Where should we explore if we want to consider living on the Costa Blanca? - Page 6

I saw a discussion about pensions in some of the replies...if you have any private pensions note that Spain does not recognize the 25% tax free withdrawal option. Under current legislation you will be taxed for this. If you are thinking of making such a withdrawal it is best to do so before coming to Spain :-)

Hi

Thanks for the heads up on this as was unaware...wouldn't Tax Free cash if drawn down before coming to Spain, still be taxed as an asset in Spain (savings?) regardless of whether the money is actually held in Spain or UK?  My understanding is that Spain taxes you an your worldwide assets, though double taxation agreements might mean you don't get taxed twice?

You don't get taxed on your saving or assets (unless you have a couple of million and pay the wealth tax). What you get taxed on is the income earned from your savings or assets such as interest or dividends. 

Spain does not tax you on your worldwide assets (as said, unless you have enough to go into the wealth tax brackets) but they tax you on your worldwide income.

Thanks for clearing this up..and we will comfortably be below the wealth tax threshold based on what I've read😂.

I'll be looking at getting advice well in advance of making any financial decisions, so hopefully will be able to structure things correctly.I

Cheers

Those liable to wealth tax will have minimum worldwide assets of €3 million euro so I should think that lets most of us out.

The 25% is considered income so you would be taxed on this. 

The wealth tax threshold depends on the Comunidad that you live in. For the Valencian Community, it kicks in at 500,000 euros (not a couple of million as someone else said). The tax rate as a percentage of the overall amount is much less than income tax rates e.g. for a wealth of 500,000 euros in Valencia it would be less than 0.5%.

I think you'll find the wealth tax was updated this year and only those with assets of 3 million plus worldwide are liable to it now.

From 3 to 5 million you pay tax at 1.7%

From 5 to 10 million you pay tax at 2.1%

Over 10 million you pay tax at 3.5%

These changes came in for 2023 

And the exemption used to be 500,000 (in the Valencian Region) There was also a 300,000 euro allowance per owner on the value of your main home to be added to that.

Plus the tax on the pension draw down would only kick in if it was taken in the same year or after you become tax resident. 

Solidarity tax

The new, but temporary, ‘solidarity tax on large fortunes’ was approved at the end of December and applies for the 2022 and 2023 tax years (when it will be reviewed). 2022 labilities will be due between April and June this year.

It only applies to those with net wealth above €3 million (worldwide assets for residents).

The progressive tax rates are 1.7% for wealth over €3 million, then 2.1% for wealth over €5,347,998, and 3.5% for over €10,695,996.

Since that was posted by Blevins Frank, it has been confirmed the levels for 2023/2024 tax years will remain the same (CostaLuz Lawyers)

Thanks again...unless we win the lottery or I have a rich aunt I don't know about...we'll be well below those amounts😃