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Declaration for Tax as a RESIDENT of SPAIN

Posted: Mon Jan 4, 2021 9:31pm
26 replies885 views12 members subscribed
MORF

Posts: 133

35 helpful points

Location: Catral

Joined: 24 May 2019

Hello all C.B.Forum readers

I ask the members of the forum whom are “Fiscal Residents” in Spain.

I have recently purchased a property in SPAIN and have been advised by several Gestor and Accountant sources that I am now “obliged to fill in a Modelo 720” declaring my worldwide assets - especially if my worldwide assets are above €50,000.

I ask those of you whom are “RESIDENTS in Spain” and whom own a house in Spain, do you fill out this Modelo 720 declaration?

Those of you who do not complete and send Modelo 720 declaration into the tax authorities within Spain - 

Maybe you can advise me how you get away with NOT declaring your assets over €50,000?

The same as many of you, I would prefer not to pay this country Spain -  anymore tax - as they already have taxed me enough.

I would much appreciate anyones advise on this matter.

Appreciated 

tebo53

Posted: Mon Jan 4, 2021 9:35pm

tebo53

Legendary helpful member

Posts: 4779

4963 helpful points

Location: Benidorm

Joined: 29 May 2018

Posted: Mon Jan 4, 2021 9:35pm

I strongly advise you to fill in modelo 720 if advised to do so. The fines for not doing so can be much  more than the taxes to be paid. 

Steve 

MORF

Posted: Mon Jan 4, 2021 9:41pm

MORF

Original Poster

Posts: 133

35 helpful points

Location: Catral

Joined: 24 May 2019

Posted: Mon Jan 4, 2021 9:41pm

tebo53 wrote on Mon Jan 4, 2021 9:35pm:

I strongly advise you to fill in modelo 720 if advised to do so. The fines for not doing so can be much  more than the taxes to be paid. 

Steve 

G’day Steve, 

Fair advise tebo53, thank you for your insight on this matter.

Kelvin1960

Posted: Mon Jan 4, 2021 9:55pm

Kelvin1960

Super helpful member

Posts: 1488

1767 helpful points

Joined: 5 Mar 2017

Posted: Mon Jan 4, 2021 9:55pm

Yes, we are fiscal residents. Yes we completed the modelo 720.

If you want the sunshine you have to pay the taxes. 

You can always return home to the rain.

Tax evasion increases the burden for tax payers.

Lancelot

Posted: Mon Jan 4, 2021 10:37pm

Lancelot

Very helpful member

Posts: 687

768 helpful points

Location: La Finca

Joined: 24 Jun 2019

Posted: Mon Jan 4, 2021 10:37pm

Just off of the back of this - we moved over here late July 2020 and so do not become tax resident until this year when we will have completed the requisite number of days in Spain.

I've been contacted by our tax advisors to complete the modelo 720 by end of Q1 this year - is that right given we are only tax residents from this tax year?

TIA.  

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Kelvin1960

Posted: Mon Jan 4, 2021 10:57pm

Kelvin1960

Super helpful member

Posts: 1488

1767 helpful points

Joined: 5 Mar 2017

Posted: Mon Jan 4, 2021 10:57pm

Lancelot wrote on Mon Jan 4, 2021 10:37pm:

Just off of the back of this - we moved over here late July 2020 and so do not become tax resident until this year when we will have completed the requisite number of days in Spain.

I've been contacted by our tax advisors to complete the modelo 720 by end of Q1 this year - is that right given we are only tax residents from this tax year?...

...

TIA.  

We gained our Residencias in August 2018. 

We became liable for income tax on 1/1/19.

We did our modelo 720 in Feb 2020.

We submitted our income tax returns for Jan-Dec 2019 in June 2020

We paid our Jan-Dec 2019 income tax in 2 chunks ... June and November 2020.

So, if your experience matches ours, your modelo 720/income tax process won't be until 2022.

FYI ... we are still paying PAYE in the UK as well, and have not yet recovered our UK-paid income tax from 1/1/19 onward - so there is a hefty cash flow pinch point to plan for.   

Lancelot

Posted: Mon Jan 4, 2021 11:11pm

Lancelot

Very helpful member

Posts: 687

768 helpful points

Location: La Finca

Joined: 24 Jun 2019

Posted: Mon Jan 4, 2021 11:11pm

Kelvin1960 wrote on Mon Jan 4, 2021 10:57pm:

We gained our Residencias in August 2018. 

We became liable for income tax on 1/1/19.

We did our modelo 720 in Feb 2020.

We submitted our income tax returns for Jan-Dec 2019 in June 2020

We paid our Jan-Dec 2019 income tax in 2 chunks ... June and November 2020.

So, if your experience matches ours, your modelo 720/income tax process won't be until 2022.

FYI ... we are still paying PAYE in the UK as well, and have not yet recovered our UK-paid income tax from 1/1/19 onward - so there is a hefty cash flow pinch point to plan for.   

Thanks for that I'll follow up with my advisor.

Kimmy11

Posted: Mon Jan 4, 2021 11:44pm

Kimmy11

Legendary helpful member

Posts: 6869

12554 helpful points

Joined: 8 Aug 2017

Posted: Mon Jan 4, 2021 11:44pm

Hi MORF,

I'm fiscally resident in Spain and, as others have said, not complying with Spanish tax law could end up being far more costly.

The Modelo 720 is a declaration of your worldwide assets - it's for information purposes only and has to be presented during the first quarter (1 January to 31 March) in the year after you first become tax resident in Spain.  The form is divided into three different groups:

  • Group 1: accounts held abroad where the total balance of all the accounts exceeds €50,000 (balance is not divided between the holders).
  • Group 2: private and works pensions, annuities, investments, shares, bonds, life insurances and other assets held abroad exceeding €50,000 in value.
  • Group 3: property or business premises abroad with a purchase value of €50,000 or more.

Once you've completed your first Modelo 720 (assuming that you have sufficient assets to warrant doing so), you only have to submit another if:
  • There has been an alteration in your circumstances.
  • Your assets have increased by €20,000 or more of total assets in any of the groups previously declared.
  • Your assets have increased in value to €50,000 or more in a new group not previously declared.


If you're a UK citizen, it's also worth noting that ISA savings, which are tax-free in the UK, are not tax-free in Spain.

Kind regards,
Kim
CharlieFarmer

Posted: Tue Jan 5, 2021 6:43am

CharlieFarmer

Helpful member

Posts: 123

164 helpful points

Location: Catral

Joined: 4 Nov 2020

Posted: Tue Jan 5, 2021 6:43am

"I would prefer not to pay this country Spain -  anymore tax - as they already have taxed me enough.

What you 'prefer' is irrelevant, you live in Spain so you obey the laws of Spain, if you find that unpalatable then you know what to do.

BTW as far as the Spanish tax man is concerned 'residency' in Spain begins when you sign on a padron not when you receive your residencia.

Peter3473

Posted: Tue Feb 2, 2021 11:53am

Peter3473

Very helpful member

Posts: 988

900 helpful points

Location: Torrevieja

Joined: 21 Oct 2019

Posted: Tue Feb 2, 2021 11:53am

Kelvin1960 wrote on Mon Jan 4, 2021 10:57pm:

We gained our Residencias in August 2018. 

We became liable for income tax on 1/1/19.

We did our modelo 720 in Feb 2020.

We submitted our income tax returns for Jan-Dec 2019 in June 2020

We paid our Jan-Dec 2019 income tax in 2 chunks ... June and November 2020.

So, if your experience matches ours, your modelo 720/income tax process won't be until 2022.

FYI ... we are still paying PAYE in the UK as well, and have not yet recovered our UK-paid income tax from 1/1/19 onward - so there is a hefty cash flow pinch point to plan for.   

Hi Kelvin1960, thank you for your post, I am exactly the same as you, but gaining residency August 2020, I paid non residence tax for year ending 2019 = December 2020, Any idea what type of tax/taxes I should have to pay for tax year 2020 = non resident up to August 2020 and thereafter a resident = what tax for that 4 month period? reading your post I am liable for resident tax from the 1/1/21 and then February 2022 submit a 720, then submit tax returns for January to December 2021 in June 2022 paying in 2 chunks in June and November 2022, I hope I am correct in reading your post, very helpful, but what to do for the year 2020 as mentioned? thank you, stay safe and healthy my friend.  

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