Hi All,
I have owned a holiday property in the Canaries for 11 years. For that entire time I have chosen to remain fully non-resident in Spain. I obey the 90 day rule, pay non-residents income tax each year based solely on the cadastral value of my apartment as I never rent it out. Obviously I also pay my local council taxes.
For the last 11 years I have observed a cottage industry on this island of local “fixers” visiting the police station, Ayuntamiento etc to get fellow British home owners their residency documents. These people then use these documents to get cheap travel between the islands and the mainland and since Brexit they also use these documents to justify stays of longer than 90 days.
Whenever I question these people about where they pay their taxes they reply that because they spend less than 183 days in Spain each year then they are deemed “non-fiscal residents” so they continue to pay their taxes in the UK. When I quiz them on why they think such a thing as a “non-fiscal resident” exists they say “because it does” offering no proof otherwise.
Many of these people do not pay non-resident income tax in Spain (“why should I, I am a resident”) or indeed Spanish resident income tax (“I am a UK resident for tax purposes”) so they pay less Spanish tax than me (a non-resident) and they make no connection between getting generous travel discounts and the fact that they pay zero taxes to deserve these. At the same time they often produce a GHIC card when needing healthcare.
My position for the last 11 years is that these people are talking rubbish and that it is only a matter of time before somebody comes knocking. But nobody ever does….
In the meantime I am the patsy who is doing everything by what I deem to be the law. The inter island travel discounts aren’t that big a deal to me but apparently having the ability to ignore the 90 day rule (as long as they don’t breach the 183 day rule) would be a big deal to me if it could be achieved legally.
Are there any experts out there who can tell me that these people are chancing their arms and that one day a nice big fine might land on their doormats. Alternatively is there some ruse that everyone else has long since woken up to that little old idiot me has missed.
Very many thanks,
Des
Non Fiscal Residency ??
Re: Non Fiscal Residency ??
Ps. I can’t see how it would make any difference but all the people I am talking about tend to be over 65 whereas I am under 65. I doubt many of them do the S1 form thing to get Spanish healthcare preferring to use their U.K. GHIC’s instead.
Re: Non Fiscal Residency ??
Ps. I am not saying these “fixers” are doing this now that we are in the era of the non-lucrative visa but they were doing it for years prior to the final Brexit deadline so all these Brits I am talking about have continued to have their cake and eat it for a good few years and at least one couple over 20 years !!
Re: Non Fiscal Residency ??
I am one of those people, I spend less than 6 months a year in Spain , so pay income tax in UK. I do spend more than 90 days in any 180 so the residency remains useful. I don't think there is anything even slightly dodgy in that and neither does my spanish lawyer. I have the private health insurance I had to take out when I got residency. My ongoing medical care (trivial fortunately) is done in the UK and I have wondered whether I could get away with the health card and my travel insurance but decided to play ball. It wouldn't be funny for the bureaucracy to catch up with me while I was trussed up in ITU.
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Re: Non Fiscal Residency ??
Depending on when you originally got residency, it is possible to remain a tax resident in the UK by spending less than 183 days in Spain. If you now have a TIE issued under the Brexit Withdrawal Agreement, you can spend 5 years out of Spain and still retain your residency rights, meaning the 90/180 day rule does not apply. Tax residency is not linked to your residency rights, but just to your actual physical residency. When applying for residency, health coverage is needed either through a private health policy or the S1 form. However, until you have to renew your residency, that can lapse. If you are an S1 pensioner, you are entitled to UK NHS health care irrespective of where you live. The differences in income tax in both countries are not huge, especially for elderly people on low income.
Under the current visa rules, this approach is no longer possible. The normal NLV visa which is, post Brexit, about the only option for pensioners, requires that you must spend more than 183 days in Spain which means you are tax resident. When your visa comes up for its first renewal after a year, if you cannot prove you have paid tax in Spain, it will not be renewed. So, its no longer an increasing problem for these "residents", so best to not worry too much about it. Most of the realy fraudulent "residents" have gone back to the UK in their UK-registered, untaxed and uninsured cars!
Sid
Under the current visa rules, this approach is no longer possible. The normal NLV visa which is, post Brexit, about the only option for pensioners, requires that you must spend more than 183 days in Spain which means you are tax resident. When your visa comes up for its first renewal after a year, if you cannot prove you have paid tax in Spain, it will not be renewed. So, its no longer an increasing problem for these "residents", so best to not worry too much about it. Most of the realy fraudulent "residents" have gone back to the UK in their UK-registered, untaxed and uninsured cars!
Sid
Re: Non Fiscal Residency ??
Hi Danny,
Do you own a property in Spain ? If so do you fill out a Spanish income tax form for that property and if so which one ?
Thanks in advance,
Des
Do you own a property in Spain ? If so do you fill out a Spanish income tax form for that property and if so which one ?
Thanks in advance,
Des
Re: Non Fiscal Residency ??
I do, but I let my lawyer sort it out. 3 reasons. It's nice to have him on a bit of a retainer, I have been able to drop him an email for some simple planning issues, also residency (TIE runs out this year.
2ndly we are out in the campo with no postal service and no PO box arranged, so easier for him to deal with the powers that be.
3rdly he doesn't charge much!!
2ndly we are out in the campo with no postal service and no PO box arranged, so easier for him to deal with the powers that be.
3rdly he doesn't charge much!!
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