I am currently jobless and am living off the interest from the house I sold in the UK.. (Will be starting a new business next year) In the mean time 20% is tax is taken off automatically everymonth from the interest earned(In the UK) At the moment I have been given a choice.. I can continue paying tax in the uk at a rate of 20% or the bank with which I hold the money passes on info to the Spanish tax authoroties (think it is called the european directive) and you pay tax here.. Now, my question is… Is anybody in this situation? and does anybody know how the the tax system works here?
Many thanks.. Richard

If you are resident in Spain in excess of 183 days in a financial year you should pay Spanish tax- You cannot be taxed twice on the same income - Double Taxation Treaty - read the UK govt tax pages.

The Spanish will not chase you to pay tax here (unless of course you start a salaried job in the system then its automatic)

If you come into the Spanish tax system it is 18% tax withheld on interest earned on a residents account. But you might want to think twice about moving sterling into Euros at the moment!

Thanks for your answer… Well my money is in nationwide @ 6.7 % so that at least compensates for the gbp weakness…. Even as a foreign exchange trader this move caught me and a lot of other traders by surprise ....Actually if anybody wants market info and forecasts for interest rates and foreign exchange rates will be glad to help Thanks once again
Richard

You have had a result with your Nationwide account as my friends with N/W accounts say that they can withdraw cash from their N/w accounts from Spanish cash machines with zero charges!

The POUND:EURO exchange rate is slowly climbing back up a bit despite the stock market problems, I can hear the sighs of relief!

I know..  It was during the run on northern rock…. Even with the interest rates coming down in the uk (a further 3 cuts awaited for this year) The price at whhich banks led to each other is still about 0.75 % above the base rate. This is the credit crunch still in full swing…  If we get down there in EURGBP definately buy euros at 0.71/0.72 ..or sell gbp at 1.41..  These are interbank rates so not sure how much comission to add ... Richard