Capital Gains Tax After Brexit - Taxes in Pinar De Campoverde: Suma, NIE and general tax advice - Pinar De Campoverde forum - Costa Blanca forum in the Alicante province of Spain
Gentlevan Removals
Costa Blanca Building Specialists
Expat Services
Jennifer Cunningham Insurances SL
ASSSA Insurance
Car Key Solutions
Thy Will Be Done
Blacktower Financial Management
interior building work
Airport Service Taxi Mil Palmeras  Torre de la Horadada
Espana Dream Properties
AA Free English TV
James Spanish School
Gran Alacant Insurances

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 Taxes in Pinar De Campoverde: Suma, NIE and general tax advice and much more!

Capital Gains Tax After Brexit

Posted: Thu Jul 22, 2021 4:07pm
4 replies267 views3 members subscribed
Janpug

Posts: 24

5 helpful points

Joined: 22 Jul 2021

Hi All,

We are planning to move to Spain in the future (probably 2022), if we sell our only house in the UK and relocate to Spain in the same year (and buy a villa) would we have to pay Capital Gains Tax on our UK property sale profit? I am not sure whether Main Home Exemption applies now that UK are out of the EU, if you could answer this question it would be appreciated. We are aged 52 & 59 so will be requiring a non-lucrative visa when arriving.

Many thanks

J

Kelvin1960

Posted: Thu Jul 22, 2021 4:53pm

Kelvin1960

Super helpful member

Posts: 1488

1767 helpful points

Joined: 5 Mar 2017

Posted: Thu Jul 22, 2021 4:53pm

You need to sell your UK main home before you become tax-Resident in Spain.

The Spanish tax year is Jan-Dec.

If you gain your TIE between Jan 1st and end June in any year, you become tax-Resident with effect from 1st Jan that year.

If you gain your TIE between end June and end Dec in any year, you become tax-Resident on 1st Jan the following year.

So think carefully about the dates.

In Spain, tax is paid a year in arrears. So if you become tax-Resident on (say) 1/1/23, you will submit your modelo 720 form in Feb 24. In June 24 you will submit your income tax return for Jan-Dec 23. You will pay your 2023 tax in 2 chunks ... June/early July and November.  

Note ... if you own any other property in the UK (such as a rental property), and you sell it after you gain tax-Residency in Spain, you will pay CGT in the UK and again in Spain. 

Janpug

Posted: Thu Jul 22, 2021 6:50pm

Janpug

Original Poster

Posts: 24

5 helpful points

Joined: 22 Jul 2021

Posted: Thu Jul 22, 2021 6:50pm

Kelvin1960 wrote on Thu Jul 22, 2021 4:53pm:

You need to sell your UK main home before you become tax-Resident in Spain.

The Spanish tax year is Jan-Dec.

If you gain your TIE between Jan 1st and end June in any year, you become tax-Resident with effect from 1st Jan that year.

If you gain your TIE between end June and end Dec in any year, you become tax-Resident on 1st Jan the following year.

So think carefully about the dates.

In Spain, tax is paid a year in arrears. So if you become tax-Resident on (say) 1/1/23, you will submit your modelo 720 form in Feb 24. In June 24 you will submit your income tax return for Jan-Dec 23. You will pay your 2023 tax in 2 chunks ... June/early July and November.  

Note ... if you own any other property in the UK (such as a rental property), and you sell it after you gain tax-Residency in Spain, you will pay CGT in the UK and again in Spain. 

Thanks Kelvin,

That confirms that we would sell up and move over to Spain between June and December rather than the early part of the year.

Does Spain and the UK not have the "Dual Taxation Agreement" any more?

Thanks

J

Kelvin1960

Posted: Fri Jul 23, 2021 12:02am

Kelvin1960

Super helpful member

Posts: 1488

1767 helpful points

Joined: 5 Mar 2017

Posted: Fri Jul 23, 2021 12:02am

Janpug wrote on Thu Jul 22, 2021 6:50pm:

Thanks Kelvin,

That confirms that we would sell up and move over to Spain between June and December rather than the early part of the year.

Does Spain and the UK not have the "Dual Taxation Agreement" any more?

Thanks

J

Yes. The non-double-taxation treaty endures.

BUT ... it applies to income tax, not completely to CGT. We recently sold a UK rental property. We declared/paid CGT to HMRC. We also declared to Spain; we had to pay the Spanish CGT (with the value previously paid to the UK deducted). 

Also ... beware ... there is a period of double taxation to be planned for. If (as an example from above) you become tax-Resident on 1/1/23, you will submit your modelo 720 form in Feb 24. In June 24 you will submit your income tax return for Jan-Dec 23. You will pay your 2023 tax in 2 chunks ... June/early July and November 2024. BUT you carry on paying UK tax PAYE.

In Sept 2024 you will be able to submit forms to the Spanish tax authorities (2 identical forms, one in English, one in Spanish). They will check your tax status and then issue you a certificate. You send the certificate and the English version of the form to HMRC, who will zero-rate your tax code and reimburse tax paid in the UK since 1/1/23. This may not complete until 2025, so you will have >2 years of double taxation to deal with.

https://www.gov.uk/government/publications/double-taxation-united-kingdomspain-si-1976-number-1919-form-spain-individual

Some forms of income remain taxable in the UK (Crown Pensions - military, Civil Service, Police, Local Authority, some nurses, etc.) but must still be reported in Spain.

Janpug

Posted: Fri Jul 23, 2021 10:34am

Janpug

Original Poster

Posts: 24

5 helpful points

Joined: 22 Jul 2021

Posted: Fri Jul 23, 2021 10:34am

Kelvin1960 wrote on Fri Jul 23, 2021 12:02am:

Yes. The non-double-taxation treaty endures.

BUT ... it applies to income tax, not completely to CGT. We recently sold a UK rental property. We declared/paid CGT to HMRC. We also declared to Spain; we had to pay the Spanish CGT (with the value previously paid to the UK deducted). 

Also ... beware ... there is a period of double taxation to be planned for. If (as an example from above) you become tax-Resident on 1/1/23, you will submit your modelo 720 form in Feb 24. In June 24 you will submit your income tax return for Jan-Dec 23. You will pay your 2023 tax in 2 chunks ... June/early July and November 2024. BUT you carry on paying UK tax PAYE.

In Sept 2024 you will be able to submit forms to the Spanish tax authorities (2 identical forms, one in English, one in Spanish). They will check your tax status and then issue you a certificate. You send the certificate and the English version of the form to HMRC, who will zero-rate your tax code and reimburse tax paid in the UK since 1/1/23. This may not complete until 2025, so you will have >2 years of double taxation to deal with.

https://www.gov.uk/government/publications/double-taxation-united-kingdomspain-si-1976-number-1919-form-spain-individual

Some forms of income remain taxable in the UK (Crown Pensions - military, Civil Service, Police, Local Authority, some nurses, etc.) but must still be reported in Spain.

Hi Kelvin,

Once again you have answered my question very clearly and concisely.

You have been a massive help and have put my mind at rest which is much appreciated!

Thanks again.

J

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 Taxes topics from a particular area:


Register for free!

Login to your account

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