property), you must complete a Modelo 720 between January and end March.  
This is completed initially, but only has to be done again if you have an increase of a minimum €20,000 in any of the asset groups.

-  Modelo 100 Income Tax Return: your pension, income rental and any other income, e.g. savings interest, must be declared on the Modelo 100 between April and end June each year.

You can engage specialists in both countries to do these returns for you and I would highly recommend you use a "fiscal asesor" in Spain, at least for your initial M.720 and M.100 submissions.  

With regard to submitting your property rental declaration to HMRC, self-assessment is very straightfoward - HMRC has published very good online guides and videos to help you.  In the first instance, you'd need to apply for a Government Gateway ID:

https://www.gov.uk/log-in-register-hmrc-online-services

You can prepare your tax return online and use the system to calculate any tax due, but note that, unlike UK residents, non-resident landlords must print off the forms and post them to HMRC (the system does actually allow you to submit your return online, but if you do, you'll get a £100 fine!).

If you prefer, there are UK companies offering these services, but I'm afraid that I can't recommend any, as I use Self-assessment.

Kind regards,

Kim

Campoverde53

Posted: Mon May 29, 2023 12:25pm

Posts: 74

46 helpful points

Joined: 16 Jul 2016

Posted: Mon May 29, 2023 12:25pm

Hi can anyone advise how we pay residents tax if we do not have a Spanish bank account, we only have a wise account if that sufficient?

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Stevec2x

Posted: Tue May 30, 2023 1:27pm

Stevec2x

Super helpful member

Posts: 1816

1040 helpful points

Location: Playa Flamenca

Joined: 23 Jan 2020

Posted: Tue May 30, 2023 1:27pm

Campoverde53 wrote on Mon May 29, 2023 12:25pm:

Hi can anyone advise how we pay residents tax if we do not have a Spanish bank account, we only have a wise account if that sufficient?

Hi Campoverde

I'm having the same problem!

I've resorted to opening an account with n26 in order to gain a Spanish IBAN. 

Cheers

Steve

Gary

Posted: Sun Jun 4, 2023 1:38pm

Gary

Helpful member

Posts: 124

155 helpful points

Location: Elda

Joined: 19 Mar 2016

Posted: Sun Jun 4, 2023 1:38pm

Stevec2x wrote on Tue May 30, 2023 1:27pm:

Hi Campoverde

I'm having the same problem!

I've resorted to opening an account with n26 in order to gain a Spanish IBAN. 

Cheers

Steve

Hi Campoverde & Steve

I also have a Wise Euro and Gbp account and also an account with N26, but when I tried paying my residents tax a couple of weeks ago with N26 (ES IBAN number) it was refused and I was told it was not on the list of banks approved by the Agencia Tributaria.  

I had the same problem with Wise, but then again neither neither the Euro or Gbp accounts have a ES IBAN so I expected that.

After some deliberation I decided to bite the bullet and open a "Current" account with my local Bankinter office, who I have to say are extremely helpful. There are no requirements for this type of account and it's just €45 per year.

They also offer other types of accounts some of which are free, one of which is to have your UK pension/s paid in every month, but I prefer having them paid in Gbp into Wise, that way I have the freedom to transfer only when the exchange rate is favourable.

Regards

Gary

Regards

Gary

Campoverde53

Posted: Sun Jun 4, 2023 1:43pm

Posts: 74

46 helpful points

Joined: 16 Jul 2016

Posted: Sun Jun 4, 2023 1:43pm

Gary wrote on Sun Jun 4, 2023 1:38pm:

Hi Campoverde & Steve

I also have a Wise Euro and Gbp account and also an account with N26, but when I tried paying my residents tax a couple of weeks ago with N26 (ES IBAN number) it was refused and I was told it was not on the list of banks approved by the Agencia Tributaria.  

I had the same problem with Wise, but then again neither neither the Euro or Gbp accounts have a ES IBAN so I expected that.

After some deliberation I decided to bite the bullet and open a "Current" account with my local Bankinter office, who I have to say are extremely helpful. There are no requirements for this type of account and it's just €45 per year.

They also offer other types of accounts some of which are free, one of which is to have your UK pension/s paid in every month, but I prefer having them paid in Gbp into Wise, that way I have the freedom to transfer only when the exchange rate is favourable.

Regards

Gary

Regards

Gary

Thank you for your response, looks like I will have to open one just for this then.

Campoverde53

Posted: Sun Jun 4, 2023 4:43pm

Posts: 74

46 helpful points

Joined: 16 Jul 2016

Posted: Sun Jun 4, 2023 4:43pm

Gary wrote on Sun Jun 4, 2023 1:38pm:

Hi Campoverde & Steve

I also have a Wise Euro and Gbp account and also an account with N26, but when I tried paying my residents tax a couple of weeks ago with N26 (ES IBAN number) it was refused and I was told it was not on the list of banks approved by the Agencia Tributaria.  

I had the same problem with Wise, but then again neither neither the Euro or Gbp accounts have a ES IBAN so I expected that.

After some deliberation I decided to bite the bullet and open a "Current" account with my local Bankinter office, who I have to say are extremely helpful. There are no requirements for this type of account and it's just €45 per year.

They also offer other types of accounts some of which are free, one of which is to have your UK pension/s paid in every month, but I prefer having them paid in Gbp into Wise, that way I have the freedom to transfer only when the exchange rate is favourable.

Regards

Gary

Regards

Gary

I’ve just opened a BBVA account online no fees or commission and no need for monthly regular ncome.

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