ChiFRA

It is important to review your tax planning from time to time, to check that it is up to date with Spanish tax reforms over recent years as well as international developments that may affect you.  You also want to make sure you are using the opportunities available in Spain to reduce tax liabilities for yourself and your heirs. 

This article summarises the key taxes affecting residents of Andalucía and those owning property here.

Income tax

There were no changes to income tax rates at either state or regional level, so we pay tax at the same rates as last year.

The above rates only apply to general income (employment, pension, rental income, etc). 

The 2017 rates for savings income (interest, dividends, income derived from life assurance contracts, purchased annuity income and capital gains on the sale or transfer of assets) are:

Modelo 720 penalties under challenge but taxpayer obligations remain

There may be some relief ahead from the threat of Modelo 720 sanctions for taxpayers in Spain.

What has happened?

On 15^th February, the European Commission gave the Spanish government a two-month ultimatum to make Modelo 720 penalties fairer. While the Commission accepts that Spain has the right to require taxpayers to declare their overseas assets, it disagrees with the severity with which it punishes late or inaccurate submissions.

Sanctions under Modelo 720 law include, among others, a minimum €10,000 charge on incorrect declarations and an additional 150% penalty on unpaid capital gains. In some cases, taxpayers have faced large fines for just minor errors or omissions in completing the form. With penalties being so disproportionate to those imposed for other defaults (such as late submission of Spanish income and wealth tax returns), the Commission claims it is discriminatory and in conflict with EU freedoms.

The Commission has been arguing with Spain about the fairness of Modelo 720 for the last two years. As no agreement has yet been reached, they have taken this step to force a resolution.

Brexit has been all over the news again, with the British Prime Minister announcing her negotiating plans and MPs voting to trigger the process by the end of March. A 77-page White Paper released on 2 February has also spelled out the government’s intended approach.

But are we any closer to knowing how Brexit might affect expatriates or British property-owners in Europe?

While there is still much uncertainty, we are optimistic that Britons will continue to enjoy the benefits of owning property and living in Europe. Here is what we do know.

The Spanish tax office has announced new measures to crack down on tax fraud. Their tax inspections plan for 2017 revealed new IT tools and processes that will make it much easier to investigate the tax affairs of wealthy individuals.