Monday, January 4, 2010

Article Printed in the Daily Mail - Spanish Tax Refunds

Up to 90,000 Britons who have sold a holiday home in Spain in the past 12 years could be owed thousands of pounds by the Spanish tax authority.
During that time, the price of holiday homes in Spain enjoyed a huge boom, with prices peaking in 2007.
But while the locals paid just 15 per cent in capital gains tax (CGT) on their profits when they sold, Britons and other non-residents were charged a hefty 35 per cent.

Experts estimate the homeowners who sold since 1997 could be due an average £13,500 tax refund.
The European Court of Justice has opened the door to this huge tax rebate for nonresidents by ruling that the tax regime was 'unlawful and discriminatory' to other EU citizens.
This latest ruling paves the way for tax rebates totalling £283million, according to calculations by foreign currency specialists HiFX.
The ruling applies to homes sold after 1986, when Spain joined the European Community, but the differences in the level of CGT charged to Spanish and UK nationals mean that rebates are only due to those who sold from 1997 onwards.
Someone making e100,000 profit on the sale of their holiday home, for example, would pay €35,000 in tax if they were British, but only €15,000 if they were Spanish residents - a massive 133 per cent difference. So they would be entitled to a rebate of €20,000 (£17,680).

In addition, they can claim interest on the amount of 6 per cent a year. Spain's two-tier CGT system was changed to a single rate of 18 per cent for all in 2007, after the Spanish High Court found in favour of a British couple who argued that they shouldn't have been charged more for selling their holiday home.
But at that time the tax authorities allowed only claims for tax rebates going back to 2004.

More...Tips & guides: Capital gains tax (
Tips & guides: Moving abroad - tax (
Tips & guides: Buying property abroad (

Now the limit for claims has been extended. HiFX estimates the average claim could be £13,370.
Spanish lawyer Emilio Alvarez of Valencia-based Costa, Alvarez, Manglano & Associates, who is handling hundreds of claims, says: 'There is a conflict between the European Court and our domestic procedure, which has a statute of limitation of four years.
'The Spanish legal procedures are complex. We are concerned that the authorities will reject claims. They may force people to go to the Supreme Court to uphold their claims.' The Spanish authorities will hold proof of how much tax non-residents paid originally on their sales.
Mark Bodega of HiFX says: 'You need to seek proper legal advice as it's not simply a case of filing a claim with the Spanish tax authorities.'
The amounts owed will be boosted by the exchange rate as the euro has soared 27 per cent against the pound in the past two years.
However, it is not easy to calculate exactly how much you will receive as you still have to allow for CGT in Britain. Under UK tax rules, if you are taxed less overseas than you would have paid here, then you have to pay our taxman the difference.
So once you receive your refund from the Spanish you may have to hand some back to HM Revenue & Customs.
Until April 2008, the top rate of CGT was 40 per cent but rates were tiered - the longer you'd held the property, the less tax you had to pay. Everyone has an annual exemption from CGT which they can set against their gain before tax has to be paid. This amount rises every year.
Those most likely to gain are basic-rate taxpayers and those who owned their property for more than five years.
Our sister website today lists the top ten pitfalls of Spanish property ownership at homes-abroad

I paid a lot of needless tax
Donna Del Greco could be in for a £17,850 tax windfall from the sale of her Spanish property.
The 30-year-old (pictured) lived in Spain from 2002 to 2006 when she worked as a solicitor in Gibraltar. Donna, who now runs lettings agency Vanilla Lettings, in her home town of Bath, sold her three-bedroom villa in Alcaidesa having made a €100,000 profit. She would have paid around €35,000 in tax as a British resident. But a Spanish resident would have paid just €15,000 in her position. As a result she she be entitled to a rebate of €20,000 (£17,850) - though some of this may have to be repaid to the UK taxman.
Donna says: 'I had made tentative inquiries before about reclaiming the tax because it was so much. I basically only took home about €3,000 profit from the sale, despite the property going up in value by €100,000. There were so many taxes and charges. 'I'm going to pursue this because its unfair to have paid so much tax when I didn't need to.'

For more information on Spanish Tax Reclaim follow the link here and submit your details, the a UK company governed by the Ministry of Justice will handle you claim in a transparent and ethical manner.

Spanish Tax Reclaim Slideshow

There are currently many people persuing this matter and trying for a Spanish tax reclaim

Please be aware of the following criteria and requirements in order to make your claim.

Firstly you must not have been regarded as a Spanish Fiscal resident during the period of 1996 and 2006.

You must have been an EU citizen during this period.

You must have access to the Spanish tax form the "Modelo 212"

You must have access to a ciopy of the title deeds of the property plus a sales contract. Before trying to reclaim Spanish tax you must take note of the above.

Spanish Tax Refund

Any properties sold in Spain must have Capital Gains Tax levied against the profit made on the purchase.

Previously there were 2 rates of CGT in Spain, 15% - Spanish residents, then 35% - non-residents.

This two tier system was changed in 2007 and exchanged for a single rate of 18% for both parties.

As mentioned in the previous post the Spanish High Court of Justice ruled in favour of a UK couple who argued that the tax law they had been at the end of were regarded as discriminatory.

On the This is Money site, they used an example given by Patricia Mock, from Deloitte, who stated "as result of this ruling, those who were charged at the 35% rate could be entitled to a refund of anything in excess of the 15% rate - in most cases this will probably be a large amount.'

As a working example, suppose you sold your property for €200,000 and the value of it had risen during the period you owned it by €100,000 then you would have faced a tax bill of €35,000. For more information on making a Spanish tax reclaim please follow the link provided.

Reclaiming Spanish Property Tax

As many as ten thousand Britons have found out that their holiday homes could be entitled to a Spanish Tax Claim for possibly in excess of £140m in overpaid capital gains tax (CGT) after a ruling buy the European Court of Justice.

The Times newspaper gave details of Alan Roy, 65, and his wife Margaret, 63, from West Molesey, Surrey and their claim of £3,000 from the Spanish authourities after they were charged more than double the total paid by Spanish residents.

Many legal firms think that this is only the beginning as now a precident gas been set by many of the successful cases. There is also the possibility of claiming for the interest of approximately 6% a year from when the claim is started.

There is currently an issue, in Spanish law, that there is a tight window for initiating claims, so the people who sold property between 1997 and 2006 need to expedite their claims, to be sure of action.

The courts in Spain currently deliberating the cases of about two hundred and sixty British property and a further three hundred and sixty have put forward their details. There are several companies offering to help clients reclaim Spanish tax.