We don’t have to tell you these are difficult times for the Spanish Tax Authorities. They need to generate more revenue at a time when tax collection levels are not what they expected.
But we must ask if chasing foreigners who regularly submit their income tax returns and aim to have their tax affairs in order, is the right way to do this.
It’s normal for the Spanish Tax Authorities to send out tax inspection letters querying a particular tax year. If you are one of those people who have received an unexpected letter querying how you have declared your income received from a British source, we know how you feel.
You need help to understand what the letter is about and what action is required, so you ask the person who prepared and submitted the tax return on your behalf in the first place.
The problems start when the Spanish Tax Authorities do not accept your reply to their letter and ask you to pay more tax on top of what you have already paid. It’s hard when you did what was expected, declaring your income, and paying tax and now the authorities claim you have not.
You are not on your own. We know because many of those people have contacted us. They explain that the person who submitted their tax return has not given them an explanation of the tax query and what they need to do to defend themselves correctly.
It’s important to meet the timelines for replying to the Spanish Tax Authorities. You may have everything required to win your case, but if you miss the deadline then you could lose.
At this point, UK Tax Refund SL should be the company you contact. We are registered Agents with HMRC and understand the English and Spanish tax systems and the way they fit together.
You may be in receipt of a state retirement pension, a private works pension and/or a pension paid by a government or local government authority, or you may receive rental income. If the Spanish tax office asks you for proof of the sources of your income and the way in which they have been included on the income tax return, then you must be able to give them proof and an explanation.
If you receive an income which according to the Double Taxation Treaty has to be declared in both countries and this income you receive is from a British source, then you have the right to deduct the tax paid in the UK when completing the Spanish income tax return. This said, if the Spanish tax authorities query this you must be able to prove this has been done correctly.
And here is where the problems arise. There are lots of Tax Advisers in Spain who are very good when it comes to dealing with Spanish income, but they struggle when it comes to understanding and dealing with British pensions and other sources of British income and how they should be declared in Spain. Or those who understand how to include the income from a British source in the Spanish tax return, but struggle to produce the documents to satisfy the tax inspection.
You could end up paying extra tax, not because you have made an error, but simply for not being able to prove it was done correctly in the first place, or by missing the deadline to reply.
If you are one of the many expats who received a letter from the Spanish Tax Authorities, please do not panic, we can help put your tax affairs in order.
Give us a call on 965 636 938 and stop worrying! Or e-mail us: [email protected]