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.
It is important to highlight:
- This applies to expats and property owners, who are considered Spanish Fiscal Residents because they spend more than 183 days in Spain in one calendar year, not necessarily counting them as consecutive days.
- You can also be presumed a Spanish resident for tax purposes if your centre of vital interests is in Spain. i.e. if your spouse lives in Spain and you’re not legally separated. This was introduced to prevent fraud by those who lived in Spain and had non-declared incomes under the 183 day residence criteria.
- Supplementary tax returns for the four previous years will need to be submitted including pensions, or just pension incomes which were wrongly declared.
- No surcharges, interest charges for late payment or penalties will be applied when updating your tax situation within this 6 month period.
- For those who have already updated their situation declaring their pensions they may be able to request the cancellation of default interest and claim back a refund of penalties and surcharges which have already been paid. You should contact your tax advisor.
- According to the Spanish Inland Revenue this grace period has been granted to make sure that Spanish pensioners and Spanish fiscal residents complete their annual income tax returns the right way, including pensions and other earnings from overseas. However, it is very likely that following this 6 month grace period the tax authorities will undertake subsequent inspection campaigns and those who have not updated their fiscal situation may face substantial tax bills.
For more information please feel free to contact Corral&Alcaraz Law Firm. Please seek expert advice as it is not worth the risk.