In Spain there are four levels at which ISD (inheritance tax) is paid: Level 1 = Children and grandchildren (including adopted) under the age of 21 Level 2 = Children and grandchildren over the age of 21, spouses and parents Level 3 = Other relatives such as brothers and sisters, in-laws, cousins, aunts and uncles Level 4 = Everyone else including unmarried partners If you are not married, your partner is relegated to the ‘any other person’ level of inheritance tax. Being Spain, it does vary for residents between autonomous regions. So, for example this rule applies in Valencia but not in Murcia. It is certainly worth establishing what rules apply to you as it affects both the … [Read more...] about An important decision – making your will
spanish taxes
Avoiding double taxation in Spain
At this point you are no longer a non-resident property owner paying imputed income tax but a Spanish resident making an annual income tax declaration in May/ June. The taxes paid in the current year are for your income the previous year. So, for example, if you make a declaration in May/June 2012 it will cover your income for the tax year January 2011 to December 2011. If you were previously living in the UK there is an exception – employment tax is currently deducted in the UK. The tax brackets in Spain will change next year but are currently 24%, 28%, 37% and up to 43% for incomes over €52,360. If you are a UK tax payer and are trying to do the right thing and pay your taxes in Spain … [Read more...] about Avoiding double taxation in Spain
Calculating complimentary tax on Spanish property
Of course, more research might have unearthed the possibility of this tax. But many purchasers expect the information to be given to them. Unfortunately, those keen to sell property are not always as keen to inform you of the taxes you can expect to pay. Ironically, this lack of transparency is one of the reasons so many possible purchasers are anxious about buying in the first place. However, complimentary tax need not be a skeleton in the closet, provided you prepare for it. This tax, levied on purchases up to five years after the purchase date, consists of 7% of the difference between what you declared you paid and what the Tax Authority claim it is worth. Plus interest, of course. It … [Read more...] about Calculating complimentary tax on Spanish property
Wave of complimentary tax hits home buyers
What is complimentary tax? During the property boom in Spain purchasers and sellers sometimes came to an agreement to pay some of the purchase price ‘unofficially.’ This meant that the amount declared was below what had actually been paid. The idea was that by doing this purchaser and seller could avoid higher capital gains tax and Spanish transfer tax payments. The Tax Authority wised up to this and as a result began to check the amount the property had been sold at against their own valuation. Complimentary tax represents the difference between what tax they considered should have been paid and what actually was. Unfortunately the drop in the market value of most property sold today … [Read more...] about Wave of complimentary tax hits home buyers
Tax in Spain
The tax regime has changed dramatically in Spain in the past decade. It is far harder now to avoid paying tax and the penalties are high. Income tax in particular has risen considerably, although it remains lower than the EU average. But it is still very difficult to get consistent advice on what you should and shouldn't be paying. The rules keep changing, the system is complicated and you may receive different advice from different tax advisers. Foreign residents would be wise to find yourself an English-speaking adviser to explain the intricacies of your tax situation as it will depend upon numerous complicating factors such as where you live in Spain, whether you are resident or … [Read more...] about Tax in Spain