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Tax authorities target Expats

March 14, 2019

Expats seem to be at the very front of every new tax initiative both from their country of origin and from their new country of residence.

Nowhere has this been more evident than in Spain where the authorities have lurched from previous regimes where expats were just left to get on with it and if they paid any tax it was almost treated as a windfall, to a full frontal assault where the new mandatory annual declaration via Modelo 720 requires a statement of all overseas assets when they fall into certain categories and they are valued in a particular grouping in excess of 50,000 Euros. At the same time, at a local level, police are checking those who own foreign plated cars and looking at electricity and telephone records all to find out those who might be exceeding the 183 days residency rules.

Of course it’s not hard to see why expats are deemed such an easy target, there is little public sympathy from their fellow nationals back at home who see them as somehow privileged deserving to be taxed and of course it is politically expedient to target expats in their new country of residence as they are unlikely to win much sympathy locally.

The bottom line however, is that all governments are falling over themselves to collect tax revenue and they see the expat as being more likely to try and flaunt the rules. This is exactly the reason why the EU has made tackling tax evasion as its number one priority and the major countries in Europe including UK and Spain have signed an agreement to exchange information to ensure that with significant cooperation it will be impossible for the expat to evade paying tax wherever they choose to keep their assets.

Gone are the days when you could live in Spain, exceeding the 183 day residency rule and keep your money in a Channel Island investment account and expect not to pay tax to either the UK or the Spanish tax authorities. To close the loop even further the UK has established exchange of information agreements with Guernsey, Jersey and the Isle of Man as well as a number of offshore jurisdictions such as Cayman Islands and BVI. Even if you choose not to report on Modelo 720, and run the risk of fines and penalties, the likelihood is that your offshore investments even if these are held in a trust will come to the attention of the UK authorities and subsequently information will be passed on to Spain.

Quite honestly is it worth taking the risk? Perhaps you like the idea of being hounded by a number of different tax jurisdictions and playing Russian roulette with your assets. However I suspect that most people would prefer the quiet life where their taxes are paid and they are left alone by the authorities.

If you fall into the first category please ignore this editorial. Alternatively if you would like to put your affairs in order call Tel: 956796911 or email