Britons living in Spain who have investments overseas are being warned to beware of the Spanish tax authorities’ clampdown on tax evasion. Afimar Accountants on the Costa del Sol says the Hacienda is now routinely investigating all forms of investment and pension income from overseas. In the latest development, it is pursuing ex-pats who have bank accounts in tax havens which they have failed to declare. Afimar believes the Hacienda is acting on the basis of information supplied by banks in the jurisdictions concerned.
Peter Howarth, a tax expert who works with Afimar, is urging Britons who have undeclared income to review their position and, if appropriate, to make the most of the current tax amnesty. The amnesty, which runs until 30th November 2012, allows people to admit to undeclared assets and pay a nominal ten per cent tax rate.
Peter explains: “A number of Afimar’s 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.
“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. We would advise anyone concerned about their tax liability to resolve matters while the amnesty is in place rather than wait to be caught out.”
The amnesty is part of series of measures to tackle Spain’s ‘hidden economy’. They include rules obliging people who set up overseas investments to notify the tax authorities and a ban on cash payments of €2,500 euros or more. In addition, the Organisation for Economic Co-operation and Development (OECD) now requires all member states to routinely and regularly swap all information relevant to personal taxes.
Peter Howarth said a range of factors were conspiring against those who were not declaring their full income: “For countries under pressure to shore up their public finances, tax evasion is a logical area to target and – as the current example shows – tax authorities from different countries are now routinely working together to catch offenders.
“In addition, a lot of data is readily available online so it is easy to track them down. We are convinced it is only a matter of time before the Hacienda begins to use Land Registry records to pursue those with properties in the UK. The world is becoming smaller and more transparent. People need to put their affairs in order now or potentially face tough penalties.”
report from Afimar, Fuengirola