Decaration of assets abroad- end of term 31st March

But under the Spanish asset relief scheme ‘’esquema de alivio de activos’’ you can claim back tax paid where the asset has reduced in value.

Agreed, but I guess that would be dealt with through the Renta declaration whereas the purpose of the modelo 720 is to find undeclared assets to tax, so for that losses would not be relevant.

You don't get taxed on assets. Only on the income derived from those assets such as bank interest, rental income etc. The value of the assets themselves are not taxed.

If "you don't get taxed on assets", to what does the Patrimonio tax apply? Anyway, I thought the point raised by  Kavanagh related to offsetting losses against income tax (Renta) which wouldn't seem to be relevant to the 720. But maybe I misunderstood.

The wealth tax, or patrimonio, does not only apply to foreign assets but it applies to all assets. The 720 is only a declaration of foreign held assets for Spanish residents whereas the patrimonio applies to non-residents as well.

You'd have to be in a different league to me to pay the weatlth tax as national law gives a €700,000 per person (€500,000 in Catalonia) allowance. In addition, you have a main home allowance of €300,000 per person giving a tax free allowance of €2,000,000 for a couple. 

Many regions (Valencia being one) gives a reduction on any tax over that rate of 100% so, in effect, there is no wealth or patrimonio tax in those regions. Even if you are in a region that does levy the patrimonio then the rate is 0.2% up to a maximum of 2.5% if you have over €10,700,000 in assets.

Are we really talking of being liable for this? (If so, I'm pretty sure you could afford a financial advisor rather than relying on social network sites).

O.K., first you said " you don't get taxed on assets".(20.16).

Now you say "The wealth tax, or patrimonio, does not only apply to foreign assets but it applies to all assets."(22.49). Which seems to contradict what you said before. 

You then suggest that if I have to declare Patriminio I can afford a financial advisor and I shouldn't be using this site. I would have thought anyone who had sufficient assets to need to make a 720 declaration could afford a financial advisor. But I expect you're right so I'll accept your suggestion.

Really? You can't see a difference between fifty thousand euro and a million euro?

And, no, you are misreading things. The 720 is a declaration of foreign assets and only made by residents. You don't declare assets in Spain on that particular form. 

I never mentioned the patrimonio, you brought that up and I'm failing to see your point. You appear to be mixing things up rather a lot.

The 720 has nothing whatsoever to do with the wealth tax and nothing to do with Spanish held assets. 

If you fall into the wealth tax bracket (Ojalla) then it is a totally different procedure.

Sometimes I just cannot understand what’s what with Spanish taxation system and rules. The more I read and research the more I become confused. I never really know who to believe.

I have been Spain resident for 10 years. I have a substantial investment with RBS in the UK for the past 10 years. Over that period it has grown in value quite a lot. I have never drawn a penny out of it. I have never declared this investment to the Spanish tax authorities. I am now told by a financial advisor who is mad keen to sell me a Spanish compliant bond that I owe tax on the growth value and fines for not paying the tax and not declaring it.

What’s the truth?.

Kavagnah, as i understand taxation internationally , on a personal basis, you are supposed to disclose these foreign investments so that you are not taxed in your country of residence and again a second time in the country your asset is invested in. This does make sense, and ultimately it also serves to help prevent fraud generally. The problem that seems to arise with expats in Spain is the reluctance to reveal the extent of their assets in the UK, for what reason i do not know. If you were still resident in the UK and owned a Spanish property and investments, wouldnt you declare them to get tax relief in the UK tax system?

Thank you robertt8696

What you say makes sense. I still need to know from anyone

1. Will I get fined by the Spanish tax authorities for not disclosing this asset/investment? And how much?
2. Do I owe tax on an investment that has grown in value (on paper) but never drawn a penny profit? As the FCA say investments can go up and down and in the UK I do not think you pay any tax until you actually make monetary gain by disposing of the asset, fully or partially (cashing some of it in).

The reluctance is simply a lack of trust of the Spanish authorities. Why? Read this thread again, or any of many others with a similar theme - such as one about reclaiming the 3% retention on property sold at a loss. The lack of trust is well founded. 

Kavanagh - if the asset in question was worth more than €50K when the 720 was first introduced, I'd say you could be in deep trouble if you didn't declare it, or if it's subsequently grown to be worth more than €50K and still not declared. As for tax due on any gain on paper (but not yet realised) - I'm no expert, but I don't believe that. If that was the case, we all would have been paying extra tax on our properties during the boom years as the value on paper increased year after year! 

Thanks Roberto

The sum is substantial.

I have tried my best to find the answers to the questions I am asking by contacting various international  financial advisor companies. All I get is fobbed off with vague answers and high pressure selling to buy anything that earns them commission.

Best I get is Spanish bond, Spanish bond, Spanish bond, when you having it, when you having it.

I agree with Roberto with regard to the declaration on a Modelo 720. You really need to seek professional advice about this, as, the tax office may have already received information about your RBS investment (pretty definite if RBS have you recorded as resident in Spain) under the exchange of information agreement. The fines for non declaration are heavy, although this is still subject to a case at the ECJ. Nevertheless the fines are cheaper if you declare before they raise it with you.

With regard to declaration in the growth in value, then this depends on what you mean. So, for example, says the investments are shares. If the value relates to the increase in the share price, then any gain or loss arises when the investment are sold, in which case they are declarable for capital gains or losses. So, unless you crystallise the gain or loss it’s just a theoretical value.

However, if your investment attracts regular payments or dividends, which are either credited to your account, or used to buy new shares, then these are declarable in the year of receipt. It doesn’t matter if you don’t withdraw the funds, the key issue is they are received by you in your account.

It really puzzles me why anybody would re locate to Spain from UK to become liable to report their worldwide assets to the Spanish Tax authorities for them to grab in the future often lifetime saving you have worked hard for, there are so many other countries you can go to, I was saved by my  financial advisor of investing 500000 euros  in Spanish property with a view to retiring there,  instead chose Panama who gave me tax exemption for 20 years on property taxes plus no world wide taxes on my income, all tax free, only my local income taxed , so please don’t rush into the Spanish dream.

I think the answer to that is that people still want to relocate to Spain despite the negatives (such as taxation & overseas asset reporting), or possibly because they simply don't find out about it until it's too late. Many people simply (wrongly) think Spain can't be that much different to "back home". Many also (wrongly) believe that if they do everything correctly, by the book, they'll be OK. There are hard lessons to be learned, and unfortunately most of us still learn the hard way.

Having said that, if I knew then what I know now...! The biggest problem with the 720 asset declaration (and in fact with many other simpler tax matters) is that if you ask 2 people (so-called experts, professional advisers, even the tax office included) you'll get three different answers. That, in my opinion, is the biggest issue with Spain, and what makes moving lock stock a bigger risk than most people realise.

Kavanagh - in your position, I think I'd seriously consider moving back home (at least on paper), and making myself non-resident for tax in Spain asap! Hope that's being too melodramatic though, and that everything works out OK for you.

''Kavanagh - in your position, I think I'd seriously consider moving back home (at least on paper), and making myself non-resident for tax in Spain asap! Hope that's being too melodramatic though, and that everything works out OK for you.''

Thank you Roberto that’s probably the best and only advice. So far I cannot get a straight and reliable answer from anyone worth trusting. The RBS investment 10 years ago was substantial, today it has grown to double the value. It’s just a straight forward growth fund based on the value of the shares you have, no income, no dividends. But it seems no one knows for sure if the growth value (never drawn) is taxable in Spain. As you say I could go to the tax office direct and get 3 different answers.

Then there are the potential fines, in this case over 200,000€ for not declaring something that may well not be even taxable. That seems a scam and it is thieving.

What a country we are living in, Wyatt Earp come back.
 

Just to be clear, there are two issues, non declaration assets of the Modelo 720, and (potential] non declaration of income or capital gains.  In terms of the 720 there is no doubt you should have declared, and this is the one that incurs the heavy fines. Non declaration of income/capital gains also incurs fines, but these are limited to 5%of the tax payable  for every quarter unpaid in the first year plus 5% for every year thereafter. There may also be additional fines depending on the amount. Where they are declarable depends upon the way your asset is managed.

In addition, if you return to the UK, you are still technically liable, assuming they discover your omission. In these circumstances I can tell you that they then enlist the services of HMRC to collect the debt on their behalf. There are also agreements with other countries.

Roberto.  

Would I be right in thinking that if one becomes non taxable as you suggest if they still have property that could be ceized / embargoed against the debt ?

Thank you johnzx

Perhaps if we could establish what the true liabilities are first before we get into the  ceased / embargoed department. Do you know if the investment is taxable or not? And what are the fines for non disclosure?.

John, yes, I would assume so - and as Kathyslad says, they could of course also pursue you via HMRC; I was basing my suggestion (not advice!) on the assumption that Hacienda don't already know about the asset in question. 

Kavanagh, I'm pretty certain, as it seems are others, that unless you have taken an income from your investment (such as interest or dividends) then no, no income tax is payable. But don't quote me on that! I think the main concern for you is that you didn't declare the basic asset in the first place when the 720 was introduced. I'm sorry, I really could not say what the potential fines etc. could be, and can't even advise on how to get a definitive answer either - in my experience, even large well known investment firms (with initials like BF) often don't know what they're talking about.