June 28th, 2013

The new requirement earlier this
year for declaration of overseas assets by Spanish nationals and Spanish
residents was expressly intended to be ‘for information purposes only’.

Most took this to mean that there
would no immediate adverse fiscal consequences based on the declaration made.
Indeed, where income and gains arising from the overseas assets in question
were already being declared in Spain, the declaration of the details of the
assets should make no difference at all (pending any Wealth Tax revisions).

However, it appears that some were
unaware of one fiscal consequence of the declaration, being the impact of
the Spanish tax which arises from ‘imputed income’ arising from
non-principal residence properties.

To clarify, a Spanish national or
Spanish resident who owns a property which is not their principal place of
residence is deemed to derive an income from the property (based on its
rateable value) even if no actual income is received in respect of the

For second (etc) homes in Spain, the
Catastral value is used to calculate this liability. But for ex-pat Spanish
residents for example, who still keep a property in their country of origin,
the tax is assessed on the basis of the last declared value of the property. In
the case of the overseas asset declaration, the requirement is to declare open
market value of overseas assets.

So, in some cases, Spanish residents
are now being required to pay a significant amount of additional tax in Spain
in respect of their property in their home country, even though the property is
non-income producing.

It is unclear as yet, whether this
is being universally applied- or indeed was an intended consequence of the
overseas asset declaration. Hopefully some clarification will be forthcoming
from the Spanish Tax Authority, as it is a factor which will need to be taken
into account by those considering becoming resident in Spain, but keeping their
‘bolt-hole’ back in their country of origin.