Expats Must Rush to Beat Tax Amnesty Deadline


A tax amnesty in Spain for resident expats that offers a fixed rate 10% penalty and gives immunity them against criminal or civil penalties is coming to an end.

The Hacienda – the Spanish tax authority – is closing applications from November 30, 2012.

Spanish residents and non-residents holding assets which should have been subject to taxes are subject to the amnesty and can make a declaration to the Hacienda to pay any taxes owed until December 2010 with a 10% levy.

The amnesty also works in reverse, so any expats with assets outside Spain can join the amnesty.

Any tax due from January 1, 2011, is not subject to tax forgiveness.

“Unfortunately, many clients are worried that once they make a declaration they will continue to be hounded by the authorities. This is particularly worrying as the amnesty specifically states that once a declaration has been made the authority retains the right to investigate further,” said Paul Barnett, of tax advisers Totus.

Stiff tax penalties

“Rumours the deadline will be extended have also been unhelpful. I do believe people should take the opportunity as the tax authorities are likely to be aggressive in their approach after the amnesty closes.”

The Spanish government has already announced anyone missing the amnesty will face stiff new penalties.

Paul Fidell, senior business development manager at Prudential, said: “This remains, a good opportunity for advisers to re-engage with their clients” and urged advisers to talk to those clients who have not yet made use of the amnesty, but could benefit from doing so, to do so before time runs out.”

Meanwhile, other tax advisers are warning that the Hacienda is pooling resources with offshore financial centres to track down taxpayers who have not participated in the amnesty.

London tax consultant Peter Howarth is concerned Spain needs to enforce a hard line in a bid to raise money to boost the nation’s ailing economy.

£6.6 billion in unpaid tax

“A number of clients have reported receiving letters about their offshore bank accounts. It is the first time we have seen the Hacienda using information supplied by a tax haven to pursue tax on undeclared income. The Hacienda has also sent enquiries based on information received from other OECD tax authorities,” he said.

“This might affect both residents who have offshore accounts and those who are claiming non-residence but have told their bank they live in Spain.”

The Spanish government has promised to find around £6.6 billion in unpaid tax by the end of 2012 by tackling expats and residents who have failed to properly declare their income.

The money will go in to the government coffers to offset a Eurozone bail-out of £89 billion to prop up banks suffering from toxic property debts.

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