expats in spain warned to declare offshore

Added 1st January 2013

Advisers with expatriate clients who are tax-resident in Spain say they are urgently reaching out to their clients to warn them that they must begin reporting to the Spanish tax authorities about any overseas assets they hold worth more than 50,000, following a recent change in the country’s tax regime.

expats in spain warned to declare offshore

The new rules took effect yesterday, with Spanish residents with offshore holdings being expected to provide their first accounting of their non-Spanish assets between that date and 31 March 2013.

They were only published at the end of October, giving advisers and their expat clients little time to prepare, some advisers have said – particularly, they note, given the harsh penalties potentially facing those who fail to comply.

Under the new rules, failure to declare any amount worth more than €50,000 in any single asset class, or to report on any offshore entities which name the individual in question as a beneficiary, would result in a combination of a tax and fine that could not only empty out the offshore account completely, but could leave the individual owing the Spanish tax authority –  La Hacienda – even more.

For example, an expat living in Spain who was discovered to have €300,000 in an undeclared offshore account would see this nest egg taxed at the top rate of 52%. But the fine for having failed to declare this would be 150% of the 52%, meaning that he would not only lose all of his savings, but he would owe the tax authority an additional €90,000, according to Vince De Stefano, managing director of Totus, which specialises in looking after expats in Spain. 

In addition to the name and address of the financial institution holding their accounts, Spanish taxpayers with offshore accounts will be asked for all their relevant account numbers; the dates that their accounts were opened, closed or changed in any way; their account balances as of 31 Dec; and the average account balance in all the relevant accounts in the final quarter of the year.

Individuals are considered resident in Spain for tax purposes if they spend more than 183 days in Spain in one calendar year (or live on a boat within 12 nautical miles of Spanish land during that time); if Spain is “the centre of [their] economic activities”; and/or if their spouse and/or their dependant minor children live there, regardless of how many days the individual in question actually spends in the country.

The new rules come into force just a month after a tax amnesty ended. As reported, under that scheme, Spanish taxpayers with undeclared taxable assets were given the opportunity to declare them in return for having to pay no more than a flat 10% levy.

Visitor's Comments Add your comment

Add Your Comment

We won't publish your address

About Author

International Adviser is aimed at global intermediaries who advise their HNW clients on International fund, life and banking products and tax efficient solutions to their cross-border needs

Features

Why you should care about the German elections

Why you should care about the German elections...

You may be forgiven for not staying up late this Sunday to watch the final results of Germany’s parliamentary elections come in. While chancellor Merkel is sure to win, the scale of her victory is likely...

Analysis

Profiles

Directories

Canada Life International Limited
Canada Life International...

Canada Life International Canada Life House,...

Tweets

Events

IA Best Practice Adviser Awards Europe 2017
IA Best Practice Adviser Awards Europe 2017

Thursday 28 September
The Waldorf Hilton, London

IA Future Advisory Forum Europe 2017
IA Future Advisory Forum Europe 2017

Thursday 28 September
The Waldorf Hilton, London

IA Future Advisory Forum Cape Town 2017
IA Future Advisory Forum Cape Town 2017

Thursday 5 October
The Vineyard Hotel, Cape Town

IA Best Practice Adviser Awards South Africa 2017
IA Best Practice Adviser Awards South Africa 2017

Thursday 5 October
The Vineyard Hotel, Cape Town

Sponsored Content

Investment Strategy

OTHER STORIES FROM LAST WORD...