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Just been hit with an extra tax bill for 5900 euros. This was a complete suprise, and I was not aware that the taxman could move the goal posts like this.
We were told it was 7% of the declared sale price as agreed when the money was transferred at the notary. This was all carried out 100% honestly and above board, now the taxman says we have to pay more on some figure plucked out of the sky that may have been relevent some years ago when the building boom was at its peak. This is totaly illogical, and unfair.
Has anyone had any success with appealing against this type of unfair tax?
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Hello,
Yes, the same thing happened to me under the same circumstances in 2007. Mine was in hte region of 6000 euro. s The figure you are being taxed on is the valor catastral of the house you have purchased...a figure most people would accept gladly for their house now. I ended up paying it as my lawyer told me to fail to do so would mean they could take the house off me!
It is so unfair but i honestly believe there is nothing you can do about it...sorry.
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We are going through a similar situation as a vendor. We purchased our house in 2006 our vendor at the time declared herself as a resident. She had all the correct paperwork to indicate that she was a resident and therefore the notary/solicitor did not retain the 5% of the purchase price (it has now been changed to 3%). We sold the property this month to a cash buyer. As we did not have any finance or any debts on the property, our solicitor considered the sale to be straightforward. However on the day of completion we were informed by the notary that there was a charge of 14,000 euros outstanding on the property which apparently was the equivalent to the 5% of the purchase price when we bought in 2006. It would appear that again the tax office have changed the goal posts and now require a registration certificate from residents when selling their property. This document did not not exist in 2006 - our vendor at the time showed her residencia card which was completely legal and was accepted by all legal parties at the time of the purchase.
We have been told that the law changed in 2009 and now the tax office require a registration certificate from our previous vendor to prove that she was a resident. Until this is produced the charge of 14,000 euros remains on the property. We now have a ridiculous situation where our purchaser now occupies the house - we have returned to the UKand have had to hand power of attorney to our solicitor to resolve this crazy situation. How the tax office can make a charge on a property retrospectively surely cannot be legal - our solicitor fears that this is another death knell in the housing market because unsuspecting vendors will not be aware of this change in the law until they come to sell their property. We have already made a massive lose on the property and now we find we have yet another charge to pay. We might just as well have given the property away. !!!!! If anyone knows how this can be resolved we would appreciate it.
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From what I hear this problem will become more widespread as more and more purchasers look for a cheap bargain and desperate sellers sale below the value the tax office put on the property. A family member had to pull out of a sale recently for exactly the same reason. All resident sellers have to apply for a tax certificate to prove they pay their taxes in Spain, this also is supposed to safeguard the purchaser. Some agents are not helping matters much by selling properties at ridiculous low prices even taking into account the fact values have dropped dramatically over the past three years they still seem to prey on the desperate, and then we end up with the exact problem mentioned in the previous posts. Before making a purchase or sale maybe do a bit of homework and check what the true value of the property is worth, apparently there is a sliding scale which will indicate the value the hacienda will except. A good lawyer should be able to get this information prior to any monies changing hands.
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Toddie
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The big con here surely must be the value the tax office put on the house?. The house's true value is what it will sell for in the current market, anything else is fiction. Sounds like Spanish justice again, not based on common sense or reason, more greed and lies!.
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Welcome to Spain - where buying a property should carry a very serious health warning!
What has happened here is that you have bought a property at a bargain price (below the mimimum acceptable price which is a multiple of the catastral value) and you have now been re-assessed to transfer tax on the difference.
The attitude of the Spanish tax authorities is just because you buy cheap or sell cheap does not mean they should also lose out on tax!
But your lawyer should have checked and advised you before hand so you knew to expect the additional assessment and then maybe you could have re-negotiated the price.
It is possible to appeal but as always no guarantees. You will need to find yourself a tax lawyer with experience in these matters.
If you bought in Andalucia then this site will tell you what is the mimimum acceptable value if you know the catastral value. If in another part of Spain then someone else will have to post links.
http://www.juntadeandalucia.es/economiayhacienda/apl/surweb/consultas/bienesUrbanos/valUrbana.jsp
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I know people who have paid it, contested it and then been refunded, its a possibility you can look at with a solicitor. Try to find someone that specialises in tax matters, there are a few around.
Joan
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We are the vendors in this case. We already have 3% retained based on the revised castaral value - we were informed by the solicitor that the authorities are going back through passed sales to recoup monies where the tax registration certificate has not been produced. Our solicitor has been in touch with the previous vendor's solicitor in the hope that a registration certificate can be obtained. But the worse case scenario is that we will be out of pocket to the tune of 14,000. Our life is on hold at the moment waiting for the authorities and legal people to sort this out. We certainly would not be entitled to claim a refund on this charge - we hope to get a refund on the 3% already retained.!!! But as you know everything moves at a snail pace in Spain.
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my general advice would be for an amount less than EUR1k to pay but for an amount greater then speak to a specialist tax lawyer
but always bear in mind in spain there are no guarantees and you could at the end of the day be further out of pocket by legal fees
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Just do the homework and then do it again and then use some common sense and a GOOD independant lawyer, not the same one as the vendor. Check on the true value of the property, not what the agent is trying to get a quick sale on ! There are no bargains in Spain as far as the tax side of things are concerned, they will always come after you one way or the other, even in the UK now. There is something simialr in the UK it's not just a Spanish con, if you try to sale a property for far less than the excepted value in the UK the tax office will investigate the circumstances !
Pattaly your lawyer should have seen there was a 14,000 euro debt on the property, did they not advise you on that. Debts always go on the property here in Spain and it is something a good lawyer should look into first. This message was last edited by Toddie on 27/06/2011.
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Toddie
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The charge on the property only came to light when the note simple was received on the morning of the completion. The solicitor applies for the upto date note simple on the day of completion to ensure that all there are no
The charge on the property only came to light when the notary applied for the note simple on the day of completion. This is the final document required to complete and is only issued on the day of completion. This is to ensure that the vendor does not incur debts against the property prior to completion .which then can be passed on to the purchaser Both notary and solicitor were in shock when the charge was revealed. The notary spent a great deal of time on the phone with the office which issued the note simple but they would not budge. Until they receive the certificate of registration the charge remains against the property. It is nothing to do with value of property it is all about reclaiming back taxes in a very underhand way. And they know they will get away with it because no one will dispute the tax office. We just hope that the person we bought from is able to come up with the relevant paperwork which enable her to receive a tax certificate from the tax office which will confirm that she was indeed a resident at the time of her sale to us. It is Spanish bureaucracy gone beserk.
TT
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There's a bit in one of the freebie papers about this. Properties sold in the last four years (for lower than they were bought for) have been valued at higher than they sold for and the tax man is issuing bills based on a formula only they understand. This, however, is not confined to Spain. It happens in France as well. It also happens in UK depending on which band the house is in. Several people have complained they have been charged CGT on the house they bought as they bought for lower than the tax man thought it was worth. This only used to happen when the price was silly (like someone selling a half million quid house to their kids for 20 grand) but some people have also been charged stamp duty even though the house is under the level (250,000??) by a few quid but the tax man reckons it was worth more.
This will only be applicable to resale houses but, beware, the tax man in Spain has also been investigating new properties which have been sold using the "black money" system where cash has been handed over as a deposit to bring the price of the house down. I know of several people who have an extra bill, me included about 3 years ago when I had to pay an extra €1500 to get my deeds despite the poroperty being bought nearly 10 years ago.
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Poppyseed
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It’s worth reminding ourselves what tax we’re talking about here. This is capital gains tax for which the seller is due. If the seller is resident, it is included in their Renta return unless they are exempt. Where the seller is non-resident, the Tax Authorities insist that the purchaser retain currently 3% (previously 5%) of the escritura price or assessed value and pay it directly into the Hacienda. Nowadays, I understand that you cannot complete unless that has been done. But the non-resident seller should submit a capital gains tax return within six months of the sale and pay the balance or get a refund.
Because the Spanish are world leaders in tax evasion, the Spanish Tax Authorities took steps against mainly native Spanish who understated the escritura price by ridiculous amounts thereby reducing transfer tax paid by the purchaser and capital gains tax payable by the seller. So they introduced the coefficient based on the catastral value as the minimum that they would accept as a tax base. It’s not some mysterious formula and any competent estate agent or lawyer can tell you what it is.
So when grodob posts “We were told it was 7% of the declared sale price as agreed when the money was transferred at the notary” then the problem is not the Spanish authorities as goodstitch would have us believe. It’s simply that grodob was given rubbish advice, presumably by his estate agent or lawyer either of whom should have known that the Hacienda would have been more than happy to tell them the minimum amount they would accept as the tax base.
My sympathies lie with Brits buying in Spain expecting to meet Brit standards of propriety. You don’t expect estate agents, bank managers, lawyers and notaries all to be conspiring to defraud the taxman. But that is what happens in Spanish Spain – less so now that the Tax Authorities are clamping down. It’s the Spanish way. But let’s remember how many of these Brits have been quite happy to go along with it and go down the black money in brown envelopes route.
I think patally’s case is different though. It looks very much as if the previous owner did not pay capital gains when she sold and the Hacienda are attaching that debt to the property. I don’t think the tax office can apply regulations retrospectively and, if that is what they are doing, I would imagine you could win your case with perseverance. But I would not be surprised to learn that there is something else going on. Incidentally, when you agreed the sale and were at the notary, had your lawyer checked with the Hacienda on the number you were putting in the escritura?
When patally says that the nota simple “is the final document required to complete and is only issued on the day of completion”, then I’m sorry but that is absolute rubbish. A nota simple is available from the Property Registry any time and, indeed, in Andalucia it is now law for every estate agent to have a nota simple less than three months old for every property on their books. It is good practice to get one on the day of completion to check that nothing has happened in the last few weeks but are you saying that this charge appeared in the last few days prior to completion?
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jek - good posting but I think the original poster is talking of additional transfer tax payable by reference to the deemed price as that exceeds the actual/declared price.
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Our lawyer made all necessary checks on the property and utilities and decided not to apply for the nota simple until the day of completion, just to make sure everything was completely clear and as already explained we had no finance on the property so he presumed that this would be a straightforward sale. The charge only came to light on the day of completion when the notary received the nota simple. Incidentally when we purchased the property we did everything by the book, there was no "black money" and everything was declared - all paperwork was correct. The requirement for a residential certificate is a new law introduced by the tax office in 2009. We are going to appeal against this but in the meantime we have the purchaser living in the property and all we have is the initial deposit - how long we have to wait for the remainder is anyone's guess.
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The 14,000 euros equates to the then 5% retention monies which a resident does not have to pay. The vendor at the time is and was a resident so therefore retention monies were not held. Meanwhile we have had 3% of the proceeds from our sale retained and which we will have to claim back - our solicitor says it usually takes a year for this money to be refunded!!!!
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"Our lawyer made all necessary checks on the property and utilities and decided not to apply for the nota simple until the day of completion"
No patally. Your lawyer did not make all the necessary checks. The most important check of all is the nota simple. It is unbelievable that he would choose not to get that straightaway. Think how much hassle would have been saved if your lawyer had done what almost every other lawyer does as their first act and got the nota simple. €3 in person; €12 online.
It's also not clear why the "buyers" are in your property without having paid the full price.
Have you considered consulting another lawyer?
Hopefully Maria will find time to post.
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" but in the meantime we have the purchaser living in the property and all we have is the initial deposit - how long we have to wait for the remainder is anyone's guess." Who, given this scenario, is currently legal owner of the property?
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Faro,
If you're looking at €14,000 extra tax, that would mean the Hacienda assessing the value of the property at €200,000 EXTRA!
I think this is, as patally says, the 5% retention towards the capital gains tax that her seller was liable for. If so, then I would expect a decent lawyer to have a fair chance of contesting it.
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