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Hi All on Eye on Spain,
I am still living in the UK but want to live the dream like all of you when I retire in a couple of years. My wife and I would like to live in the Malaga region. I have been doing quite a lot of reserch online but there are a few things I can't seem to find information on so if possible could you answer the following questions for me or post some links for me to read, many thanks in advance and looking forward to joining you in the sun!
Here's the questions:
1. Financial
1.1 Do you have to open a spanish bank account, close your UK one and move all of your money to live in spain even if your property is purchased with cash?
1.2 Can you keep UK credit cards or must you cancel them and start again?
2. Driving
2.1 Do you need to take a spanish driving test after a period or can you continue driving indefinately on a UK driving license?
2.2 Do insurance companies in Spain recognise your UK built up no claims bonus?
3. Property
We intend to rent long term to start with while we find our ideal property.
3.1 Do you need to register as a citizen if renting to get equivalent medical to the UK?
3.2 Is it advisable to have private medical anyway?
Thanks guys, thats all for now.
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Oh one more question I forgot:
If you live in semi-rural location what do you do about post?
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Hi All on Eye on Spain,
I am still living in the UK but want to live the dream like all of you when I retire in a couple of years. My wife and I would like to live in the Malaga region. I have been doing quite a lot of reserch online but there are a few things I can't seem to find information on so if possible could you answer the following questions for me or post some links for me to read, many thanks in advance and looking forward to joining you in the sun!
Here's the questions:
1. Financial
1.1 Do you have to open a spanish bank account, close your UK one and move all of your money to live in spain even if your property is purchased with cash?.........Yes you should open a Spanish bank account,it's easy to do and will help you pay bills etc. No dont ever close your UK bank accounts, and definitely dont move every penny to Spain.
1.2 Can you keep UK credit cards or must you cancel them and start again?.......Yes you can keep all your cards, and dont cancel any UK credit cards, you can use them in Spain should you find the need.
2. Driving
2.1 Do you need to take a spanish driving test after a period or can you continue driving indefinately on a UK driving license?.....You will probably have to take a Spain driving test after a set amount of time, up to you as to how long you can get away with your UK license, suppose problems will start if you get stopped a few times and they find out you have been in Spain for X amount of time.
2.2 Do insurance companies in Spain recognise your UK built up no claims bonus?.....A quick phone call or visit will give you the correct answer to this one.
3. Property
We intend to rent long term to start with while we find our ideal property.
3.1 Do you need to register as a citizen if renting to get equivalent medical to the UK?....Would have thought so as the uk cards give only basic medical cover.....So I have been led to believe.
3.2 Is it advisable to have private medical anyway?.....Can you afford it? then it's best to.
Thanks guys, thats all for now.
I have only answered your questions as best I can and know for a fact, Surprised you haven't had a bit more help from some who are in the know on here.
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Financial-are you aware of the implications of the 183 day rule, regarding tax? After 183 days, regardless of whether you have registered on the foreign citizens register or not, you will be deemed to be tax resident for the whole year,Jan 1st-31st Dec, so any thing like sale of house, pension pot payout, inheritance, maturation of savings plan etc will have to be declared the following year on your tax declaration. Anything that is tax free in UK, eg ISA, lottery win, is taxable in Spain, even if you received it before moving to Spain, before July 2nd.Any income apart from government pensions is taxable in Spain, including UK savings interest.Research tax in Spain very thoroughly, including inheritance tax, which is very different to UK.Think very carefully if you will be due any payouts, lump sums, inheritances when living in Spain.You will also have to file an assets form for any assets outside Spain if they are more than 50,000€ in each of the categories,property, savings or investments. Minute details of everything are required.Still want to move to Spain?
Driving -I thought you could continue with your present driving licence until it expires,( also renewing it when photo expires) as long as you have the medicals which all Spanish drivers have.However, once you have registered as resident, it makes life much easier if you change to a Spanish licence-no need to take another test.
Health care-free to state pensioners. You may qualify for 2 free years, prior to this, though this is soon to be reviewed.If not eligible medical insurance is needed, but does not usually cover existing conditions. There are discussions about monthly contributions for state care, which would cover everything, but every region is different.
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Know many who are not fiscal residents in Spain but live here on a permanent basis however possible implications with inheritance tax if not so best to inquire of a Spanish tax advisor in your area. People paid via PM general HAVE always to pay tax in country of origin. Any endowments ,pensions, lottery wins best to make sure they are paid out before you arrive. Always keep a bank account in UK however not all banks will allow you to renew credit cards. Debit cards no problem but why have them when you can have Spanish ones instead. Having a Spanish bank account or signing on the foreigners register doesn't make you a fiscal resident. Receiving state pension ? Then wouldn't bother with private medical insurance as the medical care here is fantastic. 2nd to none. Driving licenses. If you have UK one with your photo then keep it until time for renewal. A simple eye and co-ordination test is all that is required to change to Spanish one. Some areas postman delivers to your door but more likely you will have either a centralised panel and buzon near to your house or rent one from the local correos. As UK car insurers will normally only permit you full comp for 30 days from leaving UK and thereafter 3rd party, if bringing your car over, ask them for a letter confirming your NCB for proof. A UK car is only permitted to be here 6 months before matriculation so if you do this ,and intend staying, DO NOT sign on the empadron ( necessary for renting a property or allocating a doctor), at town hall, until you do otherwise you will incur import duties. As with most of your queries suggest you take all advice given as a possible but speak with an English speaking Spanish gestor and local Brit residents beforehand as every area in every region here interprets the rules differently. Here's hoping your dreams come to fruition.
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It's a bit unfortunate if you receive an inheritance, or maturation of a long term savings plan while living here!
If you can afford it, keep your home in UK, spend 7 months there, 5 months here; you'll still have non resident taxes, but at least the taxman won't have his hands on the rest of your money?
Still keen to retire to Spain?
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Camposol Any income apart from government pensions is taxable in Spain,
Just to clarify that, it government pensions paid to former government employees, police, military etc, not State Retirement Pension, which is taxable only in Spain,
Income from rentals in UK is also taxable in UK but you may need to show the details on the Spanish Tax Return. All other worldwide income is taxable in Spain
Floella Know many who are not fiscal residents in Spain but live here on a permanent basis
What you mean is, some who are tax resident in Spain, on the 183 rule, pretend not to be tax resident. If they get caught ……
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They all know the rules elaineG. Dont suppose they will get caught unless someone " bubbles" them and as we have seen on an earlier thread most hope these folks will get found out but not through our interferences.
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Wow it's more complicated than I thought on the tax thing. I am intending to ensure that any lump sums will be paid before I move there so that shouldn't be an issue but I do have a good uk company final salary pension that will probably be liable for tax then in Spain like in uk. I will check with a tax lawyer I think. Thanks so much everyone for your help
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You are not obliged to become a tax resident until after 183 days and taxes have to be filed by June 30th for previous year. So gives you time to organise the best time to relocate. Providing you are paying your dues in UK , if as my my area , you need the ID number from your rates bill before your can become a fiscal resident ( took us 4 years) I would chill out and not worry. It is only the wealth tax that requires notification of your savings. But reiterate just take what you have read on this thread as a guideline. Once you have decided where in Spain you want to live THEN seek professional advice.
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Floella-if it took you 4 years to become tax resident, what happened about your taxes due in Spain during that time?
Not only wealth tax-the assets law requires notification of all your savings, plus property, investments etc if totalling more than 50,000 e in any category
007-phil-if your pension isn't a government one, yes you will have to declare in Spain, and no accountant can save you from that!
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Camposol, within months of taking residencia we met with an aesoria who did the fiscal paperwork but was unable to complete because we did not have the notification of value on our property from the town hall. To get this took 4 years during which time we continued to pay our dues in UK. Since then we pay tax here. No-one came knocking at our door because it was the Spanish system at fault not ours but I think the biggest problem for those who continue to stay under the radar is when the property is sold or inheritance is due. Some regions permit a free transfer between spouses and others give reductions dependant upon how long one has been in the system. Is the wealth tax back ? It wouldn't surprise me although it was supposedly abolished a few years ago. 007-Phil, One should always use an accountant who knows the tax rules of the region of your residence and only use forum info as a guideline because, as with everything in Spain, it is not black and white but many differentials. If you haven't been put off am sure , providing you find your piece of paradise here, you will have, like the majority, a happy retirement.
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When registering on the Spanish tax system, what has the value of your property got to do with anything?
What if, during those 4 years you had received a lump sum, inheritance, insurance payout, proceeds from selling a house,all which would have been taxable in Spain, but not in UK? Can Spain claim it back?
Yes wealth tax is back, but the threshold is 700,000 euros. It was never abolished, simply set at zero, so they could reinstate it without having to pass a new law-clever.
Free transfer between spouses??
Are you sure that assets can be passed to spouses without IHT in some regions? there are different regional allowances and concessions, bit I don't think a spouse can inherit wihtout liability to IHT, anywhere in Spain;I'm sure Maria de Castro can clarify this.
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Camposol understand that when personally building or renovating a property there is an allowance that can be off set against tax and believe now this is why he wanted our IBI bill which is based on the actual cost of building materials not on sale value. Certainly we were told to keep all bills relating to kitchen and bathrooms we had had installed. Unfortunately by the time we became fiscal residents these were out of date. As we didn't have extra cash " donated" by other means ...have no idea ....but assume as still tax resident in UK the Spainish authorities would have nothing to do with it expect through non resident or wealth tax and if your figure of €700000 is correct, they still wouldn't. Am sure I read somewhere that Andalusia had nil IHT between spouses but as I live in Murcia have never enquiried further. What I do know is that, in Spain, one rule doesn't fit all regions ,areas within the regions or personal situations so everything I hear or read I never take as Gospel unless expressly told by my aesoria,gestor or lawyer....all of whom are au fait with the area I live in.
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Am sure I read somewhere that Andalusia had nil IHT between spouses but as I live in Murcia have never enquiried further.
Wrong.
QUOTE http://www.expatica.com/es/finance_business/tax/A-guide-to-Spanish-inheritance-tax.html
In some regions like Comunidad Valenciana (Alicante, Valencia and Castellón provinces), the Balearics and Madrid, there is almost complete exemption for spouses and children.
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Proves my point. If you want to be sure of the facts ,as they relate to your personal circumstances ,speak with a professional.
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Surely you could still have registered on the system in order to pay income tax; the allowance to offset against tax could have been done later.It shouldn't have stopped you registering, and I don't think it would be accepted as an excuse. will the Hacienda chase you up for income received during those 4 years?
Unfortunately, you live in Murcia, as I do, where the regional allowance has been abolished except for Class 1, the under 21s. Now there is only the state allowance of just under 16,000 euros. The average IHT bill will be huge, and all those methods described to reduce it have serious flaws.
As for some gestors, accountants-we do have to trust someone but I have been let down by some with their conflicting advice.
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Proves my point. If you want to be sure of the facts ,as they relate to your personal circumstances ,speak with a professional in your area. Using general forums though to know what questions one should ask.
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If one comes to Spain and makes it one’s home, then as from then they are Tax resident. The 183 rule applies to those who do not make a concrete decision earlier, thus in that case they are tax resident on their worldwide assets (excluding Gov employee pensions and rental income) after 183 days.. They do not need to have any bits of paper to do so.
If one lives in Spain, as their main residence, or it's their centre of economic activity, their family home is in Spain, or are not tax resident elsewhere, they are obliged to make tax declarations in Spain. That they paid tax in UK, in error, is not an excuse.
This message was last edited by elaineG on 21/09/2013.
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It isn't an excuse Camposol, but FACT. Without the town hall data on the paperwork it couldn't be sent to tax office. Took 3 Spanish gestors and 4 years to get our paperwork become a fiscal resident. Now if there is something you know camposol that all the professionals we have used ..don't ..please tell.
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