New Asset Reporting Law for Spanish Residents

I just received this as an Email.   Posted just for info.         New Asset Reporting Law for Spanish Residents

Are you resident in Spain? Do you own any assets outside Spain worth over €50,000? If so you will need to declare them by 31st March next year under a new reporting requirement. Failure to do so would have very costly consequences. You also need to consider whether your assets are in the most tax-efficient vehicles, or you could be paying more tax than you need to. Blevins Franks specialises in providing integrated and detailed tax and wealth management advice to wealthy British expatriates in Spain. We have an in depth knowledge of Spanish taxation and law and would be happy to discuss what you need to do now, and the most tax efficient ways to hold your assets going forward. The new reporting obligation The new obligation to declare all assets you hold outside the country forms part of Spain's new anti-fraud law. It is an additional requirement on Spanish taxpayers. You remain obliged, as always, to also fully declare your annual worldwide income for income tax purposes, and your taxable worldwide assets for wealth tax purposes. It is designed primarily to ensure that people do not hide their assets; to increase penalties for tax fraud and to help the Spanish authorities increase and improve tax collection. It also eliminates the application of the statute of limitations regarding undeclared assets, so, instead of being able to go back just four years to review unpaid tax, there will now be no limit. You need to make the declaration on a new official form, to be released shortly. Reporting must be done by the end of the first trimester each year, so your first deadline is 31st March 2013. Who does it affect? Any Spanish resident who owns any of the assets listed below, or who is a beneficiary of a trust, as well as Spanish residents who are an authorised signatory of such an account, or where the assets are held by a fiduciary. What do you need to declare? If you own any of the following assets outside Spain, valued at €50,000 or more per asset class, you need to declare them. Accounts held with financial institutions All types of immovable property (real estate) and rights over such property Shares and securities   Life insurance policies Temporary or lifetime income generated from the lending of money, rights or other assets (including immovables) to foreign entities. If the total value of your assets in each class is less than €50,000, you are not obliged to report. For example, if you have four bank accounts worth €10,000 each, you do not have to report, but if you have one bank account with €55,000 deposited or six bank accounts worth €10,000 each, you do have to report. Once you have reported the assets the first time, you do not need to report them again each year provided the value of all your reportable assets has not increased by €20,000 or more. What values do you use? The value to be reported for accounts with financial institutions (bank accounts), shares, securities, life insurance policies and other assets is that at 31st December. In the case of bank accounts, you also need to report the average balance over the last three months of the year. For immovable property, the value is the cost of acquisition. You also need to provide information on the type of property, its location and date of acquisition. What happens if I do not report? If you fail to report any assets as required by the new law, penalties will be imposed if the omission is discovered. No-one should try to hide assets. Spanish residents are obliged to declare their worldwide income and assets. There is a high level of exchange of information between countries these days and the penalties are now very heavy. Legitimate tax planning is the only way to lower your tax liabilities. You would have to pay all of the following: Income tax at the income tax scale rates even if the income would normally be taxed under the savings income regime. The top rate of these is over 50% compared to 27% under the savings income regime. Plus late payment interest for the last four years. Plus penalties, which can be as high as 150% of the total tax due on the asset. Plus a fine of €5,000 per each piece of unreported data, with a minimum fine of €10,000. The undeclared income arising from the asset will be deemed to arise in the last tax year which is not statute barred – four years in most cases. This effectively abolishes the statute of limitations. When you submit your declaration form by 31st March, you need to be sure you have filled it in correctly and included all the overseas assets that you should have, with the right values. Any mistakes or omissions, even accidental, could prove very costly.

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The very fact that the Spanish government is asking people to declare their foreign assets says to me that they have absolutely no idea who has got what where.

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 Do not forget to report any Kugerrands you might have in a hole in the ground! 

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 Do not forget to report any Kugerrands you might have in a hole in the ground!

 

Unless that hole is in Spain maybe !!!!
 

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Why does it have to be declared by march 31st - the form isn't even ready yet. Why can't it be done on the normal tax return, payable by june 30th?

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I wish i had this problem to deal with

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Is it purely coincidence that these scare tactic notifications are always published by Accountants or financial advisers?

Are they really that desperate for business or just hoping that the punters will react and panic?

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Why does it have to be declared by march 31st - the form isn't even ready yet. Why can't it be done on the normal tax return, payable by june 30th?

Because that was what they decided when they passed the law :

 

Is it purely coincidence that these scare tactic notifications are always published by Accountants or financial advisers?

 

Not entirely, they are just passing on the news which applies to to many of us albeot that thye hope to gain from our business.  (I thank them for the info).   However, they did not pass the law, the Government did, so if you want to blame someone,  blame the government, nop the messenger !

 

This message was last edited by johnzx on 22/12/2012.

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Just a reminder, or for those who missed this post but need to know

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 So, what about all the people who live in Spain permanently, and have never registered on the Spanish tax system? wIll they be tracked down? or will they randomly select some law abiding soul who is a fiscal resident, trying his best to do things legally, and scrutinise their financial status?

So those who need to declare their assets will now have to pay their accountant twice a year to do a declaration;I think the Hacienda has to be careful it doesn't drive out the "Golden Goose!

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I agree with johnzx

if you are a legal fiscal resident as I am then you

will have been declaring any invesmetn income on

your tax returns as I have for the last 3 years since I

moved here permanently.

I was of the opinion that when a person lived here

permanently that they were legally obliged to be a fiscal

resident.

or amd I wrong !!!!!!!!!

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I too have been completing a tax return since I came to live here permanently three years ago. Once I have put together the value of my investments as at 31st December I intend to go and see my accountant early next year and see what information he has about completing a declaration. No doubt this will incur another fee!!  The penalties for none compliance however are very harsh it's not worth the risk, there are far too many computers "talking" to each other these days.

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Minor point, but  I think residency as in habitual abode, and fiscal residency are two different things and it is possible to be one without being the other necessarily, but that's a complex issue that probably won't affect the average member of this forum.

I understand Camposol's point and don't see it as negativity. This is rather like checking drivers of Spanish registered cars, because it's easy for the police to determine whether all their paperwork is correct, whilst blatantly ignoring foreign registered cars that are probably being driven illegally by permanent residents because it's not so easy for them to check their status. Similarly, years ago when I owned a bar I had regular police checks and inspections, which each time established that all my permits etc were in order, while right next door the bar with no licences of any description was constantly overlooked because it wasn't on their list!

If you are already registered on the tax system and submitting your annual declarations, you are an easy target for further investigation or fines for not adhering to some new hair-brained scheme to try and squeeze a bit more from the aforementioned Golden Goose.. If however you are ignoring your legal obligations and possibly avoiding tax that you should be paying, (quote: "breaking the law and not paying their share at the expense of the rest") you will no doubt be completely overlooked.

I imagine this is aimed at residents who own a property in another country that they haven't declared previously, rather than income producing assets such as bank deposits. Never mind that they probably derive no income from it, Hacienda will want to know so that they can tax you on imputed income.

So far I have not seen any official announcement about this (admittedly I haven't searched very hard) but I wonder how anyone who doesn't subscribe to newsletters from Blevins or similar are supposed to know about it? I know ignorance is no excuse, but even so....And out of interest, does it also apply to Spanish nationals who may have assets outside of Spain? Somehow I doubt it.

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"So far I have not seen any official announcement about this (admittedly I haven't searched very hard) but I wonder how anyone who doesn't subscribe to newsletters from Blevins or similar are supposed to know about it? I know ignorance is no excuse, but even so....And out of interest, does it also apply to Spanish nationals who may have assets outside of Spain? Somehow I doubt it."

It applies to Spanish tax residents, so includes Spanish nationals, who it is primarily aimed at, rather than expats. It follows an amnesty,where you could declare overseas assets, previously undeclared, with a nominal fine to bring you upto date ( again aimed at Spanish nationals), which only raised about 30% of the target.

In terms of announcements, it's been all over the English language Spanish newspapers where we live in the Costa Blanca, and on the local radio stations.

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So far I have not seen any official announcement about this

 

Its been fairly widely published, and when it actually becomes declarable, i.e. in 12013, no doubt we will hear even more about it.

 

And as Kathy says, it is not directed against non Spanish but everyone who is tax resident in Spain.

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Is it a million? Expect that to change when they discover how many foreigners own properties overseas worth a couple of hundred grand. Surely the real reason for wanting to know exactly what everyone has, is to see if there is some way of extracting more tax that they hadn't already thought of. 

By the way, I have nothing to hide. I just think this sounds like yet another bit of pointless legislation that will probably cost more in administration than it will raise in additional revenue.

 

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thankyou Roberto-you are spot on;I wonder why johnx thinks I am negative, when I am being realistic.

It has not only been written about by legal advisors-it was on the front page of the Costa Blanca News, a couple of weeks ago..

I doubt many will want to take this form on themselves, so it is yet another expense.

Yes, income from accounts is stated ont he tax return. but this is a completely neww thing-a declaration of assts, so a current account may not make any interest, but now it has to be mentioned., including bank account numbers, end of year value and average amount for the last three months of the year. It is very intrusive.

Johnx-I think you are wrong about  not many ex pats having in excess of 50,000 in assets in each category- many have properties in the UK, many have investments and savings accounts. The cash cow is being well and truly milked!

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