12/04/08-A Spanish legal firm has highlighted the fact that thousands of former Spanish property owners may have paid too much tax when selling their Spanish property. The stunning revelation indicates that they government discriminated between Non Spanish property sellers and Spanish sellers in its taxation policies. This claim could mean British property owners may be owed literally thousands in over paid tax. Up to 2007 a capital gains charge of 35 per cent was levied on property sold by non-Spaniards, despite the fact that the same tax charge was just 15 per cent for Spanish sellers.
Costa, Alvarez, Manglano & Asociados the Spanish legal firm involved in the challenge is taking the Spanish government head on. The claim is being is being prepared for the European Court of Justice for what it describes as illegal capital gains taxes on overseas property owners. They firm have found that until 2007 a capital gains charge of 35 per cent was levied on property sold by non-Spaniards, despite the fact that the same tax charge was just 15 per cent for Spanish sellers.
The legal company believes that an estimated £37m is now owed to British former owners alone. What is more, they say that Brits can now start the long process of getting their money back because, they suggest, it flies in the face of EU laws on discrimination. This means that if you were one of the 4,500 British citizens who sold Spanish property between 2004 and 2007, and were charged at the non-resident’s CGT rate; you could be eligible for an average rebate of £11,000.
According to the Spanish Ministry of Housing (Ministerio de Vivenda), non-residents sell over 17,000 properties a year in Spain. Based on the number of British ex-pats in Spain, the law firm estimates that around 50 per cent of these transactions were made by British citizens, and that around 17 per cent of those were house sales rather than purchases. If these estimates are accurate, it means that the Spanish government could owe Brits over €53.25m, around £37.27m, in capital gains tax refunds.
The ministry’s figures suggest that the average property price has increased from €125,000 in 2004 to €171,000 by the end of 2006. This means that the average capital gains bill for non residents was around €20,700, or £14,500, between 2004 and the beginning of 2007. Meanwhile, the average capital gains charge paid by Spanish residents over the same period was an average of just €8,892, or £6,224.
“Anyone who has sold a Spanish property between March 2004 and December 2006 will have been victim to this inflated capital gains tax rate,” says Emilio Alvarez of Costa, Alvarez, Manglano. “This saw non-residents scammed into paying inflated capital gains tax (CGT) by as much as 20 per cent. This tax trap is thought to have affected hundreds of thousands of people across the UK and Europe.”
A change in Spanish law at the start of 2007 saw the standard CGT for non-residents being brought into line with residents’ CGT. Although this went largely unnoticed, Alvarez says this now allows for those who may have been overcharged to get their money back.
Buying or Selling Property in Spain we can help
