Posted: Wed Nov 30, 2022 2:41pm
HI JC2021,
The first thing to know is that the tax year in Spain runs from 1 January to 31 December each year (as opposed to 6 April in the UK). Also, whilst the UK operates a "split year" tax system for citizens moving in and out of the UK tax system in each tax year, Spain does not. This means that you have to bear in mind the timing of your house sale alongside when you become tax resident in Spain. The primary factor that Spain uses for deciding when you become fiscally resident here is the number of days you live here in the Spanish tax year, i.e. 182 days (6 months) and you would not be tax resident here, but 183 days (6 months + 1 day) would make you tax resident here.
Spain taxes you a year in arrears, so if you moved to Spain in the first 6 months of 2023, you would become tax resident here in 2023. However, if you move to Spain much later in 2023, i.e. less than 6 months here, you would become tax resident in 2024. Ideally, you would sell your UK house prior to becoming tax resident in Spain and pay any Capital Gains Tax owing to the UK. If you become tax resident in Spain the same year as your house sale, you will still have to pay any CGT in the UK (which must be declared within 30 days of the sale), but you would also have to declare the sale in Spain. I'm not aware whether the Dual Taxation Agreement covers CGT - if it does, Spain would discount any CGT owed here by what you've already paid in the UK, but you should check. There are also national and regional laws regarding discounts on Spanish CGT subject, for example, to you spending all the proceeds on a property in Spain, but this would depend on the region where you buy, your age, etc. You really must speak to a professional tax advisor (fiscal asesor) to ensure the advice you receive is accurate, current and specific to your complete fiscal situation.
Kind regards,
Kim