6 MONTHS GRACE PERIOD FOR SPANISH FISCAL RESIDENTS TO DECLARE THEIR FOREIGN PENSIONS IN SPAIN STARTS ON 1st JANUARY

It has now been published in the Official Spanish Gazette (BOE) on 28th November, Law 28/2014, that Spanish fiscal residents will be given a 6 months grace period to update their fiscal situation to declare pensions received from their own countries.

This act comes into force, effectively from 1st January 2015, and follows the new draft for Spanish Income Tax and Non Resident Tax Law, approved on 1st August 2014.

Spanish fiscal residents will have to upgrade their fiscal situation, declaring pensions received from their countries.

The Spanish Tax Office has announced to open a 6 months period starting January 2015, allowing them to regularize their situation according to new draft for Spanish Income Tax and Non Resident Tax Law, just approved last 1^st August.

Spanish fiscal Residents and Non Residents selling property are liable to pay capital gain tax.

The capital gain or loss on property sale is calculated by the difference between your selling price and your purchasing cost, as stated on your purchase deed.

The current Spanish Tax Law allows us to increase the purchase price, by adding up all the costs related to the purchase, such as solicitor fees, notary fees, land registry fees, alterations made to the property and taxes paid on purchase.

It is a normal practice to make building extensions on your property, or major building works, such as a swimming pool or a garage, where planning permission required, although it isn’t unusual to be made illegally without planning permission, which can result in them having to be demolished or the owner incurring huge fines.

The Income Tax Campaign for 2013 has just started last 1st of April, with only few days left to submit your returns.

This year 2014, we will be able to submit our returns from 23rd of April with deadline 30th June.

Spain’s Experts Committee on Tax Reform, formed by 8 registered accountants (Economists) and one lawyer, announced last 13^th March on their 400 pages report, substantial cuts to direct taxes and social contributions, which would be funded through a reduction in tax expenditures, and environmental and indirect tax hikes.

Spanish resident tax returns declaring income worldwide received in the 2013 calendar year will be submitted during May and June 2014. A Spanish Income Tax return will be always required to be submitted in your first year of tax residency, regardless how low is your income. Remember that for a tax purpose you are considered as a resident if you stay in our country more than 183 days within a year period.

Eviction is the removal of a tenant from rental property by the landlord. It is a well-known fact that one of the main risks involved in letting a property is the tenants default on paying the rent (rental arrears). Before a case of rental arrears is taken to Court, the property owner’s hands are tied.

There are no restrictions for foreign investors to buy property in Spain; however you will need to obtain an NIE (National Identity Number (see paragraph 3) and open a Spanish bank account (see paragraph 8). EU citizens have the right to move to any other EU country to live and work.  They will have to apply for a residencia if they intend to live in Spain for more than 6 moths. However, getting a residencia for a non EU citizen who decides to stay in the country on a permanent basis can be difficult.

What is payment in kind ?

Payment in kind, daci en pago, can be used in Spain as an alternative to canceling the mortgage when handing over the property to the bank. Sometimes paying back the banks in Spain can be very difficult, especially if you have lost your job or your income has been reduced.

We have taken this opportunity to write an extended article to help many non residents better understand the issue.

You will find below answers to most of the questions you have very likely asked yourselves.