Capital Gains Tax on UK Property

As soon as you become a permanent resident in Spain, all your worldwide wealth is fully subject to Spanish taxes. On the other hand why wake up sleeping dogs?

Hi killjoy,

I may have misunderstood your post, but it appears that you're suggesting tax fraud as an alternative?

Kind regards, 

Kim

Thank you Killjoy on your prompt reply. Fully understood.

Hi Colin,

Sorry to answer a question with a question, but are you moving to Spain: 

-  as an EU citizen (with your Irish passport)?

-  To obtain the green "Certificado de Registro" (often mistakely referred to as "residency")?

-  And with your wife obtaining residency as a family member of an EU citizen?

Your responses could make a difference to the timing I would suggest for your move.

Kind regards,

Kim

Hi Kimmy11

Thanks for your reply

The answers to your questions are yes, yes and yes.

Colin

Hi Colin,

As an EU citizen who intends to move permanently to another EU member state, you have up to 90 days to register your presence in Spain.  To ensure that you're not deemed resident in Spain this year, I'd recommend that you move here no earlier than 4 October, so that the 90 days doesn't elapse during the current tax year (1 January to 31 December).  In theory, you don't become tax resident in Spain until you've lived here for a continuous 183 days, but if you receive your registration certificate (often called "residency") earlier than that point, the Spanish tax office may decide that is the point when you become fiscally resident here.  Your wife, as a UK citizen, also has to make her application for residency within 90 days of arriving in Spain, but as the spouse of an EU citizen, she is allowed to remain here while her application is processed, even if she exceeds the 90 days before receiving her residency certificate. 

Here's a link to information for Irish citizens moving to Spain:

https://www.dfa.ie/irish-embassy/spain/our-services/new-to-spain/residency-and-entry-requirements/ 

Here's a link to the application procedure for non-EU family members:

https://administracion.gob.es/pag_Home/en/Tu-espacio-europeo/derechos-obligaciones/ciudadanos/residencia/obtencion-residencia/inscribir-familiares-no-ue.html

and, for completeness, here's a link to the UK CGT rules:

https://www.gov.uk/capital-gains-tax

Unless you speak Spanish, I would suggest employing a gestor to assist you with your residency applications.  For this purpose, I would recommend Uma Sanz at Get Legal in Spain:

https://www.getlegalinspain.com/

If you prefer to use an "abogado" (lawyer), I would recommend:

https://www.pellicerheredia.com/

who are immigration specialists - their office closest to Torrevieja is based in Ciudad Quesada in Rojales.

I definitely would not recommend tax evasion in Spain - failing to declare, or even under-declaring, can result in severe penalties.  Despite what some may believe, Brexit has not negated the Dual Taxation Agreement between the two countries, and the Spanish and UK tax offices continue to share data across borders (my sister is a retired H.M. Inspector of Taxes).

Best wishes for your future plans.

Kind regards,

Kim

Killjoy and Kimmy - is it that your total worldly assets need to be declared (the authorities wish to know about them, but are not necessarily taxed) and that your income (only) is taxed...plus the usual Spanish tax based on the Spanish house cadastre plus a bit?

So (if that be true) and Colin doesn't move / buy before October here on Spain, then he will be taxed as a non-resident?

The following year will be different / full monte based on income(s) received.

Thanks for being great responders - great posts.

D&J

Hi D&J,

Subject to when Colin and his wife become legally registered/resident in Spain, they will need to make a Modelo 720 Declaration of Worldwide Assets (at the beginning of the Spanish tax year from between the start of January and end March) if they have assets in excess of €50k in one of 3 asset groups: bank accounts, property, investments/savings.  As you say, the assets themselves are not taxed, only the income derived from them, which must be declared on the Modelo 100 Income Tax return between April and end June.

By selling their UK property this year and not becoming resident in Spain until next year, any CGT liability will be due for payment in the UK, rather than Spain.

Regarding "the usual Spanish tax based on the Spanish house cadastre plus a bit?", I'm not sure whether you're referring to IBI (Council Tax), or the Modelo 210 non-resident tax, but unless Colin and his wife buy a property in Spain between October and December this year, neither of those taxes will be applicable.

I would recommend that anyone planning to move to Spain gets tax advice before doing so, to give themselves a chance to take any action that will mitigate their tax burden.  For example, one of the things we did when we bought a property in the UK, which we rent out, was to put it in my name only.  This enables me to take full advantage of the UK's Personal Tax Allowance and it also reduces my husband's tax burden - had we bought it in joint names, my husband's tax bill would have been even greater, as he also receives a Crown pension from the UK.  None of us will know all the details of another's financial situation, but a tax advisor will know the relevant questions to ask.

Kind regards, 

Kim

Always good value, thanks Kim.