Opting to be taxed in Spain as opposed to the UK

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olive
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Opting to be taxed in Spain as opposed to the UK

Postby olive » Sun Feb 18, 2007 12:26 am

I don't recall seeing this subject covered before on A.com

As I see it, once you have opted to have a Residencia card (because you live here more than 183 days in a year) then you need to be paying tax in Spain on any earned or unearned income derived from the UK as well as any income from Spain itself.

Having a look at the UK inland revenue web site, form p85 seems to cover the situation as far as stopping paying UK tax and getting a refund. How easy is the start process at this end?

Has anyone any practical tips or advice on making the transition or is this another grey area like cars? How much detail is required at this end of insignificant stuff (in my opinion) as interest from "dormant" building society accts with £1 to £100 in and so on?

olive

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hillybilly
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Re: Opting to be taxed in Spain as opposed to the UK

Postby hillybilly » Sun Feb 18, 2007 11:11 am

olive wrote:As I see it, once you have opted to have a Residencia card (because you live here more than 183 days in a year) then you need to be paying tax in Spain on any earned or unearned income derived from the UK as well as any income from Spain itself.
Olive, this topic has been covered many, MANY times before.
"Opting" to have a residencia card is nothing to do with your tax status. It's possible or required to be paying taxes in Spain before you ever apply for residencia - see LiLoLil's recent posts!
Generally speaking you have no choice as to where you pay your taxes. One exception is UK rental income (eg you still have a house in the UK, rented out) which must always be taxed in the UK.
To get yourself in the Spanish system you just have to go to your tax office (Hacienda) and register! It's all self-assessment here - you are responsible for buying (yes, buying!) your own relevant tax returns, declaring, submitting and paying!

ashtondav
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Postby ashtondav » Sun Feb 18, 2007 5:46 pm

You will still have to pay tax in the uk as well as long as you are domiciled there (and that usually means BORN there, not live there). You have to pay tax in both countries and net one off against the other under double taxation law. Being tax resident in Spain simply means you have to start paying tax in Spain - as well as in the UK.

You MAY be able to become domiciled in SPain. This would require you have no banking or savings accounts in UK, no property in UK, have no commercial connection to the uK, pay few visits and completely separate yourself from the UK.

El Cid
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Postby El Cid » Mon Feb 19, 2007 2:03 pm

ashtondav wrote:You will still have to pay tax in the uk as well as long as you are domiciled there (and that usually means BORN there, not live there). UK.
Domicile has very little to do with income tax. Residency, on the other hand, has everything to do with it.

Normally a non resident of the UK is not taxed on any UK derived income. The exceptions to this are Crown pensions and rental income.

If you are no longer tax resident in the UK then you pay tax only in Spain.

It is possible to have to pay tax in both countries but only if you are tax resident in the UK as well as tax resident in Spain. This can happen because the 183 day rule applies in Spain but in the UK you can be considered tax resident after only 90 days. Under these circumstances you would claim the UK tax against your Spanish tax under the DTA.

Domicile is an issue when it comes to paying UK Inheritance Tax where it is possible to pay IHT in both countries on the same assets. However the DTA does not apply to IHT so there can be some problems here.

Sid


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