Please sanity check/ challenge my residency plan - Brexit and the EU: living, holidaying and moving to Pinar De Campoverde - Pinar De Campoverde forum - Costa Blanca forum in the Alicante province of Spain
Thy Will Be Done
Jennifer Cunningham Insurances SL
Car Key Solutions
Costa Blanca Building Specialists
AA Free English TV
James Spanish School
ASSSA Insurance
Gran Alacant Insurances
Blacktower Financial Management
Airport Service Taxi Mil Palmeras  Torre de la Horadada
interior building work
Espana Dream Properties
Expat Services
Gentlevan Removals

Join the Pinar De Campoverde forum

Join the Pinar De Campoverde forumMy name's Alex and this is my website all about Pinar De Campoverde in Spain. Register now for free to talk about Brexit and the EU: living, holidaying and moving to Pinar De Campoverde and much more!

Please sanity check/ challenge my residency plan

Posted: Fri Dec 20, 2019 6:30pm
31 replies2060 views14 members subscribed
Lancelot

Lancelot

Very helpful member

Posts: 687

768 helpful points

Location: La Finca

Joined: 24 Jun 2019

Evening

So looks like the Brexit bill will has almost cleared the stage gates which will see the UK leave the EU on 31st Jan 2020.

For us we will be marketing our UK property again just after Christmas with a hope to selling it by June/ July/ August 2020.

Once we have sold we intend to come over again to Spain and look at our preferred areas, which we have already visited and viewed, with the intention of buying something.

Here's where I need some help;

Situation: We do not want to apply for residency in the Spanish tax year 2020 Jan to Dec because we would have to pay a reasonably hefty CGT bill on our UK house sale. Instead we hope to buy H2 next year but apply for residency January 2021. We do want to live in our Spanish home in Q3 & 4 of 2020.

Given we will be in the transition period do you think that we could buy in July/ August 2020 with the intention of spending less than 186 days in the country, being the condition where tax residency applies, do you think we could effectively live out there for the period from July/ August through to the Dec 31st before applying for residency on Jan 1st 2021 or near as damn it.

I've read from Jims Guides that anyone planning to spend more than 90 days in Spain has to register at the local Police station - what does this registration actually signify in the big scheme of things?

Interested in your views - you should make the assumption that we will both have private medical cover and be remitting funds to the value set by the "post Brexit" conditions.

Thanks.

Kelvin1960

Posted: Fri Dec 20, 2019 7:23pm

Kelvin1960

Super helpful member

Posts: 1488

1767 helpful points

Joined: 5 Mar 2017

Posted: Fri Dec 20, 2019 7:23pm

If your experience mirrors ours .... if you are granted Spanish residency in the second half of 2020

- 2020 you will be liable to UK income tax (and possibly non-Resident tax in Spain .... but this is small compared to income tax)

- 2021 you will be liable to Spanish income tax, but you will carry on with UK PAYE  (and you will pay non-Resident tax in Spain)

- in 2022, you will have to pay the 2021 tax due to Spain BEFORE you can claim back the equivalent period tax refund from the UK (no more non-Resident tax)

Income tax in Spain is paid a year in arrears.

We gained our Residency in the second half of 2018. Our reconciliation is due in 2020.

Be aware that, if you have healthy company pensions, you will pay more income tax in Spain than in the UK.

Lancelot

Posted: Fri Dec 20, 2019 7:24pm

Lancelot

Original Poster

Very helpful member

Posts: 687

768 helpful points

Location: La Finca

Joined: 24 Jun 2019

Posted: Fri Dec 20, 2019 7:24pm

This post that was quoted has been deleted.

Thanks for your response Pete. When we talk about the Schengen zone 90 in 180 rule - does that come in after 31st Jan 2020 or after the end of the transition period ie. on 1st Jan 2021?

Lancelot

Posted: Fri Dec 20, 2019 8:41pm

Lancelot

Original Poster

Very helpful member

Posts: 687

768 helpful points

Location: La Finca

Joined: 24 Jun 2019

Posted: Fri Dec 20, 2019 8:41pm

This all looks positive.

So....we could buy a house next year and come over for a period of less than 186 days during 2020 and then on 1st Jan 2021 or, more likely, shortly thereafter apply for residency. Saving us from having to return to the UK. Subject to anything happening to challenge this.

Is it true that we would need to present ourselves at a Police station if we plan to stay for over 90 days in 2020? What does this involve - just signing a register of some kind?

If the above is accurate we would just pay non residency tax for tax year 2020 and pay Spanish tax from tax year 2021.

Kelvin1960

Posted: Fri Dec 20, 2019 9:19pm

Kelvin1960

Super helpful member

Posts: 1488

1767 helpful points

Joined: 5 Mar 2017

Posted: Fri Dec 20, 2019 9:19pm

Based on a neighbour's experience ... if you are granted Residency in the first half of 2021

- you will continue with UK PAYE in 2021 (plus Spanish NRT)

- you will have to pay your 2021 income tax to Spain in 2022 BEFORE you claim back the equivalent period tax from the UK (requires cash flow planning). Your UK PAYE will continue until the reconciliation is processed. The payment to Spain will be due in June (or June and October if you choose to pay it in two chunks). 

The Spanish tax year is Jan-Dec.

I don't know about what you need to do after 90 days. We went directly for Residency.

It seems to me that you might as well apply for Residency asap in the second half of 2020, and not get hung up on the 90 day thing, as your reconciliation date would be the same. 

Advertisement - posts continue below

Lancelot

Posted: Fri Dec 20, 2019 9:29pm

Lancelot

Original Poster

Very helpful member

Posts: 687

768 helpful points

Location: La Finca

Joined: 24 Jun 2019

Posted: Fri Dec 20, 2019 9:29pm

how does this work with all the UK folks that winter over in Spain for 5 months from October to Feb? They don't need to apply for residency at the moment do they? Even from this year into next they won't have to apply for residency or will they?

I can understand from Jan 1st 2021 the above would change but for my use case if I "holiday" for less than 186 days in 2020 I shouldn't have to apply for residency in that year? or should I? All it means is that I might delay my arrival until less than 3 months prior to the end of 2020.

@Kelvin1960 I was advised by a tax advisor in Torrevieja that if I became tax resident in the same year I sell my UK home I will be liable to pay CGT which given I bought in 1998 is fairly sizeable. That's why I want to delay until 2021 Spanish tax year.

Kelvin1960

Posted: Fri Dec 20, 2019 9:38pm

Kelvin1960

Super helpful member

Posts: 1488

1767 helpful points

Joined: 5 Mar 2017

Posted: Fri Dec 20, 2019 9:38pm

Yes you are right. I had missed your CGT issue. So defer Residency until 2021 ... your tax reconciliation date will be the same either way. 

Have you had your income tax liabilities in Spain assessed yet ?

We had two different assessors look at ours. They came up with (almost) the same answers - our income tax liabilities are significantly higher in Spain. 

Lancelot

Posted: Fri Dec 20, 2019 9:59pm

Lancelot

Original Poster

Very helpful member

Posts: 687

768 helpful points

Location: La Finca

Joined: 24 Jun 2019

Posted: Fri Dec 20, 2019 9:59pm

Kelvin1960 wrote on Fri Dec 20, 2019 9:38pm:

Yes you are right. I had missed your CGT issue. So defer Residency until 2021 ... your tax reconciliation date will be the same either way. 

Have you had your income tax liabilities in Spain assessed yet ?

We had two different assessors look at ours. They came up with (almost) the same answers - our income tax liabilities are significantly higher in Spain. 

Not formally although I have had an initial conversation with Abaco in Torrevieja - for conveyancing, will and tax advice.

We have a 3.5 year float from day 1 on the third country post brexit conditions plus will take the 4th year out over years 1 to 4 by which time I can access my SIPP. So essentially we can send out EUR 2700, plus inflation. The downside in having to hold back more cash is that we have less to spend on a property but we have recently been over and seen places we are happy with at our revised price point.

So tax wise we should be pretty light for the first 3 or 4 years as my wife will claim allowance for both herself and me as part of her return. From year 5, when I can access my pension pot, we expect to pay around EUR 5.5k based on SIPP withdrawals both for my wife and myself - we would use the tax allowances each at this point. 

The tax adviser did say that how my SIPP income is derived can influence the amount of tax payable and I would need to look into this more as things move along. Think dividend payments from investments might attract a lower level of Spanish tax but not certain of this.

All of this is subject to challenge when I do eventually engage properly with a tax adviser for profiling.

Our daughter has advised she plans to move out of the family home around Easter next year which is starting to make us feel a lot more positive about moving.

Stan Bartolome

Posted: Fri Dec 20, 2019 10:28pm

Stan Bartolome

Very helpful member

Posts: 347

523 helpful points

Location: Orihuela Costa

Joined: 15 Dec 2017

Posted: Fri Dec 20, 2019 10:28pm

Regarding your purchasing of a property, just bear in mind that if you put an offer in & it's accepted, it may well take 3 months to complete.

That was the case with our purchase & I understand it's fairly typical.

Lancelot

Posted: Fri Dec 20, 2019 10:35pm

Lancelot

Original Poster

Very helpful member

Posts: 687

768 helpful points

Location: La Finca

Joined: 24 Jun 2019

Posted: Fri Dec 20, 2019 10:35pm

Stan Bartolome wrote on Fri Dec 20, 2019 10:28pm:

Regarding your purchasing of a property, just bear in mind that if you put an offer in & it's accepted, it may well take 3 months to complete.

That was the case with our purchase & I understand it's fairly typical.

Thanks Stan - I was told it normally takes a lot less than that around 4 weeks? 

Is 3 months really typical? I certainly hope not.

Sign up for free or login to reply to this topic

Want to reply to this topic? Login or register for free to post your message:

Find more Brexit and the EU topics from a particular area:


Register for free!

Login to your account

Thy Will Be Done
Jennifer Cunningham Insurances SL
Car Key Solutions
Costa Blanca Building Specialists
AA Free English TV
James Spanish School
ASSSA Insurance
Gran Alacant Insurances
Blacktower Financial Management
Airport Service Taxi Mil Palmeras  Torre de la Horadada
interior building work
Espana Dream Properties
Expat Services
Gentlevan Removals
Advertise your business here
Advertise your property
Help with my computer