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Spain?s new asset reporting law, with the first deadline of 30th April this year, applies to anyone who is resident in Spain and who owns assets outside the country worth ?50,000 or more in each of the three listed categories.
As this is a completely new requirement, there are many questions about who needs to file a report, what assets to declare, what values to use, how to report jointly owned assets etc. It does not help that the law is unclear in certain areas and so open to interpretation.
Residency is an important starting point as to whether you need to file a report or not, and if so when. The new reporting obligation is only imposed on Spanish residents. If you own property here but are not resident, it does not apply to you. However, you need to be 100% sure that you do not fulfil any of the residency criteria.
Tax residency in Spain can be more complex than people realise. Many people believe they are not resident but actually are, and so should be paying tax. This issue becomes even more critical with the new reporting law, since the consequences for failing to report an asset are much higher than ever before ? you can lose more than the value of the asset.
To ensure you get it right, talk to specialist advisory firm Blevins Franks which are experts on both Spanish and UK residency issues and how the two interact.
If you own property and spend much time here each year, you need to know where you stand, tax wise, so you can establish the best way to move forward. With specialist advice you could structure your assets to be tax efficient in Spain.
Are you planning to become resident? If so, when, and how it will affect your obligation to report?
If you were resident in Spain in 2012, you need to file your report by 30th April this year (in future years it will be 31st March).
You need to report the value of your assets as at 31st December 2012. With bank accounts you also need to include the average balance over the last three months of 2012, and with property the acquisition value.
If you were not resident in Spain in 2012, but become resident this year, then you do not need to file a report this year. You will need to report assets as at 31st December 2013, so your first reporting deadline is 31st March 2014. This applies even if you move to Spain before 30th April this year.
If you left Spain before the end of 2012, your residence condition is still assessed during the tax year ending 31st December 2012 (as with wealth tax returns), and you should file a report if you met the residency criteria. Although the law did not come into effect until 2013, it states that the first year of reporting is for information corresponding to the tax year 2012.
Tax residency in Spain
You are resident for tax purposes ? and so liable for income, capital gains and wealth taxes on your worldwide assets and subject to Spanish succession tax rules (if you are the recipient of a gift or the beneficiary of an estate) – if any of the following apply to you.
1. You spend more than 183 days (not necessarily consecutive) here in one calendar year. Temporary absences are ignored unless you can prove you are/were habitually resident elsewhere for over 183 days.
2. Your ?centre of economic interests? is in Spain.
3. Your ?centre of vital interests? is in Spain ? i.e. your spouse and/or your dependent minor children live here. In this case you are presumed Spanish resident, unless proven otherwise, even if you spend under 183 days here per year.
There is no split year treatment in Spain. You are either resident or not resident for the whole tax year.
If you arrive, with the intention of staying indefinitely, during the first six months, you are likely to be regarded as resident in Spain for the full calendar year. If you moved directly from the UK you would also be regarded as UK resident up to your leaving date, so you need to look at the UK/Spain Tax Treaty rules.
If you move to Spain in the latter half of the year you will probably be regarded as non-Spanish resident that year. However this would depend on what previous visits you made to Spain that year, so seek advice.
The same principles apply if you leave Spain part way through a tax year.
The only way to be certain that you understand all the implications of the new asset reporting law, as well as the residency issues and how to legitimately structure your assets tax efficiently in Spain, is to take professional advice from an established tax and wealth management firm like Blevins Franks.
15th January 2013
The tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; an individual should take personalised advice.