European ruling on Spanish non-resident capital gains tax.

Hi everyone.

I just read this on a news website and thought it might interest some people on our forum.

Hope this link works...............fingers crossed.

WW

http://money.msn.taxbuddies.com/newsb.php?id=72>1=63262

Really interesting article - confirms that there is discrimination between Spanish residents and EU residents. 

One of our concerns at the moment is with regard to payment of tax on rental income.  Spanish Accountants have confirmed that tax is payable on rental income at 24% with no possibility of off-setting anything at all against that liability.  That means that the cost of electricity, water, advertising, maintenance of the property etc, cannot be off-set even though they are directly related to rentals.  Spanish property owners can, I believe, off-set this kind of expense against their tax liability.

I have no doubt that a large number of people simply do not declare any rental income at all (understandable!) but they run the risk of being caught out by the Spanish and UK tax authorities if they are receiving rental income and failing to declare it.  If any rental payments are going into bank accounts (Spanish or English), then they are traceable.

Not quite sure how we go about challenging this unfair discrimination.  My understanding is that if a Spanish person owned property in the UK and rented it out, making them liable to tax in this country, they would be entitled to the same deductions as a UK citizen, but the same does not apply in reverse.

Has anyone any thoughts on this - perhaps someone with an accountancy background or Inland Revenue?

Debbie

Hi again.

I thought the article I linked to would raise a few eyebrows.

Without wishing to sound too patronising, It's possible that many people do not realise the significance of that new ruling yet, but I agree with you Debbie, someone with legal/accountancy knowledge needs to have a good rummage around and see what they can come up with.

As you correctly point out, this case does prove that there is discrimination within the Spanish tax department against EU citizens who are non-residents in Spain. However the hope that the Spanish government will accept they may have to change highly lucrative areas of their tax system is, unlike me, very slim.

As for your comments on whether owners 'declare' their rental income to Spanish or UK tax departments or not made me smile...........obviously it would be highly irresponsible for us to suggest that tax evasion is acceptable.........(with tongue firmly in cheek)............and I would guess the moderators of this forum would take a very dim view of such behavior.............but cash is king Debbie and as long as it stays out of your bank account, totally untraceable.

Oh and a fire proof security safe fitted in your wardrobe in the UK costs around £150..........

WW 

Hi Everyone ,

Hi welsh wizard , looks like we'll be neighbours as I'm also in Garden 11.Having never purchased a property overseas before , I 'm new to all this.

I understand that we have to file our spanish tax returns every year? When do they have to be completed by, and what is the average bill ( obviously decided on amount of rental income ) ?

I also get charged E23.20 every six months by the bank for "commission non resident certificate provision" ?

I have emailed the bank and am awaiting a reply !!!

Look forward to meeting you all , out next at end of May , in the school hols , can't wait !!

We have just got a fiscal representative via our solicitors and it is costing us 120 euros a year to prepare the accounts, these must be filed and as we havent done this for the past year since signing for our deeds we were trying to sell our old property prior to completing on our villa jana condada we were told the notary would not make the sale as we had not paid our taxes, therefore we had to appoint the fiscal representative prior to sale.  I have not yet recieved the bill and I will post the info when we get it.

Just found this article on the issue of Spanish tax laws for non-residents, dated October 2008- 

http://europa.eu/rapid/pressReleasesAction.do?reference=IP/08/1533&format=HTML&aged=0&language=en&guiLanguage=en

 The complaint has reached second stage in the procedure - just need to find out what has happened since October 2008.  Will continue to look and post any further info I can find.

Debbie

Although I'm fully aware that non residents have to pay renta tax by completing form modelo 210 and I also know from the general forum that some members are contemplating doing their own return. My question is that as a non resident, who does not intend renting out the property, what is the basis for calculating this tax and just how difficult is the process.

Can the form be completed online?

Is there a specimen guide? 

Can a return completed for one year just be replicated on following years returns?

I think this is another excuse for the Spanish government to boost their finances and I would consider doing my own return in an effort to plug the hole in the bucket that is my spanish bank account.

Hi again.

I have to admit I am not 'The Oracle' when it comes to tax matters. Electrical matters yes, Spanish taxation no.

Mrs Welshwizard and I spoke to our Spanish lawyer and they offered to sort out all of our tax requirements for a fee. I have to admit that the fee is slightly more than the actual tax we have to pay, but for the reasons stated by Barbararollet below, I personally would rather know for sure all my dues were paid.

I have some bad news for you raff my friend.

Our Spanish Lawyer explaind a rather uncomfortable situation to us..........as things stand at the moment in Spanish law, if you are non-resident and own a property overseas (not in Spain), your Spanish home is deemed to be your 'second home'. As such, the wonderful Spanish tax system assumes you will be renting it out and therefore you will be required to pay tax on the assumed rental. Before you hit the roof and start asking me all kinds of technical questions, I don't know how that assumed income is calculated. We are in the same boat as many other owners and do not intend renting out our place, but we were told by our legal advisors that we still have to pay an amout in income tax. If my old brain remembers correctly, it was in the region of 120 Euros per year.

Please either check with your own legal advisor, or if anyone else on here knows more than me about this (which clearly wouldn't be difficult) please speak up.

WW

Hi guys,

We're not planning to rent out either and when we had the same discussion with our solicitor they also advised that there will still be an annual tax return required.

I'v written it down that it is due in May so we should know in a couple of months what it will be. The solicitor gave a ball park figure of 300EUR & 130 EUR to file the return on your behalf. That fee is for 2 of us as the returns are filed per person. 

Slightly off thread but on the subject of outgoings I believe we also need to register the property with Murcia town council to pay an annual property tax. Haven't done this yet cos we didn't get around to it last week but I think that's quite a hefy fee as well - 600ish EUR.