Have you received a visit from the Spanish tax authorities? If so, UK Tax Refund, the tax and legal experts that we have recommended to you many times, warns and advises us in this article.
We probably don’t need to inform you that the Spanish tax authorities are having a terrible time right now. They need to create more revenue at a time when tax collection isn’t what they intended, but we’re not sure if the best way to do that is to go after overseas tax payers who submit their income tax returns on a regular basis with the sole purpose of keeping their tax affairs in order.
Over the last few years, the Spanish Tax Authorities have routinely sent out tax inspection letters inquiring about a specific tax year. We understand how you feel if you have received an unexpected letter from the Spanish tax authorities inquiring about the manner in which you have declared money obtained from a British source.
You need help understanding what the letter means and what action you need to take, so you go to the person who prepared and filed your tax return in the first place.
The issues begin when the Spanish Tax Authorities reject your response to their letter and demand that you pay an additional amount of tax on top of what you previously paid when you filed your tax return. You’ll find it difficult to comprehend what’s going on when you did everything you believed you should have done in terms of declaring your income and paying your taxes, only to be told that you didn’t.
You are not alone; it has happened to many others and continues to do so, they say the individual who filed their tax return did not provide them with an explanation that would assist them grasp the tax question and what they should do to properly defend themselves.
It’s also critical to stick to the deadlines for responding to the Spanish tax authorities. You may have everything you need to win your case, but if you don’t meet the deadline, you risk losing.
UK Tax Refund SL should be the company you contact at this time as they are HMRC registered agents and have a thorough understanding of both the English and Spanish tax systems, as well as how they interact.
You may be receiving a State Retirement Pension, a Private Works Pension, or a Government or Local Government Authority Pension, or you may be receiving rental income. If the Spanish tax office requests proof of your revenue sources and the manner in which they were reported on your tax return, you must be able to provide the proof and explanation.
If you earn income that must be disclosed in both countries under the Double Taxation Treaty and that income comes from a British source, you have the right to deduct the tax paid in the UK when filing your Spanish income tax return.
However, if the Spanish tax authorities inquire about how this was done, you must be ready to demonstrate and explain that it was done correctly. And this is where the majority of the issues arise; there are many Tax Advisers in Spain who are excellent at dealing with Spanish sources of income, but struggle to understand and deal with British Pensions and other sources of British income and how they should be declared for Spanish tax purposes. Or those who understand how to incorporate income from a British source in a Spanish tax return but are unable to furnish the necessary paperwork in order to respond to and appeal a tax inspection letter.
The moral of this story is that you will be the one to pay extra tax, not because you submitted your income tax incorrectly, but because you were unable to establish it was done correctly in the first place by giving the necessary proof and explanation, or because you missed the deadline to respond.
If you are one of the numerous Expats who has gotten a letter from the Spanish Tax Authorities, don’t be alarmed; there is almost always a solution to get your tax affairs in order.