On the 20th December Johnzx posted the contents of an email he had received outlining the rules of the new law requiring residents to report assets held overseas. Following various comments he then posted the following

Rental income on properties in the UK, is taxable only in UK.

This is not new, he has posted this statement a number of times in various other threads.

Having only recently joined I had not seen this comment before, so I simply posted that my understanding was different, and that although tax was payable in the UK, it was also payable in Spain, with an allowance for any UK tax paid.

Following this innocuous statement johnzx then posted some comments about me, that IMHO were not very nice. I replied with some factual information about the contents of the Double Taxation Agreement (DTA) between Spain and the UK, which in my view, made it clear that rental income earned in the UK, was not taxable "only in the UK".

Following some other comments by another poster the thread was then taken down for review the EOS team. It has now been reinstated, but locked, because some discussion about the new requirements have been discussed in another thread. Johnzx has commented on this other thread, but made no comment about the UK rental income.

I have therefore decided to put this in a separate thread, because, if my understanding is correct then the new law may have a potential impact on anyone who has UK rental income. Assuming that it is taxable in Spain, then whether there will be any additional liability will depend upon an individual personal circumstances. 

For example If you have UK rental income then tax is payable after expenses etc, and you also receive a UK tax allowance. So if your UK income including rental income is below the current allowance then you would pay no UK tax. The allowances in Spain are quite generous, tax is only payable on 50% of the net rental income. However, if you have other income which uses up your spanish allowance, and have paid no UK tax on your rental income, then, more than likely you will have to pay spanish tax on the UK rental income.

The second, and, in my opinion much more important point, is that generally, because of self assessment the Spanish tax authority, has no real information about the source of your income. However, if, as a result of the new law you have to declare a UK property, they will then be aware that you have an asset that is potentially income generating. So, if you have not been declaring any income, then potentially, they will now be aware of this, and can go back 4 years. 

So, we return to the key point, and hopefully you can see why I consider it to be an important issue that is not lost in the noise surrounding the original thread.

I have already alluded to the DTA, but probably the best source of clarification, is from the financial advisors most people would generally regard as a definitive source - Blevins Franks.

The following is an extract from their online brochure - Guide to Taxes in Spain, but it is also in the book The Blevins Franks Financial Guide to Living in Spain

 What about your rental income?

Many people retain UK property to ‘let’ out when they leave the UK. For some, this is their ‘pension’ fund and they have one or more buy-to-let properties; others are unable to sell their UK main home when they leave the UK, and so decide to let it out to provide an income.

This income remains taxable in the UK, and must be reported there each year on a UK tax return.

But this income is also taxable in Spain, and is added to your other income and taxed at the scale rates of tax, although the UK tax paid on this income can be offset against the Spanish tax on the same income to avoid double taxation.

As Johnzx has requested a personal message if anyone disagrees with him, , I did send him a message asking if he could post clarification of the differences in our understanding, but he declined, although we did exchange a few messages.  

http://www.advoco.es/advice/8-personal-tax/75-taxation-of-rental-properties-in-spain.html

Just to add to the confusion this website says if tax is paid in the country the property is in then it doesn't have to be declared in Spain.............I have no idea which is correct. If I were in this position and declaring it in the UK I wouldn't declare it in Spain.

 Actually,  there are two other articles on this site which say the opposite, which is a bit worrying. Blevins have been consistent with this information for a number of years. I have a copy of their book dated 2005, where it says something similar to their brochure. This is the book that you can buy, so I cannot believe that if the information was incorrect, they would still be quoting it after all this time. In addition, the potential consequences of including incorrect information  in a book that you charge for, would presumably lead to litigation. The problem is there a lot of conflicting information on the net, including forums like this one. I can point you to other forums, where the advice is very clear, that it is declarable, and people discuss it in an adult manner. 

The key point I'm making here,is that the new law changes the playing field, and if they have a record of your overseas property, then, if you do have to declare it and don't, then it seems to me they will be after you. So, if you make the decision not to declare, thats always your choice, but make it an informed choice.

 http://www.advoco.es/advice/8-personal-tax/92-double-tax-treaty-spain.html

 Income from property in Spain / UK

 Income from property i.e. rent gets a specific mention in the Double tax treaty.  Basically it is treated the same as other forms of income i.e. if you are resident in one country but rent out a property in the other then you will probably have to pay tax in both countries but can use the treaty to get relief in your country of residence.

 EG  You live in the UK and buy a holiday home in Spain.  If you rent it out the HMRC is certainly going to want you to declare the income (and do look out for holiday home renters who don't declare the rent).  But you are also liable to Spanish tax even as a non resident of Spain (see this article Taxation of Rental Properties in Spain).  You should declare in Spain using modelo 210 (we have a Form 210 tax return service for this purpose) and in the UK but in the UK you can deduct the tax paid in Spain.  You will only end up with an additional tax bill if the UK-calculated tax exceeds the tax paid in Spain.

 http://www.advoco.es/home/22-latest/39-do-you-need-to-submit-a-spanish-tax-return.html

 If you rent out a property in the UK but are now resident in Spain, the rental income is actually still declarable in the UK and you will have to carry on completing UK tax returns. You do get a UK tax allowance to use against your rental income there. Theoretically you should include the UK rental income again on your Spanish tax return and claim credit for any tax actually paid to the Revenue. The 50% deduction from rental income in Spain applies equally to overseas properties including those in the UK.

I did read your post, that was why I said    'in EACH edition' 

I have had  them going back to edition 1 and most have has a correction slip when I got them from Blevin's.

I have knownJohn McCann, a partner, for many years and  have never paid for the book (£6.99)  as many people don't.

Regarding the different categories of assets:

Financial institutions

property

shares// investments

Insurance policies

-which one  would bonds held with insurance companies or banks, fall into? I imagine it would be shares/investments, but some articles show different categories.

It's important to know as you only have to report if over 50,000e in each class.

Well in my case it will be,  if in doubt, report it.

 Just to be clear, there three classes of assets to report, not four

1. Accounts with Financial institutions

2. Shares, Securities, annuities etc

3. Property

These are the classes

Artículo 42 bis.  Obligación de informar acerca de cuentas en entidades financieras situadas en el extranjero.

Article 42a. Obligation to report on accounts in financial institutions located abroad.

Article 42b. Obligation  to provide information about securities, rights, insurance and revenues deposited, managed or obtained abroad

Artículo 54 bis. Obligación de información sobre bienes inmuebles y derechos sobre bienes inmuebles situados en el extranjero.

Let me just throw one in here as a random possibly pointless question.

I have a lot of websites.

If some of them came to market they would easily sell for over 50k euros each.

So do i report my 10 websites that maybe possibly could indpendently be valued to be worth over 50k euros each? (in theory)

Excuse my being blonde and I confess that I haven't read every reply on here in detail but if we move to Spain and still have a house in the Uk that my daughter will live in with her family, we have to declare the value of the property and pay tax on it?  Also if we were to charge a rent, I'm guessing we would have to declare that, although it wouldn't take us over our allowance?

~Grateful for any sensible replys!

As a non expert that shares an opinion anyway.

yes

In the same way usa taxes you on your worldwide assets so does spain.

So this would have to be on your tax return.

i think

but dont take that as real advice and hopefully someone else will weigh in

 As another non expert I would simply add, that as with any tax authority, it is the duty of the individual to report assets or income to the country where they are ordinarily resident and pay tax, wherever they arise NOT the responsibility of the tax authority to bill you.

What category are premium bonds then? Non taxable in the UK and is the 50K euros limit per person?

 Excuse my being blonde and I confess that I haven't read every reply on here in detail but if we move to Spain and still have a house in the Uk that my daughter will live in with her family, we have to declare the value of the property and pay tax on it? 

I think you would have to make a declaration by the end of the March following the year when you become fiscally resident (assuming the value is over €50,000). The new law doesn't introduce new taxes, and unless they continue with the wealth tax that was introduced as an emergency measure for 2011/2, then you currently wouldn't have to pay any tax on the property value. If they do continue the wealth tax, then it depends upon the value of your total assets - it was €700,000 per person.

Also if we were to charge a rent, I'm guessing we would have to declare that, although it wouldn't take us over our allowance?

If you charge your daughter rent, then you will have to declare and pay tax on the net rental in the UK. The amount of tax you will pay, will depend upon whether you are using your UK tax allowance in the UK on other income. Whether you will pay any additional tax in Spain will depend upon your personal circumstances in Spain. i.e whether you are also using your tax allowances in Spain. Tax allowances on rental income in Spain are quite generous, so it may be there is no additional tax to pay, but it does depend upon your circumstances.

There is currently a disagreement between me and Johnzx as to whether you have to then also declare the rental income in Spain. I contend you do, whereas he says it is only declarable in the UK. I am currently waiting for him to respond to a point I made earlier in this thread.

Just saw this on Round Town News:- 

http://www.roundtownnews.com/rtn-features/rtn-money/item/39774-reporting-of-assets-held-outside-spain-to-the-tax-authorities-continued.html

SINCE MY article last week I have been trying to get more info on the decree which stated that all individual assets with a value of over 50,000€ located abroad as at 31st December 2012 must now be declared to the Spanish tax authorities by March 2013. This includes all accounts with financial institutions, custodian accounts, real estate, assets held in companies aboard, shares, trusts, etc.

It has now been verified that the 50,000€ is the total for any one asset class,      So for instance if you have five bank accounts overseas and the total value between them all is €50,000 or over each account must be reported.

The same applies to all the asset classes.

If you have assets in joint names the assets must be reported if they are 50,000€ or over.