Spanish Taxman Warning ? Have You Submitted Your Tax Returns?

12.12.11

Please note that this article is over six months old. While Blevins Franks takes care to make sure that information is accurate on the date of publication, some content may change over time. You should not rely on the accuracy of legislation and tax information in this article; take professional advice for your circumstances.

Do you own property in Spain? If you are resident in Spain, have you submitted your Spanish tax return each year? If you are

Do you own property in Spain?

If you are resident in Spain, have you submitted your Spanish tax return each year?

If you are not resident, have you submitted your non-resident tax declaration each year?

Do you know that the tax authorities now have records of your property and are checking if you have filed tax returns?

If you have not submitted tax returns for recent years you need to contact Blevins Franks for advice and take action fast to avoid being investigated by the Spanish tax authorities and faced with potentially high penalties.

The Spanish tax authority, Agencia Tributaria (AEAT), has been writing to Spanish property owners warning them that it is aware that they have not submitted tax returns for the last few years. It has been suggested that around 300,000 letters have been sent out so far.

Here?s a translation of some of the letter:

?From the information we have available at the Tax Administration Agency (AEAT), we believe that for some of the tax years 2007, 2008 or 2009, you held a Spanish property, and we note that you have not filed a Non Resident Tax Return, an Income Tax Return, or a Wealth Tax Return (applicable only for 2007).

?If any of the above tax returns should have been filed, we notify you that, before we can proceed with an enquiry, which could entail penalty charges, you can regularise your tax affairs by filing the missing tax return or tax returns and paying the corresponding taxes due.?

The letter is basically a warning, giving the recipient a brief opportunity to rectify their affairs to avoid becoming the subject of a tax investigation and being charged penalties. If you have received a letter, or even if you haven?t received one yet but have not submitted tax returns for the years in question, you should seek advice from us immediately on how to rectify the situation.

The AEAT has linked up with the Land Registry system and has also been receiving information from electricity companies. It is therefore fully aware of who owns each property in Spain, and whether the property is lived in for most of the year. It obviously also knows who has been submitting annual tax declarations.

If you are resident in Spain you need to declare your worldwide income and gains each year by the end of June, even if the income is not remitted to Spain. For 2007 and now again for 2011 and 2012 you also need to declare your wealth for wealth tax purposes.

Non-resident property owners have to submit a non-resident tax declaration by the end of December. You need to pay tax at 24% on the notional rental income (normally 1% or 2% of the valor catastral) for periods when the property is not let out ? even if the property is just your holiday home. You also need to pay tax on any income arising in Spain (eg rental income), even if not paid into a Spanish bank account.

As part of its efforts to increase tax revenue the government has been intensifying its efforts to crack down on tax evasion over recent years, and we can only expect this to continue. If you are found to owe tax from past years, you will need to pay it fully plus interest and penalties. Penalty rates depend on the seriousness of the tax offence and can be as high as 150% in some cases.

If you have not submitted tax returns, whether because you were not aware that you had to or because you chose not to, you need to take action now to avoid the punitive consequences. Don?t bury your head in the sand – the Spanish tax authorities mean business.

Contact Blevins Franks now to establish whether you have any irregularities you need to rectify – you do not have much time to get your affairs in order and it could prove very costly if you don?t.

12th December 2011

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 must take personalised advice.

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; individuals should seek personalised advice.

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