Spanish Tax Take Returns to 2007 Levels – and That’s Good

Spanish Tax Take Returns to 2007 Levels – and That’s Good

With more Taxes coming Spain continues to grow

Almost no one enjoys the idea of having to pay higher taxes. The reality is that higher taxes present a more favourable outcome than lower taxes though.

Look at the USA and Greece. Many Americans are staunch believers in the libertarian way, and almost any presidential candidate that suggests raising taxes is given the boot quickly. The result is that parental leave is almost non-existent, as is personal healthcare. Then there are all the problems with public transport and the roads in bigger cities.

Then look at Greece. The country struggled for years because of the culture of tax avoidance and the damage it caused to the economy. Some people might have become rich by dodging their taxes, but society as a whole suffered badly, and still continues to suffer.

Spain has taken a more socialist and liberal approach to taxes. Income tax is often higher in Spain than it is in the UK. Companies are also expected to pay high taxes on their profits. Even so, it’s usually clear where all of the tax money is going. All the roads, resorts, beaches, and cities are kept clean, modern, attractive, and safe. Spaniards are more than happy to pay higher taxes if this is what they get as a result.

With this in mind, many Spaniards will no doubt welcome the news that Spain is expected to collect around €200.9 billion in taxes this year. There are two main reasons this is good news. The first is that it shows the individuals and businesses of Spain are paying their fair share. The other is that it shows the Spanish economy is managing to perform quite strongly following the recovery from the credit crunch and double-dip recession.

The minister for the Treasury in Spain, Cristóbal Montoro, said that the €200.9 billion figure will be an increase of 7.9% on the tax take of 2016, as well as a record annual figure for the country.

The majority of this money will come from company profit taxes and personal income tax. Commercial taxes will be responsible for around €2.4 billion of the money; a 12% increase over last year.

Montoro also said that Spain has come clear of the economic troubles of the past five years; which saw the loss of 3.5 million jobs and a devastated GDP. Nowadays, both GDP and employment figures are up, and the government feels comfortable increasing taxes on companies. Increasing taxes is never very popular with small businesses, but economists consider it a necessary move to keep GDP growing.

The next aim for the minister is encouraging businesses to increase their wages to keep up with the wider improvement of the country. Montoro said that the time when staff are paid as if they work in a country on the brink of recession has passed, and that the economy is recovering.

It’s expected that the amount of income tax collected this fiscal year will be 7.7% higher than that of 2016. This shows an increase in jobs and wages, but it also shows there is still some room left for improvement.

Revision to Inheritance Tax Law Could See 30,000 Brits Compensated

Revision to Inheritance Tax Law Could See 30,000 Brits Compensated

Thousands of Expats can claim Compensation so speak

with the experts at Costa Del Sol Property Group

Spanish authorities could soon compensate thousands of Brits who were taxed unfairly. The European Court of Justice ruled last year that Brits who inherited a Spanish holiday home between 2011 and 2014 were charged a high rate of Inheritance Tax (IHT). Thousands of Brits may now be eligible to claim back these excessive charges authorities forced them to pay.

It’s estimated that the charges that were ruled to be unfair and illegal were applied to 30,000 Brits. At the time of inheritance they were classed as non-residents in Spain. Even spouses of deceased property owners who spent over half of the calendar year residing in Spain were erroneously categorised like this.

EU rulings mean that Spain has been now been forced to change their IHT laws that would previously levy punitive charges (some of which could reach as high as a third of the value of the property) in the event that a home was inherited by a non-resident EU citizen.

The changes in the law mean that legal proceedings have started to reclaim back the money paid to the Spanish tax authorities. Even so experts believe that it won’t be so simple to claim back the money. Right now the compensation procedure has not officially begun, though the Spanish government has created a five-year window that claims could be made in.

Spanish legal experts say that it could take six to eight months for a claim to be filed and compensation to reach the claimant. Many Brits would consider this wait worth it; the previous IHT laws saw Spanish residents become exempt from as much as 99% of IHT, while people who were deemed to be non-residents had to foot the entire bill; which could work out as being up to a third of the value of the property.

Spanish authorities demanded that IHT be paid within six months of inheriting the property. The British were the hardest hit by these charges because they are the largest group of foreign property-owners in Spain. The changes to the law were introduced in September 2014. It took a while but it looks like Spanish authorities have begun to get the ball rolling. It looks like the average repayment will be around €25,000.

Spanish authorities have conceded that non-residents who inherited a Spanish property within the past four-and-a-half years are eligible to claim back their taxes, but Expat homeowners in Spain only have one chance to lodge their bids for compensation.

If you  think you have been over charged then speak with Costa Del Sol Property Group today and claim your money back.

Britons Win £2.6 Million in Spanish Holiday Home Tax Fiasco

Britons Win £2.6 Million in Spanish Holiday Home Tax Fiasco

British people who bought Spanish holiday homes have been refunded at least €3.3 million (£2.6 million) in punitive taxes that should never have been charged to them in the first place.

Great news for any one purchasing a holiday home

The overcharging came as a result of Britons being overcharged Inheritance Tax and has led to millions of euros being refunded by the Spanish authorities.

The Barcelona based Spanish Legal Reclaims law firm is also managing a further €7 million worth of claims.

The CEO of Spanish Legal Reclaims says that anyone paid inheritance tax in the last five years are eligible to claim back the tax that they paid. He does warn that it is difficult to do this, however.

He also added that he expects at least €3 million more to be filed in the next few years as more claimants come forward and demand a refund.

There are other law firms who are getting in on the action and helping Britons win back their money after being unfairly charged inheritance tax. The situation is so bad that there are currently no official estimates on how much could be won back.

As Spain is the country where Brits usually buy holiday homes and second properties it’s been estimated that 100,000 people have overpaid a grand total of €300 million in inheritance tax.

Spanish authorities raised inheritance tax and levied it on lifetime gifts. Inheritance tax is paid when someone dies and leaves their home to their family or friends.

In several cases the inheritance tax came to a third of the value of the property and the person who inherited the house would have to pay this within six months of receiving the property.

On the other hand Spanish residents were exempt from up to 99 percent of inheritance tax and paid almost nothing.

It was decided by the European Court of Justice in 2014 that charging people from outside of the country, but still within the EU or a European Economic Area country, more than locals was discriminatory. As a result it demanded that these people should be paid back and even paid back with interest.

The average claim by non-residents is costing the Spanish authorities €30,000. This repayment is also not an automatic thing. Claimants have to file to receive one .

Mr Cuervo, CEO of Spanish Legal Reclaims, said that if a non-resident was charged inheritance tax since 2010 they are eligible to reclaim the tax in Spain. They would need the help of specialised lawyers however as it’s a complex thing to do. There is more than one form to fill in and you need all the help you can get.

UK Property Tax Totalling €1.38 billion Owed by Spaniards.

Spanish love buying property

The British remain the largest foreign investors in Costa del Sol  property and Spanish property as a whole, but data from the Spanish tax authorities show that it’s not an unrequited love as Spaniards owe €1.38 billion in UK property tax.

The information comes from the Spanish Form 720, which Spaniards use to declare any assets they own outside of Spanish territory when they have a value of higher than €50,000. Overall Spanish citizens are the proud owners of over €9 billion in overseas property.

The love spreads across all of Europe as France is where the majority of Spanish homeowners buy property. In France Spaniards own €1.73 billion in property, with the UK in a close second. Germany comes third with Spanish brick and mortar assets totalling €728 million. Fourth place is shared by Mexico and Portugal with €682.3 million.

This data is based on Spaniards who are still based in and living in Spain and doesn’t take into account expats who have long since said goodbye to the motherland.

Spaniards have also bought property in other places including Andorra (€627.4 million), Belgium (€485 million), the USA (€374 million), Switzerland (€354.6 million) and finally Italy (€309 million).

Many Spanish also own second homes on the coast and when the summer months come or its holiday time where the temperature inland is so high, the Spanish decent to the coast areas such the Costa del Sol.

UNPAID OVERSEAS TAX IN SPAIN WILL BE ABLE TO BE CHARGED BACK UNDER NEW POWERS BY HMRC.

UNPAID OVERSEAS TAX IN SPAIN WILL BE ABLE TO BE CHARGED BACK UNDER NEW POWERS BY HMRC.

Tax Law

New laws will make it harder for Britons to hide undeclared rental income on properties in the Costa del Sol and on assets in many overseas countries from 1^st of January 2016. This will include holiday homes and personal properties. A new information sharing system between international banks is to be adopted to stop this kind of fraud.

A public campaign started last year is to inform potential tax fraudsters of its new powers. This has come into force from December 31^st 2015 once the LDF closes in 2016 (Liechtenstein Disclosure Facility)

Over 90 countries that also include Spain have signed the agreement allowing the HMRC to be able to look into bank and savings accounts in foreign countries going as far back as 20 years.

At this moment the LDF permits HMRC to investigate possible tax evasion in particular counties, but has not fully been put into effect. This new system will mean that all nationals’ financial information will be shared within the 90 countries. This will include all trust funds and personal properties. This could mean that HMRC will fine and sanction criminals for non-payment of tax.

Current records of HMRC show that the amount owed to the UK Treasury is approximately £565 million in non-paid taxes from British nationals who have hidden undeclared hidden wealth. The new system and minority who do hide assets abroad will face tougher sanctions.

These fines could be to the tune of 30% of the amount tax due as well as being made to pay the full amount outstanding. An amnesty was issued in 2009 by HMRC for all British nationals to settle up voluntarily their overseas tax bills without them receiving any fines or prosecution or nonpayment.

This saw HMRC receive a total of £1.6 billion paid back. But they are now doubling up their campaign after a change in the law from the Autumn Statement.

Before it was considered that only deliberate non-disclosing of tax could have been interpreted as a criminal act. But with the change in the law. Any non-disclosed tax offshore be it capital gains or income will now be considered as a criminal offence from this year onwards.

This will apply to UK residents who have a taxable income in Spain   or outside the country.

France and Spain will start sharing information with UK from January 2017. But anyone with undeclared assets and income will be asked to come forward now as the HMRC will be able to go back through 20 years’ worth of personal transactions.

Any British nationals who buy a property in Costa del Sol and Spain and have sought out the right legal advice should already be informed of what they have to declare when it comes to tax. If you do live in the UK and own Spanish property, we would always advise you to see the correct information and frequently asked question about property in Costa del Sol and Spain from a qualified solicitor or an IFA.