you see visions of notorious individuals who try to evade the system
Al Capone the infamous mobster known for his extravagant lifestyle never filed a
federal income tax return and then there is Wesley Snipes the action star who
found himself in a real life legal battle
after failing to file tax returns for over a decade he was sentenced to more
than two years in prison for tax evasion story about Shakira the global superstar
has been ordered to stand trial and span on tax fraud charges Shakira the
renowned singer has been charged with crimes against tax authorities and now
faces a potential prison term and a substantial fine these examples remind
us that taxes are a serious matter and evading them can have severe
consequences
it's not always sunny in Valencia no no no
but it's still very beautiful I'm right here in the center in front of City Hall
I want to talk about something very important you know how I talk about the
beautiful lifestyle here how affordable it is fresh groceries and cheap food and
restaurants education and Healthcare yes everything is great but
there's this one thing that can change how we actually afford things here in
Spain and now I'm going to do a deep dive today and talk to an expert to find
out if Spain is really that affordable
because if you're an American there are a few things you need to
consider before you come here [Music]
the weather literally corresponds to the topic we have for today
you're the right person to ask all these questions which so many of my viewers
are having who are looking to come here live in Spain after
183 or 86 days you're obligated to pay taxes for taxes and see if you live in
Spain for six months and one day 183 days you are considered a taxable person
so that doesn't exclude you exactly in the states we have double taxation there
are agreements between different countries and the US can you give us
like a more simplified easy to understand version of this one okay the
agreement between Spain and United States it's a simple one United States
will tax you because you're a citizen and Spain will tax you if you have
property in Spain it's more or less like that if you own property in Spain you
will be taxed by a Spanish government even if you are not resident in Spain
for any property for any property any investment shares bonds anything and
even a current account you have in your bank you don't have it in Spain you have
it in the USA you have to list all Yes okay but if you don't own property in
Spain do you pay anything here since you're paying your taxes in the US yes
because if you're a resident in Spain you have to pay taxes for your worldwide
income there are two countries in the world taxing their citizens even if they
live abroad one is Eritrea a small country located in Africa and that
brings us to the only other country on the planet with a similar tax system the
United States the American worldwide tax duty is in effect since around 1860. are
there any deductions you can deduct the whole taxes you pay in other countries
so for example if I'm paying my taxes in the US I have expenses because I have a
business there which I'm showing in front of US government tremendous I have
my deductions there and at the end of the year I pay my taxes yes but I'm
living in Spain so how are they going to take the taxes that I already paid and
deduct them from the ones I have to pay here we will um calculate the Spanish
income taxes and if the rate in Spain is higher you will pay the difference if
the rate in Spain is lower you pay nothing even though I don't have income
here in space no income just because you're living I heard that Spain also
has a wealth tax yes but this is separate from the okay please define
that a little bit I know Madrid and the lucier are exempt so you don't pay well
it's not like they are exempt but they are 100 bonus you pay nothing okay and
now a new tax very wealthy people and solidarity tax
people who owns property yeah for more than 3 million euros we'll have
to pay this wealth tax okay even if they are living in Madrid or Andalucia okay
if you're living in Valencia we have the wealth tax which is over how much over
500 000 years but this money are for things
you have here or you have industry you have everywhere you can deduct the house
where you live only if it costs less than 300 000 Euros if it's higher you
will have to pay for the difference but the house it's not generating income if
you have a 1 million euros house you will be taxed for seven hundred thousand
every year every year it's like you're punished for being wealthy yes yes
that's why Madrid and Andalucia just put this bonus because they think wealthy
people is better to have than living there and pay their income taxes this is
something that let's say you invested money you bought your property yes it's
not something that's making money every year it's not something that's giving
you income you're not feeding off of that it's not yes it's one time thing
you paid and and you paid your income taxes when you got them the money before
yeah you have to pay
we have friends that have traditional Investments like stocks bonds different
things in the US okay are they being taxed on everything that are that
they're invested in you will be taxed on the profits in the income taxes and then
in the wealth tax you will be taxed on the amount except for funds for your
pension for your retirement those are exempt do you know a little bit about
Portugal taxes I took a look because many companies are going to work to
Portugal maybe this is one of the reasons that they are deciding not to
live in Spain and it's unfortunate because they're like so many things they
like the lifestyle they like the people if you're very wealthy the the wealth
taxes or you're going to live to Madrid maybe Portugal is better because their
income taxes is really similar to our income taxes what is approximately the
percentage you have to pay on this Properties or or assets that you have
paying the wealth tax is it a progressive rate it starts about
depending on the region 0.2 percent to 3.5 percent 3.5 yes that's the highest
yes the more you have probably the more you have exactly and then if you have a
high income and there is like a balance between income tax and property taxes
but you can't pay more than a percentage of your wealth okay with both tax
together that you have to check and maybe that lower the the wealth tax are
any donations or investment into a Spanish business are
they taxed are are these exemptions deductions for donations to Charities
okay and now there are another deductions in Valencia for example if
you renovate your house if you have kids for your school there
are deductions in Madrid that depends on the region in the states there is a
difference for example if people are married or have kids how is this similar
it is similar because you have dependence so yeah maybe if you bring
your father or your mother to live here and they are dependent on you there's a
higher minimum that is not taxable one other important question is because a
lot of my viewers are coming to retire here and they have their retirement
different types of Pensions or Social Security
is there any tax on this money they will have to pay here but they will deduct
all the taxes they pay in the States because many of these Social Security
benefits and pensions uh they're either directly deducted I think people don't
even fill out any yes because it's already you know you're retired yes you
don't really deal with that but maybe here is this looked as an income or it
is it's a considered income yes do you have any general advice for the people
that are considering moving here anything they can do to just maybe ease
this process here in Spain so it's not so complicated or they don't end up
paying upfront so much money maybe something they can do before they come
here besides talking to you
there's no uh like a magic way to come here and pay the lower taxes yeah you
just can't apply for the special uh regime to just to avoid five years of
Taxation right if you come with a non-locative Visa it's suppose you only
have savings right so yeah you don't work you don't you don't work you don't
make an income but for interest and dividends that will be taxed but there's
a limit you don't beat taxes more than 15 percent okay okay and that's the only
advice the wealth tax you can't avoid it the wealth tax was banned 10 years
before and then they put it again so maybe it will be eliminated when are
usually the the tax time when do you have to file okay you have to file
income taxes from April to June okay 30 the last day and the world taxes is the
same what happens if you miss this deadline or let's say you lived here for
a couple years you didn't know because you're a foreigner you are not aware
that you have to pay taxes what you do are there penalties how does this thing
work are you gonna go to jail like what's happening
if you were living here with an allocative Visa you will probably never
file anything with tax agency and maybe they they know nothing about you right
and you they do nothing if they find out you'll have to pay it you have to pay
interest and you have to pay a fine it can be up to a 150 percent if the amount
is very big as I said earlier Spain may not be very affordable to live in
because we are paying taxes for everything I understand but you have
also a great education great Health Care system after the recent elections in
Valencia there have been some changes to the tax law the wealth tax will be
eliminated in 2023 Spain has such an incredible potential for so many things
and people want to come here yes they're living here they're paying money they
want to open businesses they want to do things and when you're being you know
stopped with yes this kind of wealth stocks and others it's not just the
taxes you know the paperwork you have to do to get your ID card or your
permission or takes a lot an amount of time and an
effort that why I don't know it's basically pushing the brakes on
something good that can happen you know if you want to come to live in Spain
maybe you have to talk to an international tax advisors that give you
a hint of how the Investments you don't have to have it in United States but in
another countries okay so maybe people can consult and figure out specifically
because things are different for everyone yes for everyone thank you very
much thank you for coming was that the Starbucks here on the
corner oh man yeah it's a Starbucks they closed it oh
no actually there's one in the in the center that is always so crazy busy and
this had much bigger much bigger space here like I don't know why they closed
it from here to here where is it right there
so it's not closed after all ice chocolate mocha latte I mean a desperate
need of this coffee after this conversation about taxes I knew Spanish
taxes are a hassle and they're very complicated
but man there are things you can do legal
steps you can take to ease your taxation here
and of course everyone has a very different very specific financial
situation so talk to her consult with her I think I think she can be very
helpful off camera our conversation continued for a little bit and she told
me that some people are paying up to 47 taxes here in Spain can you believe this
47 and they still choose to live here I don't know what that means and if you
truly want to experience Valencia like a loco I have created The Ultimate Guide
to Valencia which I'll link in the description there you will find the
restaurants that I recommend different neighborhoods activities and everything
you need to know before you arrive in Valencia are you seeing more Americans
moving here any difference any the American populations had to double do
you think they're ruining Valencia are they
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