Just came across this that might be of interest with regard to avoiding extra transfer tax up to 4 years (and 30 days) after the sale/transfer of property.....

" For the future, where you are buying at a ‘good’ price it can be best to get a tasador report at or around that value and attach that to the excritura (Title) when its submitted to the Registrar. That way the tax authorities will know they have a fight on their hands if they try for the ‘complementary tax’.

Would be interesting to know where you came across that, also...

That way the tax authorities will know they have a fight on their hands if they try for the ‘complementary tax’.

And maybe that way the tax authorities may suspect you have something to hide.

Spanish Property Insight by Mark Stücklin

Would be interesting to know where you came across that, also...

Roberto...Try the site above. 

It sounds like a good idea, but I was just curious about the source. If Mark Stücklin said it, then it's probably good advice; if a company selling valuation reports said it, then i'd take it with a slight pinch of salt, and would hesitate to spread it around on forums!

Hi Roberto

It was on Spanish Property Insight

https://www.spanishpropertyinsight.com/discussion/forum-topic/extra-transfer-tax-4-years-later/?utm_source=Spanish+Property+Insight+News+Bulletin&utm_campaign=76a8742d6e-SPI-NB-050518&utm_medium=email&utm_term=0_5c1bbc37e8-76a8742d6e-137954973

Perhaps Maria could confirm if this is a procedure to assist in the longer term?

Extra Transfer Tax has been brought about by the corruption culture of Spain and now it has backfired. I remember buying my villa over 10 years ago and €180,000 went under the table right in front of the Notary in his office. I had no idea at the time what was going on, but both lawyers with the estate agent organised it and the bank manager played his part. I was told this was standard procedure in Spain and believed it.  

Thanks for the clarification. I don't mean to be too cynical, as it does in fact seem like quite a good idea, but...it wasn't actually from Mark Stücklin (who IMHO is a well respected independent observer of all things to do with Spanish property and with no ulterior motive), but a post on the SPI forum from a member going by a name which suggests more than a passing interest in Spanish surveys, finishing with a comment that you’ll find helpful advice on the internet - which naturally will prompt some (like me!) to then Google the aforementioned name! Not outright self promotion, granted, but probably not a totally unbiased opinion either!

Yes, it would be interesting to know Maria's thoughts on the idea of obtaining an independent valuation prior to purchasing and attaching it to the escritura documents. From my own personal experience of Spanish bureaucracy, however, I wouldn't expect it to make one iota of difference if the authorities decide to be awkward - but I do confess to being a tad cynical in such matters ;-)

Kavanagh

There are also other schools of thoughts as expressed in Spanish Property Insight....

"

La Complementaria – Root Cause

The spike in complementarias we are witnessing as a sign of the times does not relate to buyers under-declaring (to pay in ‘B-money’), rather it is the disjointedness between the Tax Office’s outdated valuations and today’s low property prices as a result of a prolonged eight-year property slump.

This can be explained because Regional Tax Authorities use standard value tables (bases de comprobación de valores) to determine the valuation of properties; each property has assigned a fiscal value in Hacienda’s books. Property Transfer Tax is a devolved competency and Spain’s seventeen Autonomous Communities, following article 46 of the Property Transfer Tax Law (ITPAJD), are empowered to review the declared sales price recorded in the Title deed before a Notary Public. Regional Tax Offices draw a comparison between the fiscal value of the property and the declared sales price at completion. Any meaningful deviation is taxed.

These rateable values are static and are reviewed from time to time (every decade on average). This was fine so long as there was a continuous capital appreciation but when the market grinded to a halt eight years ago these tables froze in time and do not reflect accurately in most cases the overall 50% depreciation real estate assets have undergone (speaking in broad terms). So basically these rateable values the tax authorities zealously use are, at best, outdated showing in most cases top-of-the-range pre-crash valuations which are logically not in line with today’s low market values. That is why bargain hunters are receiving these letters.

If the Tax Authority detects a statistical meaningful deviation they will exact the difference in what they deemed a buyer has under-declared. In most instances this is simply not the case. Buyers have only shrewdly taken advantage of the opportunities a crashed real estate market has to offer. Albeit unbeknownst to them this draws the attention of Regional Tax Authorities which will do their best to recoup what they (wrongly) see as an under-declared sales price."

Presumably for the above reason it has now been suggested that there is a procedure to assist from the outset of purchase that MAY assist in this regard going forward.

Roberto

It would appear that the "outdated" tables used by the authorities need to better reflect the realities, but until such time as this re-evaluation process takes place (which appears unlikely as it is as income generator...albeit some would suggest an unfair income generator),  then a valuation procedure at point of purchase could well assist any future challenge.

I look forward to Maria's assessment on this.

This message was last edited by ads on 10/05/2018.

The problem may indeed be "the disjointedness between the Tax Office’s outdated valuations and today’s low property prices" - and it could be remedied by the tax office simply announcing (in other words, coming clean and being honest about it) that transfer tax in future will be charged on their own nominal (outdated, if you like) valuations rather than actual sale prices - rather like with registration tax on imported cars. That would probably be very unpopular (so unlikely to be implemented by any govt. any time soon) but would it be very much different to how council tax is charged in the UK now, with no relation to the value of the property? Or more relevantly, how plus valia on property sales is calculated by town halls in Spain?

Kavanagh, it was at least common, if not standard, procedure in Spain, so you were not wrong to believe it. Whilst I agree mostly with the quoted article, it's also surely true that the black money culture in the past has contributed to the situation now? Property transactions regularly were declared well below the official valuations, but a blind eye was turned because the money was rolling in nicely anyway and every corrupt official in the Spanish system was benefitting too. They could have charged complimentary tax back then very easily, but didn't bother, because they didn't want to derail the gravy train. So it's fair to say that what we're seeing now is simply a continuation of the same culture of corruption, just in reverse, so to speak. The real reason they've started now is simply because the market slump has caused a massive hole in the public finances. Increasing transfer tax has probably only added to the problem - it was never going to help, since 8% or 10% of nothing is the same as 7% of nothing, and in fact may have put more people off buying, reducing the tax take to 8 or 10% of less than nothing.

Spot on Roberto

At what point I wonder, by believing it to be standard practice, does it all become complicit in the black money culture?

Apologies in advance , as this may be distracting away from the educative purpose of this thread. ;) Perhaps best debated elsewhere.

What the heck, let's debate it here. Nothing else going on on this boring old forum, let's face it! Not entirely sure though what you mean (as usual!) but by "complicit" I think perhaps you are suggesting "guilty" of going along with something knowing it's wrong? I did make the distinction between "standard" and "common" practice. I don't think anyone can be blamed for simply believing something to be standard practice because that's what a lawyer (or worse still, a notary) in an unfamiliar country tells you. Knowing that something is common practice, albeit obviously wrong, but going along with it anyway because you're in a foreign country and, well, who are you to criticise your host nation, it's culture and ways of doing things.....? Complicit? Yes, absolutely. Blameworthy? I wouldn't like to be sitting on the jury on that one (especially as I'd also be in the dock!!)

It’s a difficult choice to be honest Roberto and I suppose it depends how strongly you feel about the impact of corruption and the way it can cause all manner of harm to those who witness it firsthand.

I don’t want to cause division at the end of the day or personalise for that matter, but we are all different and deal with aspects of corruption in our own way. 

To work alongside those who have similar hopes and aspirations, irrespective of what nationality they are, to try and find solutions to some uncomfortable realities but with a common goal in mind is sometimes hard when cultural differences exist, but equally enlightening when you make progress together. But this also has the potential to gain greater understanding and respect for each other’s cultural differences at the end of the day.

So I personally don’t see it as arrogance or interference to strive for solutions in a host nation....I see it as a meeting of minds with a common purpose, sincere intent to improve the status quo and in that process learn from one another.

Each to their own.

I think corruption is to strong a word considering what the leaders of the country do, and get away with, likewise as in the UK.

Not declaring the true value of the house is a way of life in Spain, some think it doesn't go on now, perhaps not as much but it still happens, happens in the UK in a slightly different way, when I sold one business many years ago my accountant surprised me as to how much he 'Worded and Adjusted' the sale price figures to lower the tax paid, and not fully legal. I sold one UK house, cash sale,  and the buyer wanted to lose some money so on the books was lower then the correct price.

What the hell, everyone will buy under the counter, get away with not paying Tax, avoid VAT,  it's ingrained in people from hundreds of years back, we all know when you lower the price paid for your house you have extra cash to spend else where, so indirectly the government gets the tax but from other means and sources.

I don't have a problem with Un declaring what I sell, knowing full well that this money I saved can be put to good use by me, and not some jumped up official for his/her new suits, meals, hotel stop overs.

The real biggest difference here is 'Do as I say...Not what I do' ...And they can get away with almost everything.

Many times in life I have found the ones who shouted loudest about these goings on were the biggest culprits.

Basically I think Spain is a country that is riddled with diddle. It’s their culture and they like it that way. It does come as somewhat of a culture shock to naive expat Brits that professional accountable and regulated people are as bent as a 9 bob note and tends to take a bit of getting use to. Really it’s just all a game, the UK is much more discreet whereas Spain is quite proud of it and treat it as a laugh. Private walker dads army would fit in well here.

Whether or not it's arrogance or interference (not my words) to strive for solutions in a host nation surely depends on whether the host nation actually sees the status quo as a problem that needs solving?

I think the true purpose of EOS forum is for members to exchange useful information. It is not a platform for individual members under a pseudonym to carry out personal crusades regarding their beliefs of the rights and wrongs of Spain. Of course the odd comment is bound to be posted and that is quite acceptable.

I suppose it’s all relative to the scale of “problem” associated with corrupt practices and how indemic  it is and whether it causes wider harmful effects .....but not only to the citizens of the host nation ( such as impacting their economy )  or non nationals ( such as loss of life savings ) but if it has the potential to cause division, disharmony and distrust  then surely that can’t be in anyone’s favour can it?

In this case, even where the loss is to a far lesser degree in terms of scale, the lack of legal due diligence to forewarn of potential future tax burdens can result in making people sceptical and wary of reinvesting, or left feeling vulnerable as to wondering what might happen next, or distrusting of those in whom you placed your trust..... but at the end of the day it also depends on how much you care and respect your fellow man to behave relatively honourably and be trustworthy.

It appears to me that those who are of like mind in this regard, those nationals who bravely strive for solutions and changes to the status quo, are the ones who create an environment where mutual respect and trust can grow, where unfair economic activity can result in making those intent on benefitting at the expense of others, far more accountable.

Shall we move on to discussing the Iran nuclear deal now?