Spanish authorities target expats in tax clampdown

Expats living in Spain must declare all their assets held outside the country to the Spanish authorities under new rules designed to target tax evasion.

Residents have until April 30 to declare all relevant overseas assets worth more than €50,000 (£44,000) and could face huge fines for not complying.

Expats are considered residents in Spain if they spend more than 183 days a year in the country, or if their spouse and dependent minor children live there.

In the case of UK nationals, the Foreign Office estimates that 800,000 British nationals live all or part of the year in Spain. Residency is difficult to measure, but estimates vary from 250,000 to 400,000.

Residents must declare the value of their assets on December 31 last year and failure to do so could result in fines exceeding the value of the asset.

The minimum penalty for failing to declare an asset is €10,000, as well as income tax on undeclared income, late-payment interest and penalties as high as 150pc of the total tax due on the asset.

Unpaid tax as a result of undeclared overseas assets worth more than €120,000 (£104,000) could also be considered a criminal offence of tax fraud.

The Spanish authorities are looking for people who not only own the asset but are the beneficiary or authorised signatory. The law also requires the average balances of bank accounts in the last three months of the year, and the acquisition value of properties.

In future the deadline will be the end of March, but those affected by the new laws will only need to report the assets again if their value has increased by more than €20,000 (£17,000.

Spanish authorities advise residents who were unsure of how to submit their declaration, which has to be completed online, should visit their nearest tax office for further information.

Different governments across Europe are looking at tax declaration. The pressure to raise revenue means that any legitimate methods to generate funds will be pursued.

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