wealth tax abolished from january this year

For Maria with thanks x

My lawyer is telling me this....

At present time the only thing we have are press articles. We cannot give a complete explanation of the situation until it is published in the official bulletin. Only in that moment, we will be in position to make a valuation of the complete scope of suppression. There is no information about the suppression of wealth tax for non residents. Inheritance tax in Andalucia has not been changed by the moment as well.

Any comment, further info,  anyone??

From >>>>>> HERE

Wealth Tax Suppressed – From Next Year

The Government has decided to abolish the Wealth Tax, but it will not happen before next year.   Therefore, this year the fiscal representatives of non-resident owners will have to present the declaration form No. 214 and pay the tax.

Measures to combat crisis

In the last cabinet meeting, the Government decided on a number of measures to combat the crisis. In addition to the abolition of the Wealth Tax, the most important ones were:

• A reduction of 400 Euro in the Income Tax this year for employed, self-employed and “pensionistas”.    There will be a reduction of 200 Euro in the tax retention for June. The balance of 200 € will be spread over the remaining months of the year.
• All families who want to extend the period of their mortgage, will be able to do so without any additional costs.
• For renovation of buildings, the VAT will be repaid.
• A conference will be called to analyze the steps necessary to increase the number of protected dwellings (Viviendas de Proteccion Oficial). 

Adios “Patrimonio”!

30 years ago the Government introduced the unpopular “Impuesto de Patrimonio” – the Spanish version of a Wealth Tax. It was an ‘extraordinary tax’  not supposed to be permanent.   However, the great need of the changing governments for greater income made the tax a fixture in the budgets. During the past years the income from this tax has been used to finance the deficits of Regional Governments and thus the Minister of Finance will have to compensate them for their loss of income.

Most foreign residents, depending on their level of income and value of property,  did not have to pay “Patrimonio”  but for the non-resident property owners there was no escape from the form 214 (the combined declaration form for Income and Wealth).

As our readers will know, the non-residents had to appoint a fiscal representative if they did not want to have communications from the fiscal authorities sent to the address of their property in Spain. It has been the fiscal representatives who have collected the tax money due (normally at the beginning of each year) and who have then sent it to the tax man, together with the 214-declaration (normally in the end of the year).

The “income” of the non-residents to be declared on the 214 has in most cases been an imagined income from letting, based on the fiscal value. The “wealth” has been a vacation property used for sporadic visits. By combining the two taxes and introducing some years ago the figure of the “fiscal representative”, the Hacienda tried to make sure none of the non-residents escaped the taxes.

From next year

In the law-decree number 2-2008 which the Government introduced on Friday last week and which was published in the Boletin Oficial of 21st of this month, the Wealth Tax has finally been withdrawn, but only from next year.  This was an election promise of the PSOE 4 years ago. This means non-residents will have to accept, for this year also, their fiscal representative will collect the tax money and their fees, for the simple declaration (often the fees have been higher than the taxes).

Since the fiscal representatives in most cases do their job based on an agreement that must be cancelled at the end of the preceding year and also that they have a right to present the total sum due (the two taxes and their fees) to the bank of the taxpayer, we would recommend the following:

1. In good time before the end of this year (see the actual time limits in contract) send a letter of cancellation to the fiscal representative (in the form as described in the contract).
2. Present a letter to the bank instructing them that no amounts are to be paid next year based on this contract.  Ensure the bank sign a copy that they have received it.

It is to be expected that some new Rules will come from the Hacienda regarding the Income Tax declaration for non-residents and there will be a new form to replace the 214.  If and when it comes, we shall inform our members.

No tax gifts for retired residents

The tax reductions that the Government introduced in the same Law 2-2008, will NOT be applicable to most foreign residents, receiving a pension from their home country, that they then declare in their Income Tax Declaration in Spain. The reason for this is that the tax reduction of 400 Euro is coupled to the retentions to be made this year, and since the pensions of the foreign residents in almost all cases have no retentions in Spain, a deduction made in such retention cannot be made.

We shall also be looking out for any additional rules or clarification on this point and will inform our readers. We also recommend Residents to take up the matter with their fiscal advisors.

The Government has been very late in recognising a crisis exists (overlooking the obvious signs until the recent elections were won). The measures introduced in Law 2-2008 are hardly sufficient to swing the trend in the economy and especially not the property market. With courtesy to Ciudadanos Europeos/ European Citizens' Weekly Report (24/04/08).

This is reply received from Spanish accountant.

"Good afternoon.

 The Wealth Tax abolishment was one of promises made by the socialist party which actually won again the latest general elections held in Spain on 09/03/08. However, that needs to be approved and become a law to be valid, which might happen before the end of the year affecting consequently 2008 taxes once we calculate them in 2009.

 We are informing you now about 2007 taxes, payable in 2008, so none of the above will affect your calculations for last year taxes.

 I hope this answers your query.

 Regards,  "

Maria,
I understand some regions have suppressed IHT already - if not 100% ,then almost - and I have read somewhere that the same was under consideration in Andalucia. I just wondered if there is any tangible indication that Andalucia may also suppress IHT.

Tinto - Thanks for your response. I think that answers my query as best possible at this time.

Seems you have to wait till elections, Plexx

>>>> IHT INFO HERE<<<<

Posted on February 19, 2008 by Fernando Del Canto

Inheritance Tax abolition in Spain.

This morning I was reviewing the current status of Inheritance Tax in Spain, in light of the recent news regarding the abolition of the Wealth Tax after the general elections.The Wealth Tax is administered by the regional entities, Comunidades Autonomas, but legislated nationally by the national government.

This is also the case with the Inheritance Tax. What we have seen however is that the move on this tax has started by the regions by improving the position or even technically abolishing the tax itself. In this case, they did not wait for the central government to act.

Ten regions have already abolished this tax in the context of family inheritance. The regions are Madrid, La Rioja, Murcia, Castilla y León, Comunidad Valenciana, Baleares y Cantabria, in a first move and Canarias, Aragón y Castilla La Mancha in a second move. Andalucia is considering this move too, and again, that will depend on the regional elections this year.

We welcome the move toward abolition of the Inheritance Tax and the Wealth Tax in a system overload with income, indirect duties and VAT.

Further to my post of 24 Apr 2008 11:31 PM I've found THIS INTERESTING READING 

We are paying our solicitor 60 euros each to handle our tax liabilities in Spain, but despite several emails to them have heard nothing about what we owe. Is there a deadline when the wealth tax has to be paid by for the previous year? We completed in March 2007. Friends on the same development as us who completed after us have already had the payment taken from their bank & have sent us a letter from their solicitor saying that non payment will result in a fine plus interest so we really want to get it sorted.

Steve  - is this 590 euros on top of the wealth tax?

We are getting really confused !!!!

Sue & David

Thanks Morerasado

We still have not had a reply from our solicitor, but feel happier that we are within the time limits

Thanks for the reassurance.

I have received a notification from the lawyer i used to purchase my apartment that i owe wealth tax for 2007. I do not have a problem in paying the tax but do have a problem with

1, paying the law firm €116 to do this for me as they only operated to do the legal work when i bought the property

2, how they arrive at the tax(€564.57)

3, being told i have to pay them by 30th Nov 2008

I paid €189,000 in may 2007,but am being asked to pay €564, so at 0.2% tax this values the property at €282,000....  in your dreams, in 2007 they were changing hands at €150,000.

Do you have to pay tax for whole year or is pro rata for the year?

Is it possible and easy to fill in the forms and do this yourself?

Any guidance would be appreciated.

Thanks

Simon