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Appointing a Representative

It is not obligatory for EU residents who own a property in Spain to appoint a fiscal representative. However, non-resident taxpayers must appoint a fiscal legal representative in the following cases:

  1. You carry out your business in Spain on a permanent basis (a permanent establishment).
  2. When certain expenses are deductible in order to calculate the taxable base subject to tax in Spain.
  3. When an organization established abroad and operating under the system of attribution of earnings carries out an economic activity in Spain, and all or part of said activity is carried out in an ongoing or regular manner, in facilities or workplaces of any kind, or it acts in Spain through an agent authorised to contract on behalf of and in representation of the organisation.
  4. When you own assets in Spain and have your main residence in a country with no tax information exchange with Spain. This excludes securities traded in official secondary markets.
  5. When required to do so by the Tax Office.

Even if your situation means you are not required to appoint a fiscal legal representative in Spain, you may choose to do so to save yourself time and avoid missing correspondence from the Tax Office in case of change of address or absence.

Appointing a fiscal representative, such as ourselves, provides you with the peace of mind that all communications from the Tax Office will be received by your representative, who can then inform you and act upon them according to your wishes.

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Offshore Assets – Spain’s 720 Informative Tax Form

Are you a Spanish resident with offshore assets? Have you reported them to the Spanish government? Read Andalucía Lawyer’s guide to find out why, when and how.

Introduced in 2012 by the Spanish government as a measure against tax fraud, Spain’s 720 informative tax form means Spanish residents are required to report certain classes of offshore assets to the Spanish government. This is not a tax, nor is the information given as part of any tax return, it is simply a requirement to report information about assets. Nevertheless, it is reasonable to assume that the form will be compared to any wealth tax and income tax returns submitted.

Who is obliged to submit this tax form?

Only Spanish residents are required to report their overseas assets.

Am I a Spanish resident?

Individuals become officially resident in Spain for tax purposes if they live more than 183 days of the calendar year on Spanish territory or if the principal centre of activity or physical base of their economic interests is in Spain.

For more detailed information on how tax residency is established or if you are unsure about whether or not you are a Spanish resident, read our article How Do I Know if I’m a Spanish Resident or Non-resident for Tax Purposes?

What must be declared?

There are three classes of assets. If the value of your offshore assets or income on 31 December amounts to over €50,000 in any one of the following three categories then you are required to submit a 720 informative tax declaration:

  1. Offshore accounts held with financial institutions e.g. banks and building societies.
  2. All types of immovable property and rights on real estate located abroad.
  3. Foreign shares, securities and other offshore assets including:
    – Life or disability insurance policies.
    – Temporal or lifetime annuity generated from the lending of money, rights, investments or other assets (including immovable) in foreign entities.

You are obliged to report assets if you are the owner, holder, beneficiary, authorised signatory, authorised recipient, representative, proxy holder or have the authority to dispose of the asset. This includes assets held by trusts, companies and fiduciaries.

Valuation of Assets

  • Investments traded on the open market are valued at their market value on 31 December.
  • The value of other investments is set at that published on the latest balance sheet.
  • The value of a property is deemed to be its purchase price.

Jointly Held Assets

In the case of jointly held assets, such as between spouses, a 720 form must be submitted by each individual declaring the total value of the asset, even if your personal share of the asset amounts to less than €50,000.

When is the deadline?

The yearly deadline for submitting the 720 informative tax form is 31 March. If you submitted form 720 last year, you only need to submit it again this year if:

  • The total of any category of assets has grown by more than €20,000.
  • You sold an asset or closed an account.
  • You obtained a new asset.

If you have become resident in Spain during the last year and own offshore assets that mean you are obliged to present the 720 tax form, you must file it without fail between 1 January and the 31 March deadline.

How do I submit the 720 tax form?

The 720 tax form can only be submitted online. Due to its complexity, the long list of what assets and income do and don’t need to be included and the threat of hefty fines for failure to file the form, providing erroneous information, omitting assets and late submission, we strongly suggest you get in touch with us to take care of this on your behalf.

EU Infringement

Following the introduction of the 720 informative tax form, several official complaints were made to the EU claiming that the huge and disproportionate fines and the lack of any statute of limitations on obligations imposed infringed on EU law. As a result, in 2015 the European Commission launched an investigation and in light of its findings opened an infringement procedure against the Spanish government. If Spain is required to change its law this process could take several years. In the meantime, you still need to submit your 720 form as outlined above.

Our Services

We can prepare and submit the 720 informative tax form on your behalf. Please contact us for more information.

We also offer a resident tax advice service for a set annual fee:

RESIDENT

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Spanish Income Tax Rates 2019

Andalucía Lawyers’ guide to Spanish income tax for Spanish residents for the years 2012-2014.

Am I a Spanish resident?

Individuals become officially resident in Spain for tax purposes if they live more than 183 days of the calendar year on Spanish territory or if the principal centre of activity or physical base of their economic interests is in Spain.

For more detailed information on how tax residency is established or if you are unsure about whether or not you are a Spanish resident, read our article How Do I Know if I’m a Spanish Resident or Non-resident for Tax Purposes?

What must I declare and when?

Spanish residents are taxed on worldwide income therefore you have to declare all earnings, regardless of where they come from. This includes pensions from your home country, with the exception of some civil service pensions. According to the treaty for double taxation, a deduction is applicable to all earnings that are taxed abroad. As a result you will not be taxed twice on the same income. These rules apply even if your income is not paid into a Spanish bank. You are only exempt if your income falls below the established thresholds (see below). Spanish residents have from 1 April 2020 to 30 June 2020 to declare their income from the 2019 calendar year.

How do I prepare my tax return?

Option 1: Contact the Spanish Tax Office and request your fiscal information.

Option 2: We can do it for you. Contact us to enquire about this service or to set up a consultation, either in person or via phone/email.

What are the Spanish income tax allowances and deductions?

Various income tax allowances and deductions are available for Spanish residents. These vary according to the individual’s personal situation:

Age Allowance

  • Individuals aged 65 to 75: €6,069.
  • Individuals aged 75 and over:  €7,191.

Disability Allowance

The disability allowance is calculated according to a graded scale of disability:

  • Grades 33-65: €2,316.
  • Grades 65-100: €7,038.
  • If third party care is required then an additional allowance of €2,270 applies.

Child Allowance (Under 25 years Old)

Child allowance for under 25s with an income below €8,000 living at home:

  • First child: €1,836.
  • Second child: €2,040.
  • Third child: €3,672.
  • Fourth and additional children: €4,182.

Child Allowance (Under 3 Years Old)

  • For each child under 3: €2,244.

Dependent Parent Allowance

If your mother or father is living with you and has an income below €8,000:

  • Over 65s: €918.
  • Over 75s: €1,122.

Earned Income Allowance (Including Pensions)

  • Earnings up to €9,180: €4,080.
  • Earnings up to €13,260: €2,652.
  • A sliding scale applies for income between the two limits.

Dividends

  • Receivable tax free up to €1,500.

Deductions

  • Cost of principal residence with a mortgage.
  • Incomes earned from rent which are taxed on 40% of the net.
  • There are also some deductions applied by local governments that vary from region to region.

What are the 2019 tax rates?

Rates for Capital Gains and Investment Income

  • Dividends up to €1,500 are tax free.
  • €0-€6,000: 21%.
  • €6,000-€18,000: 25%.
  • More than €18,000: 27%.

Rates for Other Income After Allowances and Deductions

  • €0-€17,007:  24.75%.
  • €17,007-€33,007: 30%.
  • €33,007-€53,407: 40%.
  • €53,407-€120,000: 47%.
  • €120,000-€175,000: 49%.
  • €175,000-€300,000: 51%.
  • More than €300,000: 52%.

Local surcharges have been added by autonomous regions such as Andalusia and Catalonia. For example, the income tax rate in Andalusia is 1% higher than the rates in the table above for incomes above €80,000, 2% higher for incomes above €100,000 and 3% higher for incomes above €120,000.

I have a low income, do I have to declare?

The allowable levels of income before a declaration must be made:

  • Earned income already subject to employer deductions (if any other incomes amount to less than €1,500): €22,000.
  • Reduced limit if earned from more than one employer: €10,200.
  • Bank interest and other investment income: €1,600.
  • Rent: €1,000.

Our Services

We offer a resident tax advice service for a set annual fee:

RESIDENT

If you would like advice about your tax situation or you’d like us to take care of your Spanish income tax return on your behalf, please get in touch.

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