At the start of this year, new tax laws on assets and income came into force in Spain. Although primarily aimed at the Spanish population – expats who have become Spanish residents will also be affected.
Article written by The Overseas Guides Company
Why the new laws?
For many years Spain has had a problem with undeclared assets and income within the Spanish population. As a result of the recent economic crisis – the Spanish government have decided that the time is nigh to get serious on those evading their tax liabilities.
How will it affect me?
By April 30 2013, Spanish residents must declare all of the assets that they own outside of Spain as of December 31 2012 if they fall in to the following three categories and are worth more than €50,000:M
- Life insurance policies, shares, loans, annuity income
- Property or rights over property
- Cash and deposit accounts held in financial institutions such as banks or building societies
It is your duty to report them if you:
- Own them
- Have rights over them
- Are a beneficiary or an authorised signatory
- Have rights to sell or dispose of these assets, including trusts
After you have made this initial declaration of your assets, you will only need to report them again if they increase in value by €20,000.
This is when things can start to become a little more complicated as the value you declare should be the same as declared on your wealth tax returns.
- For financial holdings, it is now necessary to declare the average balance over the last quarter of the previous year (2012).
- With property, you must declare the date and cost of purchase, current value for wealth tax purposes plus sales revenue if the property was sold during the year.
This is so the tax authorities can calculate any gain on the sale of the property. In the current climate, only a few properties are likely to have been sold for more than the purchase cost.
You should be aware that the consequences of failing to comply are extremely severe with sizeable fines due to be handed out to evaders. Therefore, we highly recommend going through this with a Spanish lawyer or financial advisor to make sure that you are covered.
If you are looking for property for sale in Spain, the best place to start is the Spanish listings on Rightmove Overseas.
To understand the full step-by-step process to buying a property in Spain, collect The Overseas Guides Company’s ‘Spain Property Buying Guide’
The views and comments herein are those of the author and do not necessarily reflect the views or opinions of Rightmove Overseas, Rightmove Group Ltd or Rightmove Plc