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Tax on Uk property rental with residency in Spain

May 12, 2010 · el spongebob · 4 replies · 3100 views
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Hello there

My partner has just been offered a teaching job in Mallorca. I am a total novice when it comes to anything like this so need all the advice I can get! We are both British but plan to make the move to Mallorca in the next few months and take up residency. I own a property in the UK, that I rent out using a letting agent and will continue to do so when we move. I also plan to get work when I'm out there, fingers crossed. I have been given an NRL 1 (non resident landlord) form to fill out which as I understand it, will exempt me from paying UK tax but could do with advice on Spanish tax laws etc.
Would it be beneficial to set up up a ltd company for the rental property or keep it as an individually owned property?

Thanks for any help/advice on this and any other things you think we should know
May 12, 2010 · ROB1305
Setting up a Spanish SL (= Ltd) company is complex and expensive (although I did hear that the government was going to simplify it to stimulate start ups in the current crisis)

I would doubt very much that that is a practical idea to reduce the tax liability on your UK rental income.

Suggest you read here
http://www.hmrc.gov.uk/cnr/nr_landlords.htm

and take professional Spanish tax advice.
May 20, 2010 · Advoco
I don't think it is quite right to say that signing up to the NRL scheme "exempts you from UK tax". Quite the opposite according to the blurb that Rob linked to - it says you can apply to have your rent paid gross but that it is still liable to UK tax and you have to fulfil your UK tax obligations (i.e. do a tax return if you have enough income to take you over your personal allowances). Technically in Spain you then have to declare the same income claiming credit for any tax suffered in the UK, although I don't see how the Spanish tax authorities are ever going to know you have rental income.
Jul 2, 2010 · el spongebob
Sorry its taken me so long to reply but thanks for the advice!