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Taxes in Spain after BREXIT

By John Hayward - Topics: BREXIT, Living in Spain After BREXIT, Spain, Tax in Spain
This article is published on: 12th April 2021

12.04.21

The Times They Are a-Changin’ (Bob Dylan:1964)

With the first three months of the year having seemingly whizzed by, I feel that there is a more positive feeling (generally) compared to a few months ago. More and more people are (slowly) receiving a vaccination of one brand or another. At the same time, we feel disappointed and worried that this could be a short reprieve if people lose their patience. We have witnessed crowds acting as if there is nothing out there to worry about. We may well see wave after wave of Covid-19 as the months and years go by. The main thing is to control it and, hopefully, an annual vaccination will be the least of our concerns.

Away from Covid-19, over the coming days and weeks I will be sharing my experiences relating to the concerns of others and their taxes in Spain, France, the UK, and even the USA. This information will cover income tax, capital gains tax, wealth tax, and inheritance tax in Spain and their link with taxes in other countries. I will also explain how I have helped people solve the bank charges problem, how I was able to find pension funds that the person didn´t know they had, and how I have happy clients whose investments have produced increases at a time when a lot of people have believed that the investment world is in dire straits (Perhaps relying a little too much on certain news channels and newspapers).

brexit

Since Brexit, there have been quite a few changes in Spain and I am certain that there are more to come. This has been a pretty steep learning/development curve and, as so often happens in Spain, opinion is rife. Knowledge, however, seems to be in short supply. It is quite frightening how many different answers you can get for the same question. Over the last few months, I have been studying the Spanish Tax Office’s information, steering clear of blog sites. At the same time, I have had meetings with my economista on various tax matters. Familiarity of investments outside Spain is lacking by many lawyers and accountants in Spain. It is for people like me and my colleagues to educate and liaise with clients and also with the professionals themselves.

With most countries having a focus on higher taxes or lower allowances in order to pay for the welcome support provided over the last year or so, and the likely consequence of higher inflation, it has become even more important to have savings and investments in the most tax efficient structures.

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John Haywood Spectrum IFA Spain

Are you self employed in Spain – What expenses can you claim?

By Chris Burke - Topics: Self-employed in Spain, Spain
This article is published on: 26th March 2021

26.03.21

I find people are not always aware of what they can and can’t claim back as expenses in Spain, mainly as there is no easy to understand list explaining this to you. Try asking your accountant and even they might not give you exactly what you need to understand, so, I will try to explain as clearly as possible. The following is what you can claim for, in all times, as long as you have a receipt with your name on and the payment details, using a card/account in your name (adding your NIE/TIE to the receipt is even better, thus providing you with a VAT invoice, or factura simplificada as its known):

Lunch – inside Spain you can spend €26.67 (How did they get to that amount?) and outside Spain €48.08. For a work trip away, you have an allowance of €53.34 for food, and outside of Spain €91.35. This does not include accommodation, which seems to be not capped (I would be careful here obviously).

For freelancers who work from home, Spain’s tax authority specifies certain partial deductions, such as supply expenses (water, electricity, gas, telephone, internet). The deduction is 30% of the expenses in proportion to the square meters of area at home you use, so for example an office. Not many people are aware this also includes for any home you own, on the mortgage interest part of the payment. So, if the space you work from home is 15% of the surface area, you can deduct that proportion. However, you must register your home address as your centre of economic activity when registering as an autónomo. As an autónomo, if you also partially use a vehicle for business, 50% of expenditures on it are deductible for income tax and VAT.

Car hire/leasing is covered, and generally a better way to go than purchasing a car in many cases.

Other things included as deductibles are charity donations (a specific amount) and varied work expenses, so paper, mobile phones and the contract, printers and their costs, client entertaining, travel expenses outside of food/beverage and work events. Usually, a good accountant will send you anything they aren’t sure about before they declare your expenses, so you can confirm what they are and you can then see if they are covered.

The following are importantly NOT covered and cannot be claimed as an expense:

Dry Cleaning
Purchasing of a car (even if solely for work)

Social Security in Spain

If you are earning more than the annual Spanish minimum wage as a self-employed worker or as an autónomo, you will have to pay social security contributions. If you are eligible and don’t pay social security, you won’t get any benefits. These contributions entitle you to health care and, after you’ve paid into the scheme for 15 years, a state pension. You can pay more than the basic amount to get a higher pension or make additional contributions to be covered for accidents or sickness at work.

The current monthly cost to be an autonomo is €289, whilst for many people the first year starts at €60 per month. For months 13–18, you’re eligible for a 50% discount, and from months 18-24, a 30% reduction and after 24 months it reverts to the standard rate. There are also reductions up to 50% if you are on maternity leave. The amount will differ depending on your age (over 50 it is slightly more) and you will need to make these payments even if you don’t earn anything.

Do I need financial advice

Is it better to be self employed
or run a Spanish company?

Setting up a Spanish company costs initially around €2,000 and has a monthly running cost of around €400 per individual approximately. There are also annual reporting costs and declarations, and it costs a similar amount to close a Spanish company down as to open it, so make sure you have thought this through before proceeding. In essence, if you believe your annual income will be above €80,000 then it would be worth looking into this structure. It is a lot more complicated, expensive and administrative. It might be best to run your business for a few years as an autonomo, see where you are and then look into setting up a company. It is also time consuming to close a Spanish company down.

Spanish CGT on UK Principal Residences

By John Lansley - Topics: Captial Gains, Spain, Tax in Spain, UK property
This article is published on: 25th March 2021

25.03.21

New residents in Spain wanting to sell their home in the UK, face a small but perhaps very costly change due to Brexit. John Lansley explains.

Like the UK, Spain has a favourable tax regime concerning your home – your principal residence. Here, any gain arising on selling your home can escape tax as long as you use the sale proceeds to purchase a new main residence. If you sell a property for €500,000 and then reinvest €250,000 in a new home, releasing monies for other purposes or simply downsizing, then only half of the gain attracts this exemption and the other half faces a tax liability.

Those over the age of 65 who sell their home enjoy full exemption, whether or not the proceeds are used to buy a replacement.

One little-known feature is that the rules apply to a property anywhere in the EU or EEA, which has been your only or main residence. Therefore, if you move to Spain from another EU/EEA country, selling your old home and using the proceeds to buy a new one in Spain will enjoy exemption, as described above.

However, while this exemption previously applied to those moving to Spain from the UK, Brexit has meant that the UK is in neither the EU nor the EEA, and therefore the sale of your home in the UK, when you have become tax resident in Spain, will expose the full amount of the gain to Spanish Capital Gains Tax.

property investment Spain

So, even if you want to use the proceeds, in full or in part, to purchase a new home in Spain, doing so after your arrival will result in a potentially very large Spanish tax bill, which could reduce quite substantially the amount you have available.

What are the Capital Gains Tax rates in Spain?

  • Up to €6,000 19%
  • €6,001 – €50,000 21%
  • €50,001 – €200,000 23%
  • Over €200,000 26%

If, for example, you are selling a UK property for the equivalent of €500,000, which you bought for the equivalent of €200,000, doing so now you are resident in Spain would produce a tax bill of €70,880, whereas selling before the end of 2020 (and of course reinvesting the proceeds in a new home in Spain) would have meant a zero tax bill.

What is the answer?
The best course will probably be to sell your UK home before arriving in Spain, but check that it does indeed qualify for the full principal residence exemption in the UK first. Selling UK property is usually more predictable than property in other countries, but it shows very clearly that timing can be extremely important. Any delay in exchanging contracts (the operative date) until after you arrive in Spain could prove very expensive.

The desire to tie together the sale of one home with the purchase of a replacement is something we’re used to doing in the UK, but in this case it would appear more sensible to sell your UK property, rent temporarily in either the UK or Spain, and only then purchase your new home in Spain.

moving-to-spain

Residence in Spain
Since Brexit, moving to Spain has become much more difficult. Working here, or coming here to retire, necessitates much more than it used to, and Spain’s Golden and Non-Lucrative Visa schemes will have to be utilised. The Golden Visa requires the purchase of property valued at more than €500,000, so any unexpected Spanish Capital Gains Tax bills might threaten your ability to do this.

Similarly, the Non-Lucrative Visa requires you to demonstrate your ability to support yourself. If your capital is severely depleted due to an unwanted tax bill, that might prove more difficult.

As always, it pays to seek professional advice, and we will be happy to help you make sense of these rules and apply them to your own circumstances.

Spain’s Golden and Non-Lucrative Visas

By John Lansley - Topics: Golden Visa Spain, Spain
This article is published on: 17th March 2021

17.03.21

Prior to Brexit, British residents had the freedom to live, work and travel anywhere in the EU, subject to local requirements, but those wishing to move to an EU country since 31.12.20 face a number of hurdles. Fortunately, there are two schemes that make a move to Spain much easier than would otherwise be the case, which is good news for those who have held long-cherished hopes of a retirement in sunnier climes!

Both schemes have similar basic requirements:

• You must not be a citizen of an EU or EEA state, or of Switzerland, and must be over 18 years of age
• You cannot have a criminal record (past 5 years)
• You must have health insurance, either via a state scheme or from a Spanish insurer
• You must not have entered or stayed in Spain illegally

Spain’s Golden Visa

Golden Visa
Coming from the UK, you will of course not be a citizen of an EU state, but you would need to comply with the other points above and certain others, depending on your situation. The most important aspect is that you must purchase a property in Spain for at least €500,000, without using a mortgage or other loan, and that you can demonstrate you can support yourselves financially. No specific amounts are quoted, but clearly you must be able to prove that the cost of running a property of this value plus general living expenses can be met, the figures mentioned below being a useful guideline.

There are alternatives – rather than investing €500,000 in property, investments of €1million in a Spanish bank deposit or in a Spanish company, or €2million in Spanish bonds, will also qualify you for a Golden Visa.

What are the benefits?
1. The Visa will apply to the main applicant and his/her spouse, plus minor children. Adult children or dependent parents can accompany them, but full details will need to be provided.
2. It allows the holder to work in Spain, subject to meeting local requirements.
3. The Visa holder does not need to reside in Spain or spend a certain amount of time here in order to renew it.
4. The Visa provides a residency permit for one year initially, and can then be renewed for a further two years and then 5 years. After 5 years, you can apply for permanent residency and, after 10 years, Spanish citizenship (if you have actually resided in Spain during that time).
5. The Visa allows travel within the Schengen area for 90 days out of any 180 (the same as the current restrictions for those resident in Spain).
6. The property can be sold once permanent residency is obtained.

spanish tax

Non-Lucrative Visa
Again, if you are coming to Spain from the UK, or any other non-EU country, you will satisfy the first general requirement above, but you will also need to meet the other requirements. However, the non-lucrative visa is aimed at those who do not need to work and as such will appeal specifically to those who are retired but who have sufficient income, because you are not allowed to work. It’s also known as a retirement visa for this reason, but it is also possible to undertake work as long as it is for clients based outside Spain.

In addition to the above qualifications, it is necessary to demonstrate income of at least €2,151.36 pm for the main applicant and an additional €537.84 pm for each additional family member. This can be in the form of pensions or investment income, but if in the form of dividends from a company it may be necessary to provide confirmation that no work is performed for the company concerned.

The visa needs to be applied for at the Spanish Consulate in the country of residence of the applicant, and only when the visa is granted can the applicant move to Spain.

What are the benefits?
1. As above, the visa can be applied for the main applicant and spouse, plus minor children and dependent children over the age of 18.
2. The visa provides an initial one year residence permit, followed by the ability to renew for a further 2 years, then another 2 years, and after that for a further 5 years. After 5 years, permanent residency can be applied for.
3. The ability to travel within the Schengen area, as above.
4. Even though you are unable to work in Spain, you are permitted to work remotely with clients located outside Spain.

Other Issues
Remember that being able to live in Spain, and spending most of the year there, will mean you will be fully exposed to Spanish taxes. Also, coming from a non-EU country will almost certainly mean your investments and perhaps some sources of income may no longer be suitable. For these reasons, it is essential to take professional advice well in advance of a move to Spain in order that any rearrangements can be considered.

I’m moving to Spain – When should I take financial advice?

By David Hattersley - Topics: Moving to Spain, Spain, tax advice, Tax Efficient Savings, Tax in Spain
This article is published on: 17th March 2021

17.03.21

Brexit removed the previous rules pertaining to “Freedom of movement, goods and services within the EU”. Those who now wish to move to Spain from the UK, making it their home as retirees or working here, newer and tougher rules apply.

Distance working has added a new dynamic, in particular for those in the technology sector who see that this is as an opportunity to work and live in a nicer environment. Speaking to a qualified financial adviser who is regulated here,in Spain is sometimes an afterthought . However, talking to an adviser before you embark on the journey can help avoid some of the issues which expatriates can find themselves encountering. Financial planning is complex, whichever new country one moves to, so a brief summary can help prepare for the future “devil in the detail” elements. Forewarned is forearmed and helps avoid basic pitfalls.

It makes sense to “disinvest” all UK held assets prior to becoming Spanish Tax resident. Timing and deferral is the key to planning a strategy. Note that due to Brexit, UK advisers are no longer allowed to offer continuity of advice Spain for those that become tax resident in Spain.

There are a number of rules regarding Spanish tax residence, which are briefly detailed below. You will be deemed tax resident in Spain in any one of the following cases:

1. Number days in Spain not to exceed 183 days and may include time spent in any EU member country,
2. Centre of Economic interest i.e. source of earnings is in Spain,
3. Spouse and minor children living in Spain.

moving-to-spain

With regards to your assets, without going into too much detail, the following will apply.

UK property: Disposal once tax resident will be subject to Spanish capital gains tax, even if it was one’s primary UK residence. If retained it will be subject to reporting on Modello 720, a record listing overseas assets. A 20% increase in value will mean a new Modello 720 report. Income derived from letting the property will be subject to Spanish “investment” tax.

UK Pensions: A Pension Comencement Lump Sum is tax free in the UK, it is liable to tax in Spain. So if nearing 55 wait till you take it and then become Spanish Tax resident.

ISAs: An ISA offers tax free growth or income in the UK. They are not tax free in Spain, but there is a Spanish equivalent.

Unit Trust, Shares, Investment & Insurance Bonds, NSI bonds etc: There are some tax breaks in UK but none in Spain.

Inheritance Tax: The UK rules apply to the residual estate whereas Spain applies it to the beneficiary. There is a strong possibility of being taxed twice as estate rules & beneficiary rules are not covered by double taxation agreements.Based on “domicile” there is a different law for bequests & inheritance in Spain. Also, unlike the UK, it has a the variety of laws for each autonomous area,affecting in particular the potential impact of Spanish succession tax. It makes sense to deal with a regulated adviser who is based in or near to an autonomous area you will be living in e.g. Madrid ,Andalucia, Murcia, Valencia.

Having a “ partner “ relationship as opposed to being married, brings its financial own risks in Spain, and arrangements must be considered.

Are you moving to Spain?

Spanish Property: Some people come to Spain with plans of using their new Spanish property to retire to now or eventually. If it is the latter, the property maybe used to produce rental income either via summer rentals or long term rentals, but in this case there will be tax considerations.

Investing an hour of two of your time before you make the move to Spain can provide peace of mind and financial comfort when planning your new adventure. I can provide “Your guide to tax in Spain” that goes into greater detail. Whether you want to send the guide or speak to me directly, please call or email me on the contacts below & I will be glad to help you. We do not charge for reviews, reports or recommendations we provide.

A Spanish regulated adviser can ensure you are financially prepared for your move, in terms of any investments, savings and taxes which can become due on both income and windfalls you may be expecting after your move.

Please note, we are not accountants or lawyers, but we do work hand in hand with these professionals, and can be the “first port of call”.

Cryptocurrency Taxes in Spain

By Chris Burke - Topics: Cryptocurrency, Spain, Tax in Spain
This article is published on: 10th March 2021

10.03.21

As new investment types become more popular, people generally get in touch with me about them. That is certainly the case with cryptocurrencies such as Bitcoin, and that now large investment firms are starting to invest (Blackrock for example), more people feel comfortable in also investing, or researching whether they should.

Many years ago, due to the technology (or lack of) available, it usually took some time, even a decade or so, for new companies and investments to become well known, sustainable or very successful. Now, with the exponential growth of technology, automation and social media, companies can go from almost zero to mega over a period of months or years. As you may have seen recently in the news with the commodity silver and the company GameStop, technology has become so powerful that groups of people communicating on social media can even ‘manipulate’ investment prices themselves, whether this be a good or bad thing. However, this also creates careful considerations when contemplating investing in these hyped assets.

Cryptocurrency Taxes in Spain

You need to be very aware that these relatively young and very popular assets show an incredible amount of volatility, and therefore risk. This in itself is not a problem, just as long as you understand it. Investing in anything like this, and I would put cryptocurrency and Tesla or the like into that bracket, as fantastically as they can go up, they can also come down. So the golden rule to consider is, do not invest any monies you are not prepared to lose. Imagine you are walking in to a casino and have a figure in mind that you are going to gamble with; after it is gone you are prepared to walk away without it. That amount can be whatever you like, but you have to understand you can make an amazing profit if things go your way, or, you could lose almost all of it. As long as you are aware and accept this, then you are comfortable to invest in it.

I meet more and more people who have invested in these areas and then require help in taking their sometimes life changing gain to having it managed at a much lower risk level, consolidating and securing that gain. They have made their money, there is no need to keep the risk level that high, cash some if not all ‘out’ and use your ‘winnings’ to permanently change your life. For example, if you went to the casino and won a life changing amount of money, say €250,000, would you return the following week and carrying on gambling it? At what point would you ‘cash in your chips’ and take the reward? The probability still stays at 50/50 each day whether you win or lose, so, until you have ‘cashed in’ your chips, your high-risk level is still there. By de-risking, you are guaranteeing some of that gain and reducing your exposure.

tax in spain

What about taxes on cryptocurrency?
In October last year, the Spanish government brought in greater controls for this kind of investment. In real terms, this means if you buy, sell, transfer, exchange or use to buy something with it they want to know. However, there is only a taxable event when you dispose of this type of investment.

In terms of the tax to pay, this would come under savings tax in Spain (or capital gains tax as it is also known). These rates are currently:

From 0 to €6000 you pay 19% in tax
From €6001 to €50000 you pay 21% in tax
From €50001 to €200,000 you pay 23% in tax
From €200,001 +  you pay 26% in tax

This is only on the gain/profit you have made, not the amount you sell.

Key considerations to take into account
Cryptocurrency is also applicable under wealth tax in Spain, should the region you are tax resident in be applicable to this.

If your cryptocurrency investment should incur a loss, these can be offset against any gains you have over the next 4 years, so that is something important to bear in mind.

Buying using cryptocurrency
If you sell cryptocurrency and buy another investment type having made a profit, then this would be taxed as a gain at the above rates. If you use Bitcoin to make purchases for products or services, then 21% IVA (VAT) tax would also be applicable.

If you do not make the relevant declarations or pay the necessary taxes, large penalties and fines will apply, so you must make sure you not only do this, but perform it correctly.

If you would like help in looking into investing in Bitcoin or other cryptocurrencies, would like help declaring these correctly, or would like to take your already gained profit as tax efficiently as possible and have it managed professionally, don’t hesitate to get in touch.

Fund managers, ethics, green issues and sustainability

By David Hattersley - Topics: ESG investing, ethical investing, Spain
This article is published on: 18th February 2021

18.02.21

The impact of both Brexit and the Covid 19 pandemic have given us all time to reflect on the world we live in. As consumers in the developed world, we are perhaps more aware of the impact we make on our planet. The words “Sustainable” and “Ethical” spring to mind.

So where does one stand on ethics and sustainability? As individuals, it’s very easy to say “we are Green”, but then travel 70km to stock up on our favourite brands of frozen convenience meals. Most of us, due to “lockdown”, now spend more time cooking and preparing our meals at home.

How far are major companies prepared to change too? Coca Cola has announced plans to make a paper bottle and already has a prototype that can be recycled, which was developed in the Brussels R&D centre. But, whilst that is a very applaudable, one company has gone even further.

I have to admit that there is an affection for them as I worked in one of their divisions for two years prior to a career change to Financial Services. One of the biggest global consumer companies which operates in 190 countries is Unilever. “Love or loathe it” to paraphrase Marmite, they have taken what some may consider a risky strategy. Not only do they try to ensure that the raw materials that go to make their products are as green as possible, they have taken what may be considered a leap of faith. Sustainability and ethics are not only about “green principals”. They are insisting that every part of its global chain of suppliers provide a “living wage”, and in some cases double that, by 2030. These include smallholder farmers as well major direct suppliers numbering in total 60,000. As the CEO, Alan Jope, said in a statement on the 21st Jan 2021, “The two biggest threats that the world currently faces are climate change and social inequality.”

ESG Investing

As part of a developed area of the world we should all make a choice. Do we support the ethics of a company that is looking to redistribute wealth and act in an ethical, sustainable way, or do we just look at price rather than value? Have the events of the last year been our wake up call? Morally, rather than just looking at saving tax, or short term political gain and expediency, we should consider what the real legacy is that we leave our children and grandchildren on this planet that we share.

The same questions will be applied by our fund managers, in particular those that focus on ethics, green issues and sustainability. Are they the best choices for the future? I believe so. These specialists have far greater resources than I could ever have to research this “new world” we are entering, and are better equipped to look at the longer term than I am. I would be happy to provide a portfolio of these specialist funds to anyone who is interested, so feel to contact me on any of the points raised.

How safe is my cash?

By Pauline Bowden - Topics: Spain
This article is published on: 17th February 2021

17.02.21

Many people view cash as a safe investment because they’re not exposing their money to any direct stock-market risk. However, tying up too much of your savings in cash doesn’t mean you are risk free. Low interest rates: Interest rates are at historically low levels.

This is not good news for savers. That’s because the interest is unlikely to grow their money enough to help them achieve their financial goals. Then there’s the effect of inflation. Inflation erosion: Whilst inflation is at such a low level, you may think to yourself why should this matter? When it comes to your longer term investment plans, typically 5-10 years, you should consider how much the price of goods has risen over the last five years. If the cost of goods has risen, for example 1%-3% a year, and the interest rates continue to be low, it becomes clear how the purchasing power of cash savings may actually fall over time.

What are savers looking to do with their cash?
If you’re sitting on too much cash, either in your bank account or your investment portfolio, you could be missing out by not being fully invested. Tax efficient investments, compliant in Spain may be your answer to a diverse investment portfolio.

Cash is no longer the safe haven people once considered it to be, for long term investment. While it’s important as part of your financial plans, having too much could mean your money isn’t working as hard as it could, meaning that you may not realise your financial goals. Everyone should have a cash buffer in case of emergencies, but it’s important to get the right balance between your short- and long-term plans. This is where professional advice becomes invaluable.

Speaking to a financial adviser will help you to identify the most suitable way for you to make the most of your cash. Together you’ll be able to define your aims as well as formulate a personalised plan.

Claiming your UK State Pension whilst living in Spain/EEA

By Chris Burke - Topics: Pensions, Spain, UK Pensions
This article is published on: 16th February 2021

16.02.21

Perhaps the most common questions I have been receiving since Brexit was agreed are in respect of UK State Pensions, particularly how it will work moving forward having contributed to the UK social security pension system:

  • What is my entitlement and how will UK nationals be able to claim their state pensions moving forward after Brexit?
  • What age can I start claiming (different EU countries have different age limits)?
  • How are these state pension calculations achieved?

Well, this should give you some clarity
First things first, to receive a Spanish state pension, you need at least 15 contributing years (combined years from any EU country) to be entitled to a minimum pension which will amount to 50% of the ´base reguladora´ (for Autonomos) or minimum state pension for employees, based on your past wages. At least 2 contributing years need to be within the period of 15 years leading up to your legal pension age. If you do not qualify for this, you should go directly to each country you have contributed to previously and see if you qualify from them.

Before the UK joined the EU, you would claim your state pensions from each country individually. Once we joined the EU and if you lived and contributed social security payments there, you would contact the relevant department of the country you were residing in i.e. worked and paid taxes in that country. They would then claim ALL your state pensions throughout the EU system. Under the Withdrawal Agreement for Brexit, this system has remained in place for both existing and new residents:

final salary pension review

‘The EU-UK Trade and Co-operation Agreement announced on 24 December 2020 includes a protocol on social security co-ordination. UK government guidance on the rights of UK nationals in the EU, EEA or Switzerland to UK benefits and pensions from 1 January 2021, states:

UK State Pension
You can carry on receiving your UK State Pension if you move to live in the EU, EEA or Switzerland and you can still claim your UK State Pension from these countries.
Your UK State Pension will be increased each year in the EU in line with the rate paid in the UK.

You can also count relevant social security contributions made in EU countries to meet the qualifying conditions for a UK State Pension.

This guidance is for UK nationals; however these rules on the State Pension apply to everyone regardless of your nationality and regardless of when you moved. (Gov.UK Benefits and pensions for UK nationals in the EEA and Switzerland, 24 December 2020).
(source – house of commons library)

Never worked in Spain or paid social security there?
You claim directly from the UK here www.gov.uk/state-pension-if-you-retire-abroad

retire

Differences in retirement ages
In some EU countries, you will have to wait longer to start drawing your pension than in others.

You can only receive your pension from the country where you now live (or last worked) once you have reached the legal retirement age in that country. If you have accumulated pension rights in other countries, you will only receive those parts of your pension once you have reached the legal retirement age in those countries.

So, it’s important to find out in advance, from all the countries where you have worked, what your situation will be if you change the date on which you start receiving your pension.
If you take one pension earlier than the other, it might affect the amounts you receive.

You can get more advice from the relevant authority in the country where you live and/or in the countries where you worked. Find out about the retirement ages and pension systems in the different EU countries you have contributed.

What age can you start claiming the state pension in Spain?
Currently 66 years, increasing by 1 & ½ months per year, until it reaches 67 in 2027.
(source trading economics)

How many years do I need to contribute for a full Spanish state pension?
36 years in general (35 for most people in the UK)

How is your state pension calculated?
Pension authorities in each EU country you’ve worked in will look at the contributions you’ve paid into their system, how much you’ve paid in other countries, and for how long you’ve worked in different countries.

The EU-equivalent rate
Each pension authority will calculate the part of the pension it should pay taking into account periods completed in all EU countries.

To do so, it will add together the periods you completed in all EU countries and work out how much pension you would get had you contributed into its own scheme over the entire time (called the theoretical amount).

This amount will then be adjusted to reflect the actual time you were covered in that country (called the pro-rata benefit).

The national rate
If you meet the conditions for entitlement to a national pension irrespective of any periods completed in other countries, the pension authority will also calculate the national pension (known as an independent benefit).

Pensions health check

Result
The national authority will then compare the pro-rata benefit and the independent benefit; you will receive whichever is higher from that EU country.

Each country’s decision on your claim will be explained in a special note you will receive, the P1 form.

See the below example of how this would work:
Dalila worked for 20 years in France and 10 years in Spain.
Both countries apply a minimum period of 15 years of work in order to have the right to a pension. Each country will calculate Dalila’s pension:
The French authority will make a double calculation:
• It will calculate Dalila’s national pension for the 20 years worked in France – let’s say EUR 800.
• It will also calculate a theoretical amount, the pension Dalila would have had if she had worked the full 30 years in France – let’s say EUR 1 500. Then, it will determine the pro-rata pension, which is the part of this amount that should be paid for the years worked in France: 1 500×20 years in France/30 years in total= EUR 1 000.

Dalila is entitled to the higher amount — EUR 1 000 a month.

The Spanish authority will not calculate the national pension because Dalila has worked in Spain less than the minimum period required. It will only calculate the EU-equivalent rate starting with the theoretical amount, the pension Dalila would have had if she had worked all the 30 years in Spain – let’s say EUR 1 200.

Then, it will determine the pro-rata pension – the part of this amount which should be paid for the years worked in Spain: 1200×10 years in Spain/30 years in total= EUR 400.
In the end, Dalila will receive a pension of EUR 1 400.
(source – Europa.eu – official website of the European Union)

State Pensions After BREXIT

Here is the official UK government wording on the continuation of Social Security Coordination between the UK & EU from Brexit:
“The provisions in the Protocol on Social Security Coordination will ensure that individuals who move between the UK and the EU in the future will have their social security position in respect of certain important benefits protected.

Individuals will be able to have access to a range of social security benefits, including reciprocal healthcare cover and an uprated state pension.

Article 114. This Protocol supports business and trade by ensuring that cross border workers and their employers are only liable to pay social security contributions in one state at a time. Generally, this will be in the country where work is undertaken, irrespective of whether the worker resides within the EU or the UK, or indeed whether the employer is based in the EU or the UK.

Article 115. UK workers who are sent by their employer to work temporarily in an EU Member State which has agreed to apply the “detached worker” rules will remain liable to only pay social security contributions in the UK for the period of work in that EU Member State. Similarly, if an EU worker is sent by their employer to work temporarily in the UK from a Member State which has agreed to apply the “detached worker” rules, they will remain liable to only pay contributions in that EU Member State.

116. Under the Protocol, the UK and EU Member States will be able to take into account relevant contributions paid into each other’s social security systems, or relevant periods of work or residence, by individuals for determining entitlement to a state pension and to a range of benefits. This will provide a good level of protection for people working in the UK and EU Member States. The Protocol also provides for the uprating of the UK State Pension paid to pensioners who retire to the EU.

117. On healthcare, where the UK or an EU Member State is responsible for the healthcare of an individual, they will be entitled to reciprocal healthcare cover. This includes certain categories of cross-border workers and state pensioners who retire to the UK or to the EU.

118. In addition, the Protocol will ensure necessary healthcare provisions – akin to those provided by the European Health Insurance Card (EHIC) scheme – continue. This means individuals who are temporarily staying in another country, for example a UK national who is in an EU Member State for a holiday, will have their necessary healthcare needs met for the period of their stay. 119. The Protocol also protects the ability of individuals to seek authorisation to receive planned medical treatment in the

(source – UK government summary annex – UK-EU TRADE AND COOPERATION AGREEMENT Summary December 2020)

If you would like help talking this through, or making sure your financial assets are tax efficient, working for you in a safe manner adapting to the world as it changes, don’t hesitate to get in touch.

Prochaines échéances fiscales et guide 2021 des impôts en Espagne

By Cedric Privat - Topics: Modelo 720, Spain
This article is published on: 15th February 2021

15.02.21

Que vous viviez en Espagne depuis de nombreuses années ou que vous soyez un nouvel arrivant, vous êtes soumis à certaines déclarations obligatoires et devriez donc être concernés par une ou plusieurs échéances listées ci-dessous.

Ces dates sont inchangées depuis plusieurs années et devraient le rester.

Modelo 720

Modelo 720

Déclaration informative mais obligatoire sur les biens et avoirs à l’étranger. Vous devez présenter ce Modelo 720 si la somme de vos actifs est supérieure à 50 000€ dans une ou plusieurs des trois catégories:

  • Comptes bancaires situés à l’étranger
  • Titres, droits, assurances-vie et placements gérés ou acquis à l’étranger
  • Biens immobiliers et droits sur les biens immobiliers à l’étranger

Les années suivantes, il n’est demandé de représenter le Modelo 720 qu’en cas d’augmentation de plus de 20 000€ par rapport au capital initialement déclaré.

Des sanctions sont possibles en cas de non respect de cette déclaration.

À déposer avant le 31 mars.

Saving in Spain, ISA, Tax Free Saving in Spain

Déclaration De La Renta

La déclaration d’impôt se fait entre les mois d’avril et juin. Vous pouvez soit l’effectuer directement sur internet, soit prendre rendez-vous avec un

conseiller du Trésor Public (Hacienda), soit léguer cette tâche à un “gestor” (conseiller fiscal).

L’année fiscale en Espagne va de janvier à décembre, vous déclarez donc vos revenus de l’année précédente.

En Espagne les impôts étant prélevés à la source, Agencia Tributaria n’effectuera qu’une vérification. Dans la plupart des cas, vous ne paierez pas de supplément.

À déposer avant le 30 juin.

What is the point of having money?

Impuesto Sobre El Patrimonio (Catalogne)

Impôt sur le patrimoine: cette déclaration est obligatoire si votre patrimoine brut (sans déduction

des dettes) est supérieur à 2 000 000€ ou votre patrimoine net supérieur à 500 000€.

La résidence principale est exonérée jusqu’à 300 000€.

À déposer également avant le 30 juin.

Afin de vous aider à mieux comprendre la fiscalité en Espagne, Spectrum a créé le “Guide des impôts en Espagne 2021” (document en anglais).

Ce guide vous aidera à comprendre les règles de résidence fiscale locale et les impôts sur le revenu, les successions, les investissements, la propriété et les retraites.

Vous pouvez librement télécharger ce document sur notre site et dans le même temps, si vous le désirez, vous abonner à ma newsletter “actualités financières et fiscales en Espagne”.

www.spectrum-ifa.com/cedric-privat/spanish-tax-guide-cedric-privat

Je reste à votre disposition pour vous apporter des informations complémentaires.