Tax burden

Today is the first day that we Spanish tax payers have been able to sort out either under or over payments in the 2016 tax year. The Spanish tax year is the calendar year.

Everyone, resident in Spain, who earns over 22,000€ or has more than one source of income, has to make a tax declaration. If you earn money from more than one source you don't need to make a declaration if you earn less than 12,000€. The declaration is on worldwide income. What happens is that the tax office, Hacienda to you and me, sends out a thing called a borrador, a draft assessment. Once you are on the website you can check if the borrador looks fair enough. If you have just one job with one salary and things are pretty much as they were last year you may have to tweak a few things but, chances are, that the borrador will be close to the truth. For quite a few years all I did was to have a quick scan and press the accept button because Hacienda usually sent me back a few euros.

If your situation is a bit more complicated you can, of course, buy yourself the services of an accountant to help you fill out the form. I had a short period of being self employed and so I used an accountant, un asesor, for a couple of the declarations. The other option is to book an appointment at the tax office and go and get them to help you fill in your tax declaration. I did that at the beginning when the online version didn't exist. I also did it when I first had problems with the tax on my UK pensions. I reckoned that if a civil servant filled in the form it was much less likely that I would get a late night visit from some heavily armed tax officials keen to check my deductions.

My pension has been a right pain tax wise. It's paid in the UK. Part of it is a Government pension (the sort that police officers, the military, civil servants, teachers and the like get) and part of it is private. The Government Pension, under EU arrangements, has to be taxed in the UK. In the past the Government Pension didn't have to be declared in Spain. The amount was less than the UK tax threshold so, although it was in the UK tax system, I didn't actually have to pay any tax on it. The private bit, and that amounts to less than £400 per year, comes from AVCs. Although I nominally pay UK tax on that income too I have always known that it should be declared in Spain as part of my worldwide income. I didn't think though that even the meanest of mean tax officials would be worried about a piddling £400 earned and taxed miles away. I didn't bother to sort it out. It was pure, one hundred percent, sloth. I don't even have my usual excuse of worrying about speaking Spanish. The UK tax people must have grassed me up to the Spanish Hacienda and the Spaniards came looking for their unpaid tax. I was actually able to take advantage of a tax armistice to pay the back taxes I owed without any penalty but I did need to pay an accountant to sort it out.

Then some Spanish tax laws changed. Although Government Pensions remain taxable in the UK they now have to be declared as a part of my income or that of anyone in a similiar situation living in Spain. Were the situation to be that tax was due on that pension in the UK then Hacienda would knock the amount paid in the UK off any amount due in Spain. The system still avoids double taxation but it also did away with advantage that UK residents in Spain got from both the UK tax threshold and the reduced rates for people on low incomes in Spain.

So the borrador was available online today. Hacienda has a new computer programme this year and it has been widely billed as being easier to use. I agree. It was a lot slicker and a lot easier to understand than the older system. As soon as the system fired up it asked me how much I'd earned on my UK pension. I told it. I boldly clicked, I wasn't worried because I thought I was pretty well sorted, tax wise, nowadays. I insisted on legal contracts for both my teaching jobs and, without doing the sums on the tax deductions, I presumed that I was paying my tax bill every month from my salary much as people do in the UK with the PAYE system. I was wrong. For some reason one of my two employers appears to have paid none of my tax and the other seems to have paid at some discounted 2% rate. The lowest Spanish tax band is 19%. Basically then I've only paid a tiny fraction of the tax bill on my teaching work and none of the tax bill on the two UK pensions. When I pressed the button the shiny new computer system told me that I owed the difference. I felt nauseous as they say in Hollywood.

I'm not going to say how much the tax bill is because it would be dead easy to work out how little I get paid and that would be embarrassing. Suffice it to say that it would take me two months of teaching to earn enough to pay my outstanding tax. It was a bit of a shock to the old system I tell you.

Plans and plots

A while ago we got something from the Catastro, or Land Registry, saying that we needed to stump up 60€ to have our entry in the land registry updated. I did a fair bit of research at the time to find out what was happening and why. I came to the conclusion that the Catastro was doing two things at once - updating the rateable value of houses and checking that their details for each house were correct. If there was any discrepancy between their records and the actual state of the property they were systematically fining people a standard 60€ for regularising their records throughout Spain. I read somewhere that, in Pinoso, about 1,000 households had been charged the 60€. Considering that there are fewer than 8,000 people in Pinoso and presuming that more than one person lives in most houses it sounded as though a good percentage of the records were skew whiff in some way.

The system here is a lot like the old British Rates system. Each property has an assigned value calculated on the sort of land it occupies, what use the buildings or land are put to and the area it occupies. Basically then the Catastro says your property has such and such a value - a value that bears no relation whatsoever to the market value. Each local authority then sets a local multiplier. To give a completely fictitious example a 100 square metre house might have a notional value with the Land registry of 50,000€. The local council then sets its charge at, for instance, 0.5% of the value. In this case the rates would be 250€ per year. The last time our rateable value was updated was, I think, in 1987 so I expected a bill, a settling up.

Maggie picked up the new valuation and the updated bill from the Post Office the other day. It wasn't for a few euros extra it was for 1600 of the little blighters. It would take me about nine weeks work to earn that amount. By the time I got home Maggie had been investigating. She had been pretty sleuthlike and she'd discovered that, when they had updated our details, the Catastro had added in most of next door. So although it was bad we did, at least, have an obvious error. Well it's obvious to us and we just have to hope it's as obvious to the people at the Catastro.

Local taxes are collected, in most of Alicante, by an agency called SUMA on behalf of the local authorities. I went to the SUMA offices in Elda, about 25km from home, to see what I could do. The woman who dealt with me was pleasant, efficient and helpful. She told me that the bill had to be paid otherwise we'd find the bailiffs on our doormat or that our bank accounts had been embargoed. I asked if I could break the payment down into instalments and the answer was yes. She quickly sorted out the details. The good news is that, provided the Land Registry agrees that we are paying more than we should, they will pay us back. I asked the SUMA woman how long Catastro normally take to respond - well months, usually, she said, sometimes years - they're not quick.

And the process? Well, basically I needed to collect together a bunch of documents and write an explanatory begging letter. Literally. I used a verb at the end of the letter which is rogar a verb which translates as to beg or to plead. I used it because it's the sort of verb that I've seen in this sort of letter. Spanish letters from local and national government tend to an over complex and archaic language. I asked my friend Carlos, the author, to check the letter I had written and he didn't comment on the verb. I asked a work colleague to check the letter, she didn't comment on the verb. To beg, to plead is obviously an adequate verb when talking to the Catastro.

Today I handed in all the paperwork. The man I dealt with was a bit negative when I started, maybe he wasn't keen on dealing with another tongue tied Brit, but by the time I was getting ready to go he seemed to think it was a pretty simple and fixable error. Let's hope he's right and that it doesn't take months and months to get a reply.