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EU expats desert Spain due to overseas assets tax changes
| Published: | 7 Jun at 6 PM |
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Whilst many British expats living in Spain are experiencing nervous breakdowns over the possibility of a Brexit, others who’ve already left are overjoyed they don’t have to deal with Spain’s new tax laws covering overseas assets.
Estimates of the number of EU and British expats who took their money elsewhere rather than be taxed on their overseas assets are now in the high thousands. The tax changes in 2015 have also resulted in a strong decline in the number of new expat arrivals.
The new rules, originally aimed at Spanish nationals in a bid to halt the country’s long-standing tradition of bribery and corruption, also hit on expats with life savings invested offshore or property in their home countries. All assets held outside Spain and worth more than 50,000 euros must be declared to the tax authority, with those failing to make the declaration believed to have moved to another country to avoid heavy fines.
Increased taxation and the present trend of Spanish nationals leaving to find work elsewhere in the EU has seen a nine per cent drop in the overall population, according to the National Institute of Statistics. British expats living in the country now number around 280,000, a six per cent drop from previous years indicating around 18,000 departures. Over the same period, the German expat community shrunk by seven per cent.
The new tax rules have been in place for just over a year, but may be tricky to work through for the average expat. A mandatory declaration must show offshore bank accounts, immoveable property and investments totalling over 50,000 euros in each asset class. Cash kept outside the country need not be declared should it total less than 50,000 euros.
A problem arises due to fluctuating currency rates, with expats advised to monitor the rates carefully if an asset class total is already close to the limit. Expats are now taxed on income form their overseas assets as well as on capital gains.
The British 2015 budget brought a double whammy in that profits made from the sale of expat-owned property in the UK became subject to capital gains tax. It’s possible to offset capital gains taxes levied in Spain against those paid in the UK, as a double taxation agreement is in force, but the necessary paperwork isn’t welcome.
Estimates of the number of EU and British expats who took their money elsewhere rather than be taxed on their overseas assets are now in the high thousands. The tax changes in 2015 have also resulted in a strong decline in the number of new expat arrivals.
The new rules, originally aimed at Spanish nationals in a bid to halt the country’s long-standing tradition of bribery and corruption, also hit on expats with life savings invested offshore or property in their home countries. All assets held outside Spain and worth more than 50,000 euros must be declared to the tax authority, with those failing to make the declaration believed to have moved to another country to avoid heavy fines.
Increased taxation and the present trend of Spanish nationals leaving to find work elsewhere in the EU has seen a nine per cent drop in the overall population, according to the National Institute of Statistics. British expats living in the country now number around 280,000, a six per cent drop from previous years indicating around 18,000 departures. Over the same period, the German expat community shrunk by seven per cent.
The new tax rules have been in place for just over a year, but may be tricky to work through for the average expat. A mandatory declaration must show offshore bank accounts, immoveable property and investments totalling over 50,000 euros in each asset class. Cash kept outside the country need not be declared should it total less than 50,000 euros.
A problem arises due to fluctuating currency rates, with expats advised to monitor the rates carefully if an asset class total is already close to the limit. Expats are now taxed on income form their overseas assets as well as on capital gains.
The British 2015 budget brought a double whammy in that profits made from the sale of expat-owned property in the UK became subject to capital gains tax. It’s possible to offset capital gains taxes levied in Spain against those paid in the UK, as a double taxation agreement is in force, but the necessary paperwork isn’t welcome.
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