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Moving to Spain and maintaining UK non-dom status

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manukahoney

New member
My first thread, please don't be harsh :)
Long story short - I'm originally from Russia, moved to the UK 9 years ago, enjoyed a non-dom status very much. Eventually got naturalised, so now I'm UK/RU citizen.
Married, have one kid attending a boarding primary school.
Never worked in the UK, however made several SEIS investments and last year I started a software development company in Bristol (mostly to have some UK income source).

The last 5 years we enjoyed travelling to Barcelona every Easter break and spent most of the summer there. We liked it so much, I ended up buying a villa on the seaside (on my wife's name). The value of this property allows us to apply for Spain Golden Visa.

We were thinking about spending more time in Barcelona and much less in the UK. However I'm getting very mixed advice from my UK and Spanish tax advisors. My goal is to maintain a UK tax residence to avoid paying any tax on my global income while spending most of the time in Spain. So far I've got to setting up some basic rules how to do that, but maybe someone have been in a similar situation, so any advice is greatly appreciated.

Option 1: Me and my wife spend less than 183 days in Spain (1st Jan to 31st of Dec), my kid stays in the UK school, we claim our UK residence and Spanish authorities have nothing. We only pay "wealth" tax on property and do not need to declare our UK income or global income. Here both my tax advisers agree, it's a simple setup with close to zero risks.

Option 2: Me and my wife spend less than 183 days in Spain (1st Jan to 31st of Dec), but my kid moves to Spanish! school. I know, it sounds tricky, but we have grandparent who are happy to spend some time in Spain and the school is very close to our villa, so technically it's manageable. Here starts the tricky part - while we still have a UK property, UK income and spend less than 183 days on the UK - Spanish tax authorities might claim that we moved our "live interests" in Spain and demand us to be taxed locally.

Option 3: Me and my wife spend more than 183 days in Spain, but my kid stays in UK school (boarding). So while we technically spend more than half a year in Spain, our "life interests" are not so easy to determine and we might claim our UK residence instead of Spanish.

Option 4: I spend less than 183 days in Spain, my wife and my kid spend more than 183 and my kid goes to Spanish school. Again, not clear at all - my wife will definitely get Spanish tax residence, however my UK job and main residence (I only have UK property, not Spanish) my play in my favour when determining tax residence.

Unfortunately, there is no clear table or rules on how Spain makes decision on residence test, did anyone had a first-hand experience with situation like this?

P.S. I know about an option to structure all my assets under some kind of holding company and basically getting all my global income there, it might solve the problem in its root, however it's also an expensive and more risky option than just legally not declaring personal income in the UK.
 

Konstanz

Active Member
Yes, but only 90 days in a half-year period. Also due to Covid we can't travel to Spain unless we are EU residents (f*ck Brexit!).
If you are rich move to Monaco. You get 0% tax, good weather and forget brexit. You can rent or buy in Monaco and have villa for Holiday in nice place in France. Or just move to Monaco and visit Spain from time to time. It's not so far away.
 
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manukahoney

New member
Been there, frankly didn't get it. Maybe if I had a yacht or was a socialite - it would work, but I'm a simple guy that likes long walks, hearty food and nature. Non of this is present in Monaco.
 

Konstanz

Active Member
Been there, frankly didn't get it. Maybe if I had a yacht or was a socialite - it would work, but I'm a simple guy that likes long walks, hearty food and nature. Non of this is present in Monaco.
Long walks, hearty food, and nature are all you have there. Not precisely in Monaco, because it's like an "old town", but in surrounding France (french alps, Provence, beaches, loads of walking trails and nice food).
I am not here to convince you, but in Monaco, many many people from the UK live there.
 

Martin Everson

Offshore Retiree
Mentor Group Gold
Elite Member
I would only choose Option 1 personally. Spanish taxes are too much.

We only pay "wealth" tax on property and do not need to declare our UK income or global income. Here both my tax advisers agree, it's a simple setup with close to zero risks.

Plus your annual property tax (IBI) etc. Please note that due to brexit you have lost ability to deduct expenses and you pay a higher tax rate as a non-EU/EEA person now. But in your case I guess you can afford it all.

I would do everything possible to not be considered resident. That means having no economic interest in Spain at all other than your holiday home. You do not want Spanish wealth tax on world wide assets as the assets they include in that calculation is outrageous.
 

manukahoney

New member
IBI, yes, I meant this as a "property tax".

UK and Spain has DTT, and 90 days is enough to maintain UK residence, so it's a very tricky matter of double residency.
 

GiGoGo

I make things happen
Silver Member
Option 1 or 3. Definitely moving your child would trigger for hacienda.
Spain is my favourite destination when I retire. What you should do while in Spain is keep your banking offshore, keep your UK number with the free roaming and live in a place where you can pay all bills as a company.

Basically, do not domicile in Spain at all costs, so you won't be at Hacienda's radar.
Also, Barcelona is 3h drive to France, just buy something close and move between the two countries.
 

manukahoney

New member
Not necessarily kids at school, but "golden visa" can trigger tax inspectors
It most definitely will and we are ready for them. The only question is how flexible are residence rules in Spain/UK, so I was wandering if someone face the same issues.
Definitely moving your child would trigger for hacienda.
Not 100% sure about that - I have friends that basically sent their kids to Spain with grandparents, nannies etc and spend together summers. So far they had no problems with tax authorities despite having a "golden visa".
 

GiGoGo

I make things happen
Silver Member
1. Move all your assets to a holding. Don't distribute profits
2. Create a company in Spain
3. Invoice the holding for services / representation
4. Use the Spanish company for a low salary (24k/y) and to deduct as much expenses possible (rent a car, trips, phone)
5. Keep issuing invoices to the holding everytime you need more money, keeping the Spain company with low profit
 

manukahoney

New member
1. Move all your assets to a holding. Don't distribute profits
2. Create a company in Spain
3. Invoice the holding for services / representation
4. Use the Spanish company for a low salary (24k/y) and to deduct as much expenses possible (rent a car, trips, phone)
5. Keep issuing invoices to the holding everytime you need more money, keeping the Spain company with low profit
Thanks, I was thinking about it.
Moving all my assets to a holding is a long and tedious job, so I will go this way only if I'm sure to become a Spain tax resident.
 
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