I?ve lived in Spain nearly 5 years, bought my flat outright with no mortgage and for first year lived from our savings which came from the sale of our house in UK. We didn?t become official residents until 2 years later. My partner doesn?t work and I have had 3 jobs since living here, only one was legal and I paid tax for 6 months. My other two jobs were paid cash and therefore I was not able to declare my income officially and was scared to alert myself to Hacienda. However, although I am paid better than any Spanish legal job would pay, my income is for two people and I don?t earn enough to pay lots of tax. I also have an income from renting out my property to tourists a few days a month and have done this for the last 2 years due to the precarious nature of my employment. I have a current account and savings account with same bank and put a lot of what I earn into this. However, I am now getting increasingly worried that I may be investigated and if so it would be difficult to prove that most of this money was from my house sale 5 years ago and I have had to live on the other money coming in.

Somebody told me recently that Hacienda would look at all the money I have and tax me at 48% because they would assume that it was all earned during the last year and therefore I would be forced to pay a lot more.

My dilemma is that I have not been able to declare my income the past two years due to my employer not giving me a contract, if I suddenly fill in a declaration form now, after 5 years, surely Hacienda will want to know more about me. I truly haven?t got that much money and it?s all I have worldwide, I have worked hard to save what we have and this is mostly because it?s been so difficult to find a legal reasonably paid job here. I have no right to benefits if I lose my job or have been paying into the pension system here so the money I?ve been saving is for this reason. If the Spanish tax authorities discover me (I have paid tax before so I am in the system) then they will surely want to take it all away and I won?t be able to contest it.

If I take all my savings (about 20,000euros) off shore will they still be able to claim it - I am very concerned and don?t want to live in fear. Please can anyone advise me - I will be consulting my lawyer but it would help to hear from anyone out there who might have personal experience of this type of situation. I am sure I am not alone.

Hi LondonLady,

In my experience it doesn’t sound like what you’re doing is going to set off any red flags with the Hacienda, but I could be VERY wrong. I’m not an expert on this, but my general sense is that a lot of Spaniards earn a lot of money in the black too, and if everyone’s doing it then probably the Hacienda has a lot of work on its plate (meaning you’ll sneak under the radar). My suggestion would be to get a tax lawyer to guide you on this, and then try to get legal as soon as possible, probably by registering as an autonomo.

Remember this is just my personal opinion; I’ve never gone through this myself and am not registered to provide legal advice. 😉 I’ll look forward to hearing from anyone else who can provide their two cents on the issue here!

“If I take all my savings (about 20,000euros) off shore will they still be able to claim it - I am very concerned and don?t want to live in fear. Please can anyone advise me - I will be consulting my lawyer but it would help to hear from anyone out there who might have personal experience of this type of situation. I am sure I am not alone.”

I too would like to know more about the offshore option. Would it be safe from thieving mits?

I do not think taking it off shore is a solution, although neither am I an expert! All I know is the UK off shore banks now have to share info with the UK tax office so if you are not careful you will lose it to the UK tax office!

I do not think a solicitor is the answer either - you need a tax expert a gestoria - many advertise in the freebie Brit papers (in our area anyway)

Your employer has a problem also - I think the Spanish authorities are now taking a much harder line on employers employing on the black (to help stop illegal immigration)

The Spanish tax system does still have a lot of allowances so you might be pleasantly surprised how little tax you will have to pay when you find a way into the system.

Also dont forget that for the tax benefits (on property for example) it will now no longer be adequate to prove residency but also prove you have been paying into the Spanish tax system.

You should still have bank statements etc that prove that most of the money was legitimately bought over from the UK.

Keep us posted - your situation I am sure is not uncommon.

I’m sure that you are taxed on your worldwide assets once tax registered in Spain.

Yes this is true. The same as in any other country where you are registered for tax.

ROBI - 08 March 2008 05:35 PM

Yes this is true. The same as in any other country where you are registered for tax.

Not so in the UK, if you have an “off shore” account it is exempt.

I dont think so!

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