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I have heard several people say that their annual declaratioin has considerably increased by as much as 30%! Someone commented that the exchange rate used is 1.23euro to the pound. If so, what a cheek! It's been approx 1.17 for some time. Haven't heard what ours will be yet, but it sounds ominous.
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The average rate for 2012 was 1.2332, so you will find this is the rate your gestoria is using. You can use actual exchange rates on the day of receipt, even if you don't convert your sterling on the day but if you use a gestoria, they normally use the average. Having said that, when I worked my average out, using the rates on receipt, it wsa more or less the same as the average. In terms of tax rates, the temporary ( for 2012,2013 and 2014) increases will apply. For taxable income upto €17,007 it's 24.75% ( up from 24%). The next €16,000 is at 30% (up from 28%), ad so on, upto an extra 7% if you earn over €300,000. In addition, savings income has gone up from 19% to 21%.
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I got a shock yesterday as well. My tax went up from 1100 euros to 1600 euros.This is over 10% of my annual income. The increase just about matches the rise in pension we had that year. This is most frustrating when i know so many people who are living over here but paying no tax at all.
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If you're going through hell keep on going, you might get out before the devil even knows you're there.
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I agree with Kathslad.
I have a friend who was complaining that 1.2353 euros to the pound was much higher than the actual exchange rate in 2012.
I did an historical search for the year and found that for 7 months the rate was in fact above 1.2353
(The table is pounds etc to the Euro, So to get euros to the pound 100 ÷ .8161 ÷ 100 = 1.2353
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My detailed records for 2012 show that over the year I obtained €1.220 to £1 for transfers actually made, and this was (more often than not) below the interbank rate on the date of payment, and also below the 5-day average rate. It seems somewhat unfair to use the (usually) higher EURIBOR/LIBOR rate for tax purposes but when have you known any government not to decide in its favour? In my case 1% uplift is not bad. It depends on the service provider and the date(s) used to deal, of course.
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this is our 3 rd year as a tax resident and it will be the first time we
will be paying tax because of the rate being so high.
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I got a shock yesterday as well. My tax went up from 1100 euros to 1600 euros.This is over 10% of my annual income. The increase just about matches the rise in pension we had that year. This is most frustrating when i know so many people who are living over here but paying no tax at all.
€1,600 on earnings of around €15,500 is about right.
The improved exchange rate would account for about 7% (about €242). The additional tax of 0.75% accounts for another €95, and if you got a rise of about €600, then this is the difference.
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The exchange rate used is the official rate for 31st December of the relevant tax year- nothing to do with averages.
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Thanks Kathyslad. Just seems a bit rough when you get a 6ooe rise in state pension and every penny goes in tax. Fortunately they cannot tax the sunshine.
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If you're going through hell keep on going, you might get out before the devil even knows you're there.
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Bilbo, The exchange rate used is the official rate for 31st December of the relevant tax year- nothing to do with averages.
I thought it was, in effect, the average exchange rate over the year in question, not the actual rate on 31st Dec each year.
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I was told it was the average rate for the tax year in question.I was also advised to declare what you get by monthly payments by converting pounds to euros at the rate it was on that day of the month,if you are having pensions paid into an English account,more paperwork but at least you pay the tax on what you earned that month.If it is true at least you cant really gripe at the Government setting the pound-euro rate
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I don't worry about the averaging out of the pound-euro rate over the year in order to pay tax.what bugs me is that I pay on average 1700 Euros more to the Spanish Government in tax per year than I would of done if I had remained in the U.K.
But the set up for paying tax in Spain is so different to the U.K.Personal allowances are about half in Spain compared to U.K,Spain gives allowances for the things Ex Pat wouldn't be able to claim,i.e Children at home,your Parents at home etc.So I gather the Spanish gain more than Ex_Pats
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I understand that IF you had children at home (as my daughter and her husband have) in Spain, then you would be able to claim the due allowance(s). Likewise for aged parents dependent upon you. There is NO differentiation between "locals" and "Guiris".
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Sorry marcbernard,
Yes you are correct,what I was meaning,was meant to read,that a large amount of U.K. Ex-Pats over here are of pensionable age or close to it,so they wouldn't have Parents or Children with them over here,of course some will and they can claim the same as Spanish tax payers,as is tax payers in ill health,and possibly tenants and mortgagees may be able to. .Sorry for the misunderstanding
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I ALSO THINK WHY EVERYONE IS PAYING MORE INCOME TAX OVER HERE IN SPAIN
IS BECAUSE IN ENGLAND THE PERSONEL ALLOWANCE GOES UP EVERY YEAR, BUT HERE
IN SPAIN IT IS THE SAME FIGURE THAT IT WAS IN 2010 WHEN WE CAME OVER HERE TO LIVE
PERMANENTLY.
WONDER WHY SPAIN DO NOT RAISE THE PERSONAL ALLOWANCE AT LEAST NOW AND AGAIN!!!
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Formentara,
Having been making tax returns in Spain for over 20 years, I am pretty certain that until the last couple of years, when cutbacks have been required to help combat the crisis, personal allowances did increase each year.
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The tax allowances were last revised in November 2006, with effect from 1st January 2007, so applied to the return in 2008. From memory the personal allowance went upto €5151 from €5050, although i think the earned income and joint allowances were improved. So they haven't changed in 6 years, which when you take inflation into account means they are now considerably lower. I would point out that there was no crisis in 2007, far from it. When the crisis did occur, then the rates were increased, together with IVA, which at the top rate is now 5% higher. For those on low income (below about €8500) there was a deduction of €400 in the last couple of years. This was on a scale basis upto about €12,000. It was supposed to be abolished this year, but it has been retained. Whether it will continue next year is anybodies guess.
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It is quite a long time to not increase the personal
allowances.
as most peoples pension goes up by a small amount
each year then unless the allowances are increased then
everyone is going to pay more and more tax as each year
goes by.
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The best way for them to get more tax in would be to catch all the people who are living over here full time but still paying taxes elswhere. I have got to know quite a lot of people over here in the last 5 years and I would say about 30% that should be paying tax are not doing so.
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If you're going through hell keep on going, you might get out before the devil even knows you're there.
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Acapulco, I hope you have told ‘all those people’ that if / when Hacienda discover they are evading their taxes here, then the fact that they are paying them elsewhere is no defence to being fined here and made to pay the back taxes plus interest.
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