The Spanish Tax Authorities could potentially access electricity bills and other supporting documentation to establish residency patterns.
Do you really think you can remain under the radar?
Well think again...
Mr James Smith
31st October 2011
Dear Mr Smith
I am writing to advise you that we have received a letter from the Spanish tax authorities advising us that as a Spanish tax resident you are obliged to file a tax return form and declare your worldwide income including any interest or dividend income you may have received from abroad.
We have been instructed by yourself on previous occasions to declare taxes in Spain as a non resident individual on the basis that you are not a resident of this country. As a non resident you are not obliged to pay taxes in Spain for overseas investment income.
However, we have been notified by the Spanish tax authorities that according to information they have received from a Private Bank in an offshore jurisdiction you have been receiving payments for a number of years now. They are questioning two payments received in 2008 for €43,675 and €12,825.
The tax authorities have given us 10 days in which to respond to the following questions:
* The origin and nature of the payments received.
* The arguments for non-inclusion of these sums in your income tax declaration.
* Confirm and prove that you spend less than 183 days in Spain and provide a tax certificate from your country of residence.
In light of the above we would be grateful if you could please let us know at the earliest possible opportunity if you are spending more than 183 days in Spain and therefore deemed a Spanish tax resident.
If you fail to respond within ten days the tax authorities will initiate a process to fine you and the amounts received will be subjected to tax. It is also likely they will now open an investigation to establish where you are actually resident and this may have some serious consequences.
I would be most grateful if you could please revert as soon as possible to discuss the above and establish the best course of action.
If you are spending more than 183 days in Spain and haven’t applied for tax residency, you run the risk of also receiving a letter like this. Clearly it is no longer possible to receive investment income in another jurisdiction without this coming to the attention of the authorities where you reside. However by taking action now you can avoid the cost and distress that may result from an investigation by the tax authorities in Spain. Not only will you regularise your tax situation but you will also put yourself in a position where you might be able to benefit from some of the very distinct tax advantages that Spanish residency offers expatriates in respect of their investment and retirement income.
Telephone 956 796 911 now or email firstname.lastname@example.org for a confidential discussion.