Returning after 6 years in UK

I am quite content to pay a fair amount of tax to maintain public services on which we all depend. As for the list of tax-free nations, I think you will find that you would need to be at the very least a multi-millionaire to gain residency. Free movement does not apply.

Micky, it's not the tax, just think its unfair. My husband already pays tax on his UK earnings & doesn't even live permanently in Spain so why should we have to pay twice.

Regarding my previous post, I notice it didn't come into effect Until 2014 so think I don't owe anything.

Mrnkar. 

Your understanding that tax is paid twice, is wrong

The double taxation agreement 2013 replaced a similar agreement, no new tax.

The result of the DTA between U.K. and spain is that one knows where one is obliged to pay their tax and ensures that one only pays tax on an income once

if one is tax resident in spain only two ítems of income are taxed in U.K.  crown pensions and income from let  property located in U.K.  (Although those incomes are taken into consideration in spain which may mean one is taxed at a higher rate on income taxable in spain.). All other income worldwide is taxed in spain 

Totally confused now especially when John said this earlier.

Karen.  If one’s spouse lives in spain, from what you say on paper you do, then your husband is deemed to be tax resident in spain even if he hardly ever ever visits spain.  It would appear as you were resident in spain your husband would have been regarded as being tax resident spain. Under the double taxation agreement 2014, there is no choice where one pays their tax. As I said you / your husband may have difficult question to answer if Hacienda become interested.

Think I need to speak to CAB or similar in Spain, when I return. Thanks

This information may help from PWC, http://taxsummaries.pwc.com/ID/Spain-Individual-Residence

The bold paragraph seems to apply to you so it's likely during your 'residency' in Spain you were tax liable. However, if your husband is in a position to prove tax paid during those years the DTT should apply but he would need proof if you were ever asked to account for any liability.

Individuals are resident in Spain for tax purposes if they meet at least one of the following criteria:

• Spend more than 183 days in Spain during a calendar year. In determining the period of stay, temporary absences are included in the count, except when the tax residence in another country can be proven. Special anti-avoidance rules are established for tax havens. Temporary visits to Spain to comply with contractual obligations under cultural and humanitarian collaboration agreements with the Spanish authorities which are not remunerated are not included when calculating the 183-day residency period.
• Have Spain as their main base or centre of activities or economic interests. It is presumed, unless proven otherwise, that a taxpayer’s habitual place of residence is Spain when, on the basis of the foregoing criteria, the spouse (not legally separated) and underage dependent children permanently reside in Spain. Spanish PIT law contains specific anti-avoidance rules regarding this matter.

Persons who do not meet any of the foregoing criteria are not resident in Spain for tax purposes. In such cases, Spanish-source income and capital gains in Spain are subject to NRIT.

Under Spanish law, the concept of part-year resident does not exist. An individual is either resident or non-resident and is taxed as such for the entire tax year.

However, in certain situations, a person may be a resident for tax purposes in two different countries. This could be the case, for instance, of expatriates working in Spain who are resident in both Spain and their home country. A person who is resident in another country may qualify for relief or exemption of Spanish tax under DTTs between the home country and Spain.

In such situations, the relevant DTT should be consulted to determine the country where the person is resident (see Double tax treaties [DTTs] in the Foreign tax relief and tax treaties section for further information).

Most DTTs signed by Spain consider the following to be relevant when determining the place of residence:

• Permanent home.
• Personal and economic relations (centre of vital interests).
• Habitual dwelling.
• Nationality.

Follow your instinct: seek professional advice! 

The advice/information you are receiving here is of limited value imho, partly because none of us are tax experts, but mainly because it's very hard for us to really establish exactly what your circumstances are. You started by telling us you plan to return to live in Spain in December, but then said your husband "only comes every 3 weeks & then back to work in the UK", implying that you are already living back in Spain - which would suggest that you, and your husband, are already tax residents in Spain, whether you realise it or not. Whether you rent long term or own your home is irrelevant, as is where his income is earned. However, if you own a property in the UK (whether or not you live there permanently) you should be aware as others have pointed out that if you were, are, or will be, tax residents in Spain, you will need to declare this asset on the form 720, and possibly pay imputed income tax on it too. 

As for any outstanding tax liability for previous years when you may (or may not!) have been tax resident in Spain, again, I really suggest you seek professional advice.

** EDITED - inciting- Against forum rules **

I, nor my husband have not yet returned to Spain. My earlier post should had read that my husband will only be in Spain for 3 weeks, in fact not even that as he stays in our house in the UK for a couple of days either side of going to work offshore for 3 weeks, & will then return to Spain. The same applied when I lived here previously, 6 years ago.

We are going to come over now for a few weeks in November & seek advice regarding tax etc & as I said previously, i wasn't aware of the tax rules when i previously lived in Spain. By the way, angeleyes, if your comment was directed at me, I am not a new member & find your comment insulting. Karen

Don't be too concerned mrnkar there are some posters on here whose sole purpose seems to be attacking other people. I would just like to add I don't think you have a problem with the Hacienda. We have simply explained the written rules that are not always followed closely. 

Micky.

Of you maybe right and hacienda will not be concerned.  However as the poster owns a house in U.K. and if considered as tax resident in Spain was obliged to make not only tax returns, pay imputed tax on the U.K. property and declare it on 720, they just might be interested.

I am pretty sure you are aware that  not declaring an asset on the 720 carries a minimum fine of 10,000 euros,  ‘a nice little earner’ for hacienda 

extract from;-

https://www.blevinsfranks.com/news/article/Spain-Modelo-720-taxpayer-penalties-challenge

“Sanctions under Modelo 720 law include, among others, a minimum €10,000 charge on incorrect declarations and an additional 150% penalty on unpaid capital gains. In some cases, taxpayers have faced large fines for just minor errors or omissions in completing the form. With penalties being so disproportionate to those imposed for other defaults (such as late submission of Spanish income and wealth tax returns), the Commission claims it is discriminatory and in conflict with EU freedoms. “

Thank you. Karen

I have just been reading up on this imputed tax on my house in the UK. Am I right in thinking it's about money that could be gained from renting it out etc. Sorry but I'm not very bright & people on here seem more knowledgeable..

I also have a son who although is 28, still lives in the house. Does that matter?

Extract from:- http://www.spanishpropertyinsight.com/tax-and-pensions/property-taxes-for-non-residents/

You pay this version of income tax in Spain if the following conditions apply:

1) You do not reside in Spain,

2) You own property in Spain,

3) The property is exclusively for personal use and you do not rent it out,

4) You have no other source of taxable income in Spain.

Although you do not earn an income from the property, in the eyes of the Spanish tax authorities you still derive a benefit from owning a property in Spain and therefore have to pay an imputed income tax.

John, I think Karen is trying to find out if she will have to pay imputed income tax on her property in the UK, when and if she becomes tax resident in Spain. Since I believe you (or your good lady) own property outside Spain, I'll leave it to you to answer her query.

" I think Karen is trying to find out if she will have to pay imputed income tax on her property in the UK, when and if she becomes tax resident in Spain."

Robert,

I thought you answered that question very clearly, as you invariably do,   in your post at 17.37 on 23^rd.

John, I actually said she may "possibly" have to pay imputed income tax on her UK property, because I'm not 100% sure (since I don't own a property outside Spain), and thought you might like to add your thoughts since you are evidently better qualified on this point. I thought perhaps you had misunderstood, since your extract from SPI does not actually cover any of Karen's circumstances and seems therefore strangely irrelevant here.

Never mind.

Karen, since you kindly clarified your situation a little, I have had a couple more thoughts on the subject which I hope may be helpful - although I stand by my original suggestion that you seek professional advice, because things could become complicated.

Firstly: Although Hubby works in the UK, and if you factor in the few days he stops at the home in the UK, most likely spends less than 183 days in Spain per year, I believe this will be seen as irrelevant by the Spanish authorities, for the simple reason his wife's, and therefore by default his own main residence is in Spain.

On this basis, he will be deemed tax resident in Spain and will have to file tax returns and pay income tax in Spain, as well as declare all assets outside Spain worth more than €50k (the UK house presumably, and any other savings, shares etc.) on form 720. I honestly have no idea whether he would have to continue paying tax in the UK and claim it back via the double taxation treaty, or if he could apply for an exemption from HMRC and request that his employer pays him gross (no tax deducted). Perhaps he is self employed. As for social security, it probably gets even more complicated, and I really don't know enough about this to advise - you're getting into the realms of cross-border workers, which you can read more about here. You might need to consider things such as National Insurance contributions and future pension rights as well. And of course, a lot of this very much depends on the outcome of.....

Brexit.

You asked if you would qualify for residency if not in Spain when & if Brexit happens or if you would need to be already living back in Spain? Fairly obvious I think that you have to be living in Spain to qualify for residency. At the very least, you need an address!

If we crash out with no deal, all bets are off. Either way though, it may be that the only way you can obtain permanent residency rights in Spain is by claiming you have been living here all along - which you could probably get away with because (you say) you never cancelled your residency registration when you left. However: this could potentially open a can of worms, since you were almost certainly (in Spain's eyes) tax residents previously - and ever since as well! (I notice that you didn't actually say that your husband also had residency when you previously lived here, so forgive me if I've got any of this wrong)

Of course, you could do nothing, and live here "under the radar", as some would see it - which it seems like you were doing previously to a certain extent. Presumably though there was a reason you applied for residency status first time round? If, for example, you hope to be able to register for healthcare on the social security system, you would have to be registered as a resident. 

I could go on, but I fear I may be rambling a bit, and no doubt others will disagree with some things I've said, so I'll leave it at that, and wish you best of luck and hope that you can get some good sound professional advice when you come over in November.

Thank you for taking the time to try & help my situation. All my husband ever had was an NIE number & never a residency as you worked out, he never stayed for 6 months in any year here. Don't even remember how or why I got mine but think I got a letter at my rental accommodation. 

Regarding social security & N.I etc, neither of us have ever claimed any benefits & we both have enough paid N.I to entitle is to full state pension in about 5 years, as well as private pensions. At the moment I don't have any income, we live off my husband's wages& savings.

I never thought asking a simple question regarding residency would lead to me discovering all the tax laws here & how wrong I was in assuming that you only had to pay taxes in Spain if you owned or rented out a house & nobody told me any different, but somehow your expected to know these things lol.

I will certainly seek advice on what  my situation is & take it from there. Thank you

Mrnkar or Karen

It is your responsibility to educate yourself with all the tax laws of any country you inhabit. In Spain you can seek guidance from registered tax advisors and lawyers, but they will absolve themselves of any responsibility to any advice they give. Their advice will be chargeable. The Hacienda will not care the slightest who has advised you, it will all be down to you. Fines and punishment in Spain for tax mistakes can be severe.

I thought I had as if you read below, I believed I had followed the rules. I lived in Spain until 2013 & at that time I didn't earn or claim any money & solely relied on my husband's wages. He paid tax on his earnings in the UK & according to the rules you only have to pay tax in either  Spain or the UK so you see it is easy to maybe make a mistake.

Spanish tax treaties with the UK

In 2006 Spain signed a double tax treaty with the UK which means that you should not have to pay tax twice on the same income, and you should only pay tax in the UK or in Spain.

Foreign asset reporting law in Spain

Since March 2013, if you live in Spain and own assets in excess of €50,000 outside of Spain you are required by law to declare those assets (up to the 31st December of the previous year) to the Spanish government by the 31st March each year (from 2014 onwards).