Even if you own a property in Spain which is solely for your personal use as a holiday home, you are required to pay tax and should be submitting an annual return. The Spanish authorities are allegedly checking on adverts for holiday homes and with holiday property portal ads to catch out home owners making an income without declaring it to the Spanish authorities.

So while cost effectiveness would dictate that they will be chasing the big fish renting out their 10 bed mansions for 30,000 a week in the Costa del Sol, all bright ideas eventually filter down to the lower levels and it may be an idea to get your taxes in order before they come knocking on your door.

How much tax should you pay is a good question. As a non resident you would only pay tax on anything you own in Spain but residents are liable for taxes on their world wide assets unless they can use the Beckham Law which was passed in 2005. You are right, it is named after David Beckham the footballer as he was one of the first to use the law. Prior to 2005 if you remained in a country for more than 183 days in any tax year you were regarded as “tax resident” and your world wide assets would be open to scrutiny by the Spanish Tax Authorities.

With the Beckham Law, a Spanish resident can elect to be taxed as a non-resident meaning that only their earnings in Spain come under the Spanish Tax Authority jurisdiction. Tax would be applied at the flat rate for non residents not the sliding scale for residents and Spanish nationals depending on level of income.

The Beckham Law can be claimed for the year of arrival in Spain and 5 years thereafter making a total of 6 years. The law is geared towards wealthier ex pats and an application has to be made and accepted.

Nobody likes giving away their hard earned money to the tax authorities but if you thought that keeping your money in a less conspicuous location than a Spanish high street bank might lighten the tax burden then think again. I was reading an article the other day about the 48 countries blacklisted as tax havens by the EU. All the usual names were there like The Bahamas, Caymen Islands, Montserrat and Panama but on the list at number 8 was a bit of a surprise ….. Gibraltar which has for many years been a popular place for ex pats living in Spain to keep their money. While opening a bank account there is simplicity itself, transferring your money back to an EU country including Spain might not be so easy as they have the power to deduct over half of your transfer as a fine for fraud.

So perhaps the best idea is just to appoint a Fiscal Representative to submit your tax return for you and pay the few hundred the tax man will want so you can sleep in peace and not worry about his cold hand feeling your collar while you are lying on the pool terrace sipping a Sangria.