Spanish Residency and Tax

Mrs_pbradley936

Also and I am not making this up home owning/residency does entitle you to use public services such as libraries. You get a card which you can use in all sorts of places like public tennis courts. Perhaps there is the legal definition and a common usage definition and I may be using one and Cook_County another but I am not deliberately misleading you or lying to you.

Mrs_pbradley936

Seven-day-weekend where have you been? It was you I was talking about in post 3.

seven-day-weekend

Hi, I've been around and on the boards! Glad you missed me!

I don't actually know anything about tax in Spain as I don't have to pay any (in Spain or the UK).

My husband pays tax on his Teacher's pension, but this has to be paid to the UK.

As regards the houses, as I say, we took advice from this will person and he drew up suitable wills for us I((I hope!).

So sorry, I'm not actually of much use on this one.

richt71

pbradley936 wrote:

In a nutshell Domicile is where you pay your taxes! I can only tell you about the USA because that is the only place I have first hand knowledge of. The terms resident and non resident mean different things to different organisations. For example we own a house in the USA but are domiciled in the UK, pay UK income tax, national insurance etc. but owning the house qualifies us for getting a residents rate for a fishing licences or a residents rate if we want to get into theme parks. A resident pays property tax and so can use the libraries, there is no health service in the USA but in other places residency may qualify you for that.

The way it was explained to me but I am not sure if it is a legal definition is whether you consider yourself to be “British” but live abroad or if you have become, in your case “Spanish”. Dual citizenship exists of course but the only people I know that have that is where someone has married a spouse from another country and/or let their children have dual nationality.

Generally most countries have a 183 day rule that means once you've spent 183 days in any year there then you are classed as domiciling in that country and will pay there taxes.

Cook_County

1. I understand that pbradley is a nonresident alien owning real property in the United States. As a consequence he is subject to have to pay property taxes, plus BOTH UK and US taxes on all gains on sales of any of these properties. I assume that previous disposals of US properties have all beeb declared on UK tax returns as well as US tax returns. All such properties are also subject to US (and UK) taxes on death. None of this information makes him domiciled within the United States.

I have public library cards from the city of Chicago and the New York City. I do not and never have paid real estate taxes in either place, because I have never bought real property in either.

2. Most countries have a 183 day rule that makes one RESIDENT (NOT DOMICILED) in that country.

3. Forced heirship is a system used by many countries (but not England & Wales). In jurisdictions such as France and Spain, property has to passed according to local law, which depending on the country's domestic laws, and in many cases this local law cannot be over-riden by a Will. I am not an expert on Spanish law. You will need your Wills however to take account of both UK IHT, Spanish taxes on death and forced heirship rules. Consequently you will want certainty that the lawyer you used understood both English (or Scottish if relevant) law and Spanish law.

Mrs_pbradley936

Well it's obviously very complicated unless you spend all day everyday with the legislation. I just trust to the experts I pay fees to and pay whatever they say I ought to be paying. BUT the older I get the less complicated I want things so I think for me that means selling up any properties and business interests I have abroad and being based in the UK apart from long breaks in rented accommodation. You do not think about IHT in your 20s and 30s because it is too far off, as you get older the intention is to spend the winters somewhere warmer and cheaper. That seems to work for a while until you think about the complications of if you or your partner were to pop off. Even when you pay an expert in all of this to sort it out you get another one with a different opinion that sets you off wondering if you should have arranged it all differently!

Mrs_pbradley936

If this link works here is what the Inland Revenue say about it:-

http://www.hmrc.gov.uk/cnr/residencedomicile.htm

Ian_W

seven-day-weekend wrote:

I don't actually know anything about tax in Spain as I don't have to pay any (in Spain or the UK).

Just a small point seven-day-weekend. Don't you pay the Spanish Wealth Tax, aka "Patrimonio" property tax? It's a national not a local tax, it's paid to the "Hacienda" annually based on a small % of the value of your property. When we had a property in the Canaries our last bill for it was 180€ for a 1 bedroom apartment.

alba37

Patrimonio is only paid by non-residents. Also you pay a much higher tax on selling a property if you are non-resident, therefore there are advantages of being resident. It is quite common to put "for services rendered" when willing your property in Spain, in otherwords saying you are leaving your property to xxxxx for their services for looking after you, avoiding inheritance tax.

Definately worth getting legal advice from a Spanish lawer!

If you have a Spanish will there should be no problem in your wishes being followed through, just as in the UK. It is different if there is no will. As we don't have a libro de familia (book of our children) it gets more complicted.

seven-day-weekend

alba37 wrote:

Patrimonio is only paid by non-residents. Also you pay a much higher tax on selling a property if you are non-resident, therefore there are advantages of being resident. It is quite common to put "for services rendered" when willing your property in Spain, in otherwords saying you are leaving your property to xxxxx for their services for looking after you, avoiding inheritance tax.

Definately worth getting legal advice from a Spanish lawer!

If you have a Spanish will there should be no problem in your wishes being followed through, just as in the UK. It is different if there is no will. As we don't have a libro de familia (book of our children) it gets more complicted.

We have paid any taxes asked of us. I don't know of ANY of our expat friends who pay this tax (all are Spanish resident).

Our wills were drawn up by a Scottish expat who has over 20 years experience of drawing up wills for UK (not just Scottish) expats in Spain, including those like us who have real estate in the UK and in Spain, so hopefully he knows what he is doing.