Spanish government tells expats to declare their overseas assets or face harsh fines
Spain is to demand that all British expats living in the country declare all of their assets held overseas as the Spanish authorities take action to clamp down on tax evasion. Expats who do not reveal their assets will be hit by ‘prohibitive’ fines by the tax authorities.
Expats resident in the country have until the 30th of April to declare all of their relevant overseas assets that are worth more than €50,000. Those who fail to comply could face huge fines.
The assets that are being taken into consideration are any overseas bank accounts, shares, property, life insurance policies and annuity income.
David Truman, a partner at accountancy firm Menzies, told the Telegraph: “My understanding is that clients are considering or are leaving Spain as a result of the introduction of the new rules.
“It does appear to be concerning people, and it does appear to be driving people out of the country.”
The new measures are set to potentially impact up to 400,000 British expats living in Spain as well as hitting all other foreign nationals living in the troubled country. The minimum penalty for not complying is a €10,000 fine, as well as income tax on undeclared income, late-payment interest and penalties as high as 150% of the total tax due on the asset. An Expat resident in Spain with assets valuing €300,000 in an undeclared overseas account would incur the minimum punishment of a €10,000, and will be taxed at the top interest rate of 52%, they would also be fined 150% of the tax owed and 4% annual interest going back four years, meaning they would owe the Spanish taxman €424,960 (£368,000).
After this year’s April deadline the deadline for following years will be for the end of March, you will only need to report the assets again if their value has increased by more than €20,000 (£17,000).
A spokesman for the Spanish tax authority said the globalisation of financial activity and increasing problems with fraud made it necessary “to establish a specific obligation of information on assets located abroad”.
The extra burden being imposed by Spain is set to hit expats dependent on Sterling incomes with a double whammy of costs as the weak Pound leads to them having less cash in their pockets.
Expat residents who are unsure of how to submit their declaration, which has to be completed online, should visit their nearest tax office for further information.