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Spanish wealth tax

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Posted: Thu Jun 13, 2019 9:25pm
14 replies461 views7 members subscribed
foxy1960

Posts: 3

Location: Villamartin

Hello, I am new to the forum

My wife and I have just retired and are planning on selling up and relocating to Spain. My sister moved over a couple of years ago and enjoys it very much. We have visited twice and were very impressed with the lifestyle but have also heard some not so good things about the Spanish tax system .We want to do everything above board so when we have sold our house in the uk we will come to Spain with assets of approximately £1200000 and plan to purchase a villa for £150000. Is anyone able to advise what the wealth tax would be approximately on this figure as we intend to disclose all on tax return when due. Many thanks

Kimmy11

Kimmy11

Super helpful member

Thu Jun 13, 2019 10:16pm

Posts: 1354

1539 helpful posts

Posted: Thu Jun 13, 2019 10:16pm

Hi Foxy1960 and welcome!

Wealth Tax ("Patrimonio") is quite a low-rate tax on the capital assets held in Spain at 31 December each year.  When your wealth exceeds Eu 700,000 you'll be liable for Wealth Tax of 0.2–2.5% on net assets, although it's applied differently in each of the automous regions.

As your assets of £1.2m will exceed the Wealth Tax threshold, even after deducting £150k for buying your home in Spain, I would highly recommend you see a tax specialist before you make the move to Spain.  You can mitigate your tax liability in a number of ways; for example, ensuring that you do not become Spanish Residents in the same tax year (1 Jan to 31 Dec in Spain) as the year you sell your UK house (to avoid Capital Gains Tax liability, which is higher in Spain).  Irrespective of where you live in Europe, we all have to declare our worldwide assets, so you don't have to move everything to Spain and a tax specialist will be able to advise based on your specific circumstances and needs going forward.

Kind regards,

Kim

foxy1960

foxy1960

Original Poster

Thu Jun 13, 2019 11:39pm

Posts: 3

Location: Villamartin

Posted: Thu Jun 13, 2019 11:39pm

Hi Kim

Many thanks for your reply, I am so glad i put this question up as I would never had realized that selling my house in the uk would have tax implications in Spain if sold in the same year as We become residents. Do you know if Eu 700.000 the allowance per person or per married couple.

Many thanks

Terry

Kimmy11

Kimmy11

Super helpful member

Fri Jun 14, 2019 12:23am

Posts: 1354

1539 helpful posts

Posted: Fri Jun 14, 2019 12:23am

Hi Terry,

Wealth Tax allowance of Eu 700,000 is per person.

The Spanish tax system is more like the American system than the UK, and the raft of allowances are far more complex than the UK.  For example, as a married couple, you can opt to make individual or joint tax returns each year - last year, we submitted individual returns, but this year, our tax advisor calculated that we would pay less tax by submitting a joint return.

Investment returns in Spain aren't great, so after we'd bought our home in Spain, I returned to the UK to buy a property for rental.  We're early retirees and as my husband receives a military pension, I bought the property in my name only, as this was more tax efficient for our circumstances.  A tax professional may have advised you to bring all your assets to Spain, but if not, I would urge you to take specialist advice.

By the way, a friend of mine has just had a Spanish CGT bill of Eu 37,000 for a property she sold in the UK after becoming a Spanish resident - ouch!

Kind regards,

Kim

foxy1960

foxy1960

Original Poster

Fri Jun 14, 2019 9:52am

Posts: 3

Location: Villamartin

Posted: Fri Jun 14, 2019 9:52am

Thanks  Kim

Thanks for your information

I think your right I will go to see a Spanish tax adviser when I come over next time

Terry

NickB

Fri Jun 14, 2019 10:01am

Posts: 61

Location: Cabo Roig

46 helpful posts

Posted: Fri Jun 14, 2019 10:01am

Kimmy11 wrote on Thu Jun 13, 2019 10:16pm:

Hi Foxy1960 and welcome!

Wealth Tax ("Patrimonio") is quite a low-rate tax on the capital assets held in Spain at 31 December each year.  When your wealth exceeds Eu 700,000 you'll be liable for Wealth Tax of 0.2–2.5% on net assets, although it's applied differently in each of the automous regions.

As your assets of £1.2m will exceed the Wealth Tax threshold, even after deducting £150k for buying your home in Spain, I would highly recommend you see a tax specialist before you make the move to Spain.  You can mitigate your tax liability in a number of ways; for example, ensuring that you do not become Spanish Residents in the same tax year (1 Jan to 31 Dec in Spain) as the year you sell your UK house (to avoid Capital Gains Tax liability, which is higher in Spain).  Irrespective of where you live in Europe, we all have to declare our worldwide assets, so you don't have to move everything to Spain and a tax specialist will be able to advise based on your specific circumstances and needs going forward.

Kind regards,

Kim

Hi Kim,

Can you recommend a tax advisor/accountant? As the one we met with recently was useless and could have cost us thousands!

Many thanks.

Kelvin1960

Kelvin1960

Helpful member

Fri Jun 14, 2019 10:54am

Posts: 261

229 helpful posts

Posted: Fri Jun 14, 2019 10:54am

Additionally, income tax can be significantly higher in Spain.

For many people, the additional income tax (compared to the UK) is offset by lower council tax; but if you are fortunate enough to have a substantial pension (non-government), the overall tax-take can be much higher.

RayD

RayD

Super helpful member

Fri Jun 14, 2019 12:20pm

Posts: 2437

Location: Catral

1670 helpful posts

Posted: Fri Jun 14, 2019 12:20pm

Kelvin1960 wrote on Fri Jun 14, 2019 10:54am:

Additionally, income tax can be significantly higher in Spain.

For many people, the additional income tax (compared to the UK) is offset by lower council tax; but if you are fortunate enough to have a substantial pension (non-government), the overall tax-take can be much higher.

But the higher tax rate and lower allowances are a fact of life in Spain.

As a Spanish resident I have to pay tax according to the rules and certainly wouldn't go 'offshore' to avoid my dues here.

Kimmy11

Kimmy11

Super helpful member

Fri Jun 14, 2019 7:57pm

Posts: 1354

1539 helpful posts

Posted: Fri Jun 14, 2019 7:57pm

NickB wrote on Fri Jun 14, 2019 10:01am:

Hi Kim,

Can you recommend a tax advisor/accountant? As the one we met with recently was useless and could have cost us thousands!

Many thanks.

Hi Nick,

We already live permanently in Spain, so I use Abaco Advisers in Torrevieja to do our tax returns.  They're not the cheapest, charging an annual retainer of Eu 149, but Spanish tax regulations seem to change every year, so I wanted a company with the resources to keep on top of current law.  I also noted Jim Taylor's comment (who does his own tax submissions) that when he's checked the returns of friends, the most common mistake he's seen the so-called professionals make is that they don't use the correct exchange rate.  Jim posts a message each year, confirming the official exchange rate for tax purposes, and Abaco have always been spot on.  They also have an interesting and informative website:

http://www.abacoadvisers.com/

If, like Foxy1960, we hadn't moved yet and I needed advice on wealth management, I'd look at some of the international tax and wealth management companies, such as Abbey Wealth or Blevins Franks.

These companies all offer a free, initial consultation; to make the most of that, it's worth thinking about what you want to get out of it - even confirming that in an email beforehand - as we met with other "advisors" who were more concerned with the process than actually advising.

I'm sure there must be other members on here who could offer their own recommendations.

Kind regards,

Kim

Wire Fox Terrier

Tue Jun 18, 2019 2:55pm

Posts: 9

Location: Torrevieja

1 helpful posts

Posted: Tue Jun 18, 2019 2:55pm

Hi

I've been emailing Abaco since 7th June and have been unable as yet to get a reply.  Is there anyone in particular there who you find helpful?

From reading this thread, it seems that Spanish tax is payable if you sell a property the year you become a Spanish resident. 

Do you know if this applies to your main home in the UK?

Many thanks, Heather

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