There are a few tax changes for foreigners living in Spain for 2015, and you need to understand how they affect you personal circumstances. Here is your guide to capital gains tax, succession tax and the new exit tax if you decide to leave Spain.
Are you liable to pay tax in Spain? Find out about the changes in Spanish taxation in 2015 and how it will affect your personal circumstances. […] Spanish tax for foreigners in 2015 (Part 1)
Capital Gains Tax
All capital gains are now taxed at the savings tax rates, even those arising on assets held for less than a year (previously taxed at the scale rates for general income).
If you own assets (property or shares) acquired before 31st December 1994, you need to be aware that the time apportioned capital gains tax relief on such assets has been removed from January 2015.
Instead each taxpayer will be entitled to a cumulative lifetime allowance of €400,000 to apply to the sales proceeds of pre-December 1994 assets. Therefore, if you sell assets which you bought before 1995 and are now worth over €400,000, you could have a much higher tax bill.
The Spanish Laws have changed for wealth assets held outside of Spain, by residence. If you live in Spain and hold assets outside then this information is very important for you. […] New tax reporting laws of wealth assets in Spain
Following the European Court of Justice ruling that Spanish succession tax was discriminatory, the Spanish tax authorities have now issued new regulations with significant changes to the way Spain’s autonomous community rules apply on inheritances and lifetime gifts.
From January 2015, if you are resident in Spain when you die, beneficiaries resident in an EU or EEA state can apply the local regional rules of the regional community you live in. If you receive an inheritance of Spanish assets from someone resident outside Spain, but in an EU/EEA state, you have the right to apply the regional rules of the autonomous community where the highest value of assets is located. If the assets are outside Spain you can apply the rules of your local community.
This is welcome news, since for many people the local regional rules tend to be more beneficial than the state ones.
British expatriates also need to consider UK inheritance tax.
For peace of mind about your tax residency status speak to an experienced advisory firm to British expatriates Blevins Franks […] Where are you tax resident – Spain or the UK?
Spanish Exit Tax
A new exit tax has been introduced from January 2015. It applies to taxpayers (residents of Spain for five of the last ten fiscal years) who lose their Spanish tax residence and hold shares or equity interests in any type of entity of mutual investment institution, whose market value exceeds €4,000,000 or €1,000,000 if the taxpayer holds a 25% interest in the entity. This applies to unrealised gains, so even if you do not sell the investments.
Payment may be deferred in certain cases, such as if the transfer is to a jurisdiction with which Spain exchanges tax information. If the individual moves to another EU/EEA country, the gain need only be declared if they sell the shares within 10 years or if they move out of the EU/EEA (European Economic Area).
If you hold shares or investments worth close to or more than the values above, contact Blevins Franks for advice on how to structure the capital so that your investments fall outside this exit tax regime, so you need not be concerned by it should you leave Spain.
As always, you need to make sure that you correctly declare all your assets on your income and wealth tax returns and Form 720. With the new automatic exchange of information, the tax authorities will be able to spot any discrepancies or omissions. Nonetheless, with specialist advice you can often reduce tax on your savings, investments, pensions and assets. Blevins Franks have decades of experience advising British expatriates and in-depth knowledge of Spanish taxation.
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 is advised to seek personalised advice.
For more information and personalised advice, contact Blevins Franks on +34 971 719 181.
To keep in touch with the latest developments in the offshore world, check out the latest news on Blevins Franks Tax & Wealth Management Specialists.
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Blevins Franks Mallorca specialises in giving advice for tax-driven, wealth management investments. […] Blevins Franks Tax & Wealth Management Specialists
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This article was written on the 16th of February, 2015.