People fear a Cyprus-style grab': Expat exodus from Spain as deadline for Britons to declare property and savings at home arrives

• Spanish tax laws affect an estimated 200,000 British expats
• Residents must declare any asset over €50,000
• Expats want to come home but many can't sell
• Rumours of Cyprus-style grab abound

The pain in Spain: Lorna Ainsworth helps expats and says she has has been inundated with requests, mainly from elderly people who are bewildered

New Spanish tax laws affecting an estimated 200,000 British expats, have sparked panic, prompting some to leave the country or hand in their residence cards at town halls before today's deadline (30 April), fearing a Cyprus-style money grab.
Opponents, including Spanish politicians, have branded the new asset declaration law discriminatory, and fear an exodus of EU residents from the fragile economies of the coastal towns.
Russell Thomson, the former British Consul for Alicante, Spain, has led a petition to the EU, branding the law unlawful and discriminatory against non-Spanish residents.

The Spanish government requires that any resident with an overseas asset worth more than €50,000 and who lives in Spain at least six months (183 days) of the year is affected – and must declare what they own abroad.
Failure to declare or any errors in any of the 720 online forms will result in a penalty of €10,000 or more.
As relatively few Spaniards have assets outside of Spain, those most affected are EU residents, the vast majority of which are British pensioners and retirees who have homes in the UK and, or, rely on UK pension funds and trusts for their income.
They are required to declare UK bank account numbers, mortgages and other details, via professional intermediaries, in an online format, considered risky by many.
Any delays or errors will attract hefty penalties. No information has been given as to what will be done with the data. The new law was passed in November 2012, but the majority did not find out until several months ago via the local English-language newspapers.

Lorna Ainsworth, 67, a retired hospital manager and JP, who lives in Javea, on the Costa Blanca, is one of the founders of Xabia Democrática, a political party that gives much needed representation for expats. She has been inundated with requests for help, mainly from elderly people who are bewildered.

Overvalued? Analysts at Goldman Sachs believe the Spanish property collapse has further to go.

‘The stress of on them has been unimaginable. They have had to pay for Spanish tax advisers, but Spanish and UK fiscal rules are different. For example, many of the tax advisers do not know what a ‘bond’ or ‘a trust fund’. Mis-categorising these could tip somebody over the €50,000 threshold.
‘Rumours of Cyprus-style actions abound. ‘Many people I know intend to change from resident to non-resident status and use their homes here for less than 183 days per year.
‘Many people I know are leaving; many more want to leave but can't sell their properties'
The petitioners, calling themselves Concerned European Residents (CER)  represent a group of British and other EU residents, expat councillors and politicians, who want to ensure that the laws are applied to criminals ‘and do not impact on the rights and privacy of innocent pensioners.’
They report ‘a considerable uncertainty and a degree of anxiety as the deadline approaches’ in the British community, and warn that if the process is not frozen and modified,  ‘it will drive thousands of expatriates from Spain with the inevitable loss of tax revenues and employment opportunities’.
It says: ‘We are being targeted’ and forced to reveal sensitive personal information and data to others, including the authorities, with no guarantees that this information will not be used in a tax or asset grab.’
The petition also raises concerns about the security of this online data and the risks it presents -- especially given the high records of corruption in local government in Spain.

Worried: Sarah Hill says people in her local area are very stressed and fear repercussions from declarations

Sarah Hill, 57, a retired youth worker who lives near Alicante in Orihuela Costa, an expat ‘new town’ that is home to 28,000 British residents , said: ‘The government want us to declare all this info without telling us why and what they are going to do with it. If you don’t declare you get a huge fine.
‘It’s Big Brother. Those affected, legitimate tax residents in Spain -- who have done the right thing -- are not even allowed to vote nationally here.’

‘In the years I have been here, I have never known such widescale anxiety amongst so many expats. Here on my ‘urbanicacion’ people are very stressed.
'It’s hitting people with smaller amounts of savings. €50,000, the equivalent of £42,000, is not such a big amount by today's standards. The information given out by the Spanish Government has been very poor and sometimes innacurate and misleading, and it appears that rules have been changing.’

‘It's sending expats returning to the UK in droves. Many people are putting their houses on the market or dropping the prices. For many people, it is the final nail in the coffin. For those of us who remain and who have no wealth, many of us are working with charities to feed and clothe the hungry and poor. It will hit the local economies as it's the well-off ones who are leaving.'

A rush of expats wanting to head home

WHAT MUST BE DECLARED

Spanish residents must declare overseas assets worth more than €50,000 in any of the following three categories:

• Savings or deposits (including annuities).
• Shares or investments.
• Property.

So, if you have €48,000 of savings in an overseas account, and €47,000 invested in stocks and shares, you would not be required to declare either of these.

Spanish authorities also want people to declare if they are the beneficiary or an authorised signatory on an overseas asset.

Residents groups and online forums report widespread fear and anger throughout the ‘urbanicacions’ and coastal towns of Valencia – where expats make up as many as 77% of the population in some places – with many people reporting that they intend to leave Spain.

Town halls have reported an influx of people wanting to change their residency status or de-register at the town halls. There are also rumours of British expats handing in their residence cards at their local police stations and rushing to leave by the end of April.

A new law just passed in Madrid will prevent villa owners from letting property which will further hamper plans.
Lorna Ainsworth said: ‘There is no doubt whatsoever that people who retired here for a peaceful life feel somewhat beleaguered and the magic of Spain has gone. We have been criminalised; guilty till proven innocent.

‘Many expats kept property and money in the UK for when they are elderly, so that they could return to be nearer family or arrange care in the community or a nursing home when they were no longer able to cope here, as there are very few facilities for this in Spain.’

The petitioners say the new law, dubbed the new 'Spanish Inquisition' is a draconian measure designed to tackle corruption, after previous attempts had a poor uptake -- hence the hefty penalties.

However, its main victims are innocent foreign residents of Spain, ‘who, perfectly legitimately, have chosen to hold part of their retirement savings in the country of their nationality.’

‘Their assets held outside Spain are not wealth that has been siphoned out from the Spanish economy by corrupt politicians, money launderers and tax evaders,’

Russell Thomson, as lead petitioner writes.  ‘Our worldwide, tax-paid, assets mainly derive from our working lives prior to coming to Spain, and many of us have preferred to maintain those assets away from banks here, given their recent performance record.

‘We see that many Spaniards appear to be immune from prosecution even when they are openly exposed …and have known and very substantial assets of dubious origins abroad. We cannot escape what we see in terms of widespread mismanagement, overspending, wasteful and bankrupt administrations at all levels as well as rampant corruption.’
The petition calls for a delay on today's deadline and amendments ‘to ensure that the laws are applied with due force against their intended targets and do not impact on the rights and privacy of innocent pensioners.’

Push for Europe to overturn the law

Campaigning: Deputy Mayor of Javea Oscar Anton is opposing the new law and fighting for his residents - 55% of whom are expats, mainly British.

There have been three other complaints to the EU about the law, complaining it is unlawful as it breaks EU and Spanish laws.

The Double Taxation Agreement was designed to prevent these assets being taxed or grabbed-- but given what happened in Cyprus, and in light of Spain's record in introducing arbitrary laws by Royal Decree, people fear anything is possible.

Oscar Anton, the deputy mayor of Javea, where 55% of the population, mainly Britons, are affected by this – is one of the few Spanish politicians officially opposing this law. He says many EU residents are coming to Javea Town Hall each day wishing to de-register as local residents.

He issued a motion against the Spanish government, warning of ‘the economic catastrophe that could ensue if foreign nationals resident in Javea and other towns …take their business elsewhere or even only decide to become tax residents of their home countries.’ He is rallying other coastal towns to join the opposition.

He believes the law is discriminatory, and is not convinced the Spanish government is unaware of the effect it will have on EU residents.

‘An expat who has a home in their country of origin worth over 50,000€ has to declare it, a Spaniard who has a boat or luxury car worth over 50,000€ in another country does not have to declare it. Put this way it would seem to refute the government’s claims that they are not targeting foreign nationals resident in Spain.’
Data published this week by the Spanish government show that in some towns on the Costa Blanca, as many as 50% of homes are empty. Other data shows that nearly a quarter of the one million EU residents in Spain have returned to their home countries in the last few years.

Meanwhile, Portugal is encouraging expats to up sticks and move there, announcing that any new residents will not have to pay tax for the first five years.
The new law was passed by Royal Decree in Nov 2012. In March this year, the British Embassy in Madrid posted an update on taxation guidelines for Britons.

A British Embassy spokesman in Madrid said yesterday: 'We are aware this is an issue of considerable concern amongst the British community in Spain, as communicated by individuals, expat groups and the English language newspapers.

'While the requirement is not new, the new Decree allows for tougher penalties, and the legislation also means that criminal charges can be brought in the case of non-compliance. Severe penalties can be incurred for incorrect, incomplete or late reporting.

'Britain has a double taxation agreement with Spain to ensure people do not pay tax on the same income in both countries

'The updated guidance on the website is intended to remind British residents in Spain of their existing tax obligations. Taxation is a complex issue and the British Embassy and British Consulates are unable to assist with any personal enquiries.'   

Read more information from the UK government on the Spanish law here.