(well the Spanish taxman does and so should you!)
Unless you want to live as a financial nomad dodging the taxman and probably ending up paying more tax than you would if your financial affairs were in order or worse still (in some cases) face criminal prosecution – you should seriously consider your residency status. The UK has now introduced a formal residency test and in Spain as an example there is a clear requirement for expatriates who spend more than 183 days a year in that country to register as a tax resident. Whilst the Spanish authorities have previously been fairly lax in following this through they are now obtaining reports from electricity companies, checking foreign plated cars and telephone bills to establish patterns of residency and the whole emphasis has changed to proving why you shouldn’t be treated as a tax resident rather than allowing you to carry on breaking the law.
Changing to a new tax regime can seem quite daunting particularly as you need to understand that the old way of doing things will not apply in Spain. Those tax free investments like ISA’s will no longer be tax free and UK investment bonds, highly popular because of their tax efficiency back in the UK will suddenly be subject to tax and will probably no longer be an efficient way for you to invest.
There will be a definite need to re think your investment and retirement strategy and the best way of doing that will be to speak to a firm of advisers that specialise in cross border financial planning. Not your old adviser back in the UK who would like to carry on looking after you no doubt, but probably doesn’t have the permissions or technical knowledge of the Spanish tax system to be able to do that. Neither do you want to pick an adviser here that doesn’t understand the regime you are leaving behind.
The most important thing is that you don’t bury your head in the sand in the belief that you will not be discovered by the authorities. The UK and Spain have an agreement in place to exchange information and they do soon a regular basis. Your best option is to regularise your tax affairs and use the services of a company like ours to ensure that your investments and pensions are restructured in the most tax efficient way for a Spanish tax resident. Alternatively you can keep looking over your shoulder waiting for the inevitable to happen when Hacienda catch up with you and you have to suffer the consequences. We have helped clients who have faced tax investigations and they all say the same thing that they wished they had acted sooner and put their affairs in order as it would have saved a lot of time, trouble and heartache.
If you want to sort your financial problems out why not contact us on Tel: 956796911 or email firstname.lastname@example.org.