Are you Modelo 720 ready?
I cannot believe we are already in October! And so the Modelo 720 raises its head again – you may remember that this is a new reporting requirement for residents of Spain (including foreign nationals) and April 2013 was the first year that assets held outside of Spain were to be declared to the authorities here.
We have worked with our clients throughout last year and this to put them in a situation where they are ‘Modelo 720 ready’. It is not uncommon for us to come across expats living in Spain ‘unofficially’. More often than not, many expats spend more than 6 months in Spain but still ‘declare’ that they are tax resident in the UK or elsewhere. The important point to remember here is that it is not where we consider ourselves to be resident that matters, it is where the Spanish authorities deem us to be resident should they investigate us! And the onus incidentally, is for us to be able to demonstrate and prove our stay in Spain each year is for less than 6 months.
Usually, expats continue to declare residency in the UK due to a lack of knowledge of and confidence in navigating the Spanish system. As UK expats we are familiar with terms like ISA, SIPP, OFFSHORE BOND, we understand them and enjoy the tax breaks that these bring with them as UK residents.
However, are you aware that similar tax breaks are available to you here in Spain? Many people are not.
Are you aware that although an ISA is tax efficient in the UK, it is actually the opposite here in Spain?
Are you aware that although an Offshore Bond is tax efficient in the UK, it is actually the opposite here in Spain?
Are you aware that although a SIPP is tax efficient in the UK, it is actually the opposite here in Spain?
Apologies for repeating the same question for all three different assets, I could go on to name other assets too, but the point I am making is that what is very tax efficient in one country is not necessarily the case in another – in terms of both income tax and inheritance tax (even spouse to spouse).
We can help you navigate the Spanish system by putting you in a ‘Modelo 720 Ready’ situation, but HURRY … TIME IS RUNNING OUT and although the next return is not due until between the dates of 1 January and 31 March 2014, the information on the Modelo 720 return is a snapshot of your overseas assets as at 31 December 2013.
If you enjoy the climate here in Spain, and the way of life, why leave yourself open to unnecessary tax and potential heavy penalties (not to mention the sleepless nights and looking over your shoulder, wondering what the contents of a letter from the authorities means when it lands on your doorstep unexpectedly).
By ‘Modelo 720 Ready’ I mean that we can help you put your finances in order, taking advantage of the very generous tax breaks available to you as residents of Spain and often as a result many of our clients are not even required to complete the Modelo 720 and can sleep at night in the knowledge that they are legitimately taking advantage of those tax breaks.
Please take a look at our website – www.speedfinancialsolutions.com for further information regarding the Modelo 720 and contact us (Tel 951 315 271 or 951 318 529) – we are happy to discuss your own situation in more detail. One of our advisers will be happy to come and spend some time with you either in your home or at our office to explain and go through the Modelo 720 so do call to make an appointment.
Please do not adopt ‘ostrich syndrome’ and bury your head in the sand in the hope that the problem either disappears or ‘sorts itself out’ – there really is no need. By making a few simple changes to your finances you can continue to enjoy your life here in Spain and allow us to keep an eye on what needs to be done in respect of making your finances work for you.
Andrea Speed Principal 10 October 2013