FINANCE
EUROPEAN PRESS
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3 - 9 October 2013 / Costa Blanca Nor th
EWN
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Spain And Offshore Assets As the Spanish government seeks to increase tax revenue, it has set its sights firmly on offshore assets. The international move towards automatic exchange of information will now provide much more data on undeclared or misrepresented foreign assets and income. There is nothing wrong with owning assets outside Spain, but you need to ensure you fully declare them according to Spanish legislation. It is worth reviewing your assets, with the help of a tax specialist, to ensure they are in the most tax efficient vehicles for Spain. In spite of all the measures to increase tax revenue, Spain can still provide tax advantages for UK nationals if you have the right advice. Some people who meet the Spanish residency criteria do not declare themselves for tax. The tax agency, the Agencia Tributaria, has been cracking down on this, for example by looking through utility bills and lists of foreign children registered in local schools.
By Robert Croizat, Senior Partner, Blevins Franks We are hearing more evidence that the tax authority is using information from abroad and writing to residents suspected of having undeclared funds abroad. A tax amnesty, the Voluntary Disclosure Procedure, was available last year to encourage taxpayers to regularise undeclared assets. As reported by Expansion this July, the Agencia Tributaria is following this up by sending requests to participants, asking for proof of the source of the funds or
clarification on discrepancies with data already on file. The requests are more numerous and detailed than before. Regular taxpayers are also being targeted. The article concluded: “It is clear that offshore assets are being targeted for full investigation.” The government then unveiled its new anti-tax fraud law at the end of October 2012, including the obligation to report assets and rights held outside Spain on Form 720. According to the guidelines of the 2013 Tax Control Plan, the tax office will look at taxpayers who did not submit forms, but who appear to conduct transactions abroad that imply that they do have assets outside Spain’s borders. Speaking in May, Prime Minister Mariano Rajoy said that 131,411 taxpayers had submitted Form 720, declaring assets worth €87 billion. According to GESTHA, the union of tax inspectors, this is a
very low number since there are around 2.6 million foreign residents alone, the group most likely to have overseas assets. This was reported in an article on the Sur in English website on 12th June 2013, where the Secretary General of GESTHA also told the newspaper that the government will now “seek to focus more on foreign residents in Spain, especially those from the US and those from EU member states.” Spain has signed an intergovernmental agreement for automatic exchange of information with the US. EU Directives, soon to be widened, also provide for automatic sharing of information. The G5 (Spain, UK, France, Germany and Italy) announced a pilot scheme for the multilateral, automatic and standardised exchange of tax information in April. The Treasury Ministry said this would also enable checks on information related to overseas assets.
In September the G20 pledged to introduce automatic exchange of information as a global standard. It is really only a matter of time before the authorities discover undeclared foreign assets. With the new asset reporting rules, the penalties for nondisclosure can be devastating. The tax authorities effectively have no limit as to how far they can go back to assess tax. When you add the various tax rates, penalties, interest and fines, it could add up to more than the value of the asset. While this all sounds very worrying, it need not be. With expert professional advice you can structure your assets to be both tax efficient and fully compliant in Spain, and so that Form 720 need not be such a concern in future. To keep in touch with the latest developments in the offshore world, check out the latest news on our website www.blevinsfranks.com