Non residents tax

[Spurs]

Now that the non residents tax (wealth tax ) for non EU residents has increased from 19% to 24% since Brexit  I’m beginning to feel I’m being taxed twice on the same money. I don’t rent out and don’t earn anything in Spain so I’m wondering if I can offset it against my UK tax bill has anyone got any experience of trying to do this .

[chris and jackie]

Yes you can under double taxation agreements so you don’t get taxed twice, absolute joke the Spanish tax rules but nothing you can do!!

[Aficionado]

Yes you can under double taxation agreements so you don’t get taxed twice, absolute joke the Spanish tax rules but nothing you can do!!

??

In order to obtain relief under a double taxation agreement, there has to be income taxable in the UK on which foreign tax has already been suffered.

Where is the UK income in this scenario?

[Blue and white stripes]

I offset a proportion of all my spanish expenses against the rent I receive from my spanish house including the wealth tax. I declare it all on my UK tax form.

[Spurs]

Well the income was I earnt it and paid tax on it in the first place

[Derek]

Spurs

The income you have paid tax on in the UK is not the same income as the Spanish assume you have earned therefore no double taxation.

Derek

[Spurs]

Spurs

The income you have paid tax on in the UK is not the same income as the Spanish assume you have earned therefore no double taxation.

Derek

Yes it is it’s money I earnt in the uk and paid tax on then I’m paying another tax with it . I don’t earn any money in Spain . If I did rent it out it would be fair enough but I don’t  but it’s been taxed once in uk and once in Spain . I think I will contact HMRC

[chris and jackie]

I offset a proportion of all my spanish expenses against the rent I receive from my spanish house including the wealth tax. I declare it all on my UK tax form.

You have to also declare in Spain who now charge uk residents 24% tax on any income & do not allow any expenses, following Brexit.
Any tax paid in Spain can then be offset against UK tax on overseas income

[chris and jackie]

Spurs

The income you have paid tax on in the UK is not the same income as the Spanish assume you have earned therefore no double taxation.

Derek

Yes it is it’s money I earnt in the uk and paid tax on then I’m paying another tax with it . I don’t earn any money in Spain . If I did rent it out it would be fair enough but I don’t  but it’s been taxed once in uk and once in Spain . I think I will contact HMRC

There’s also a tax on assumed income whether you rent out or not charged at 24% , usual Spanish rip off!!

[Spurs]

Spurs

The income you have paid tax on in the UK is not the same income as the Spanish assume you have earned therefore no double taxation.

Derek

Yes it is it’s money I earnt in the uk and paid tax on then I’m paying another tax with it . I don’t earn any money in Spain . If I did rent it out it would be fair enough but I don’t  but it’s been taxed once in uk and once in Spain . I think I will contact HMRC

There’s also a tax on assumed income whether you rent out or not charged at 24% , usual Spanish rip off!!

Yeah I get that it’s on assumed income , but can I offset it against my UK Tax . I’m thinking if I do my Tax return section foreign property and put earned income as zero and tax paid €300 will it offset ?

[Derek]

Spurs

Surely you do not pay 300 Euros a year. Who does your tax return? I paid less than 80 Euros.  (71.35 for year 2020)

You cannot offset the tax you pay legally when completing your tax return. Your Spanish property is not a contributor to your self employed income. I think you would be inviting problems by trying to do so.

Derek

[Spurs]

No it’s not €300 that was just an example . But thinking about it if I rent it out for 1 week a year for say €50 and then show my tax at say €80 I should get a credit . I think I will try it

[Peter D]

Just had another  tax bill for 212 euros even though I have an Irish passport,is this Correct?

[Aficionado]

No it’s not €300 that was just an example . But thinking about it if I rent it out for 1 week a year for say €50 and then show my tax at say €80 I should get a credit . I think I will try it

I would not advise it. You have stated in the original post that you have no rental or indeed any income arising in Spain. You cannot therefore have any tax paid in Spain which is available for offset under a DTA - and even if you did go down the route proposed as above, you first need to declare the income in Spain and pay tax on it as appropriate, you then cannot get repayment of foreign tax in the UK beyond the amount needed to cover UK tax due on the foreign income. Using your figures above, and assuming you are a 20% taxpayer, you would be liable for UK tax of £10 on your £50 of income, which would be covered by £10 of the £80 tax paid in Spain, therefore NIL payable in the UK. The other £70 simply disappears as a restriction on relief, it is not available as a repayment to you. So you would be wasting your time and also making a false declaration to the Inland Revenue who do talk to the Hacienda and you could quite easily trigger off an issue for yourself in Spain if you had not also declared the £50 there.

Your situation is totally different to the other position outlined in posts above i.e. where there is income arising in Spain which is a) taxable in Spain initially and b) taxable in the UK as that is where you are tax resident and in such a case the DTA applies to ensure that you do not pay more than the higher of the two tax payments due.

If you were ordinarily and tax resident in Spain the situation is reversed i.e. the main tax charge arises in Spain with relief under the DTA for tax already paid on income arising in the UK. Again, there is a restriction on the available relief.

I suggest talking to a local tax advisor in your area before embarking on this ill conceived claim.

[John H]

....and don't you need a "tourist licence" of some kind to rent your property out?

You'd end up getting slapped a fine for not having one if you declared a rental income Spurs....I'd just pay the tax and offset the expense against the cheap booze and dining out 😉

Regards all

John