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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 2989
Experience:  FCCA FCMA CGMA ACIS
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UKFamilyUK PassportState Pension + Medical Pension from

Customer Question

UK
Family
UK Passport
State Pension + Medical Pension from my late husband
House + Council Tax + House Insurance + Gas + Water + Electricity
UK vote and local elections' vote
Car + Car Tax + Car Insurance + Annual MOT + Breakdown Rescue Cover + Driving Licence
NHS Doctor
Dentist
Annual Private UK Health Insurance
Bank Account + Interest + 2 Credit and 1 Debit Cards + Bank Savings Account + Shop Discount Cards
Investments
Golf Club Membership and Blackburn Rovers' Season Ticket Holder
Spend time in the UK every month
SPAIN - (TENERIFE)
Apartment + Local Taxes + Community Fees + Water + Electric
Bank Account (compulsory for owning property in Spain) + Interest + 1 Debit Card
I would be very grateful for any advice from yourselves.
I do spend more than 180 days a year in Tenerife at present but not more than 300. I consider my home, my family and also everything I possess to be in England except for the apartment I have owned in Tenerife for nearly 30 years. I am just spending time in Tenerife, my husband died in Tenerife nearly 5 years ago and I find it difficult not to spend a lot of time there, it is a sad and difficult situation for me. I spend time every month in England in my house and with my family.
I started paying tax in Spain two years ago having been told by friends that I had to. It has been and still is a total disaster, I have paid out thousands with a lot of hassle, a lot of inconvenience, a lot of misery and still nothing is finalised. I have applied twice for the Spanish Tax Residency but twice it has been turned down and nobody knows why. (I do have a Residencia because I was told it was necessary if I was spending more than 180 days a year in Tenerife) - I have no idea what to do now. The whole situation is a dreadful experience and, after nearly two years of hassle, is upsetting me a great deal.
Paying tax in England was so simple. I took my details to my accountant, it took him 20 minutes to fill in the necessary paperwork and to send it off, I paid him his fee and about 6 weeks later I received my refund into my Bank Account. Nearly 2 years after starting paying tax in Spain, all I have done is paid out thousands and nothing is any clearer to me. I do use a well respected Accountant in Tenerife, I pay a lot of money for their work but never seem to make any progress.
I am too old for all this hassle and uncertainty - please, what is the answer? I do feel I have a good case to still be paying tax in England, I do consider myself just to be spending time in Tenerife and England is my home and where my family is. I could return to live there at any time.
I do hope you are able to advise me, any information will be much appreciated.
Yours sincerely, ***** (*****@******.***)
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello Julia, I'm Keith and happy to help you with your question.
To be non resident in the UK you should ensure that you spend no more than 91 days in the country in each tax year. These 91 days can be averaged over four years, but experts generally advise never to breach the 91 days rule. However, if you spend more than 183 days in Spain in ny one tax year you are liable to Spanish tax on your world wide income. Here are the Spanish Tax rates:
'€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%'
You may well be better off on UK taxation rates which are 20% on the first GBP 31865 and 40% thereafter.
There is a danger of your being caught as resident in both countries and thus liable to tax in both, but any tax paid in one country is allowable as a tax credit against a liability in the other and vice versa under the Double Taxation Treaty between the UK ans Spain which is designed to preclude the same income stream being taxed in both jurisdictions. What the Treaty does not protect you from is variations in tax rates between states.
Unfortunately, by your lifestyle you may have placed yourself as resident in both countries, hence your current difficulties. You must either change your pattern of movement to prevent yourself becoming resident in both countries for tax purposes or simply grin and bear it, using tax credits as a sop.
Sorry I cannot be more helpful. There is no magic wand here on your current residential scenario.

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