09 Sep 2011 12:00 AM:

Hi all,

We had an apartment in Marbella which we tried to sell over two years, including through Eye on Spain!  We paid 460K in 2005 and it was held in joint ownership between my husband, myself and my son.  We eventually sold our two shares to our Son and we put a market value on the apartment of 300k.  He paid us two thirds of this valuation.  Capital Gains Tax was withheld, which has since been repaid to us.

At the time of the sale our solicitors said that the Authorities might dispute the sale price but we had a valuation from our Estate Agents for 300K and also the experience of trying to sell it over two years so we were happy that we could stand over the price.The value of the apartment with the Tax office was E421,548 and our Solicitor suggestd that we could be fined E1,212, being 1% of the difference in the two valuations.   When we got our refund of CGT withheld, we assumed that this would be the end of the story.

However we have now recieved a bill of E2,339 from Patronato De Recaudacion Provincial, Diputacion Provincial De Malaga. The charge is headed up "Liq De Transmisiones Gestion".  Our Solicitor is vague about the charge.  

Can anyone explain this charge and advise if we can have it refunded (we have paid it)

Jcashman

 

 

Thread: Fine on sale of apartment called "Liq De Transmisiones Gestion"

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02 Feb 2008 10:52 PM:

HI,

I appreciate that you are annoyed to be inputed rental income when you don't actually rent your Villa, this is basically just an additional way for the Spanish Authorities to milk non residents who purchase property.

My problem is a little different.  I do not have a problem paying Income Tax on the profit I make if I rent but a charge of 24% on gross rental turnover amounts to more that the net profit I would make from the apartment. 

I do not believe it is legal under European Law for the Spanish Revenue to charge more on rental income for non resident EU citizens than Spanish residents.  They had to change the rules for Capital Gains Tax and I am hoping that they will have to change the rules for Income Tax on rental income for non residents.

Regards,   TaxLady

 

 

Thread: Spanish Income Tax on rental income for non residents

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02 Feb 2008 12:00 AM:

 

Hi All.

I have a problem with my spanish income tax on rental income. Where an apartment is let in Spain, as a non resident, I am exposed to a flat rate of 24% on the gross rent, without any deductions for legitimate expenses such as repairs, service charges, depreciation of furniture etc. In essence, it is a tax on turnover as opposed to profit.

However, I understand that if I was Spanish resident I would be allowed such deductions in arriving at my taxable rental income.

In my case, given my legitimate expenses on my apartment, the 24% Spanish tax will exceed the rental profit I have made on this apartment.

Up to 2007 Spain charged non residents 35% Capital Gains Tax while residents were charged 15%. This was discriminatory to EU citizens and a case was taken to the European Court. The Authorities were forced to change. Both residents and non residents are now charged 18%.

Surely, a similar discrimination applies to the differinig rules for residents and non residents for Income Tax on rental income. I don't know of any juristiction that taxes rental turnover as opposed to profit. Both the UK and Ireland charge profit. Does anyone know if this situation is likely to change or if there is any case being taken to Europe on this issue.

I do appreciate that many non residents do not declare Spanish rental income, and given the flat 24% rate, suddenly I understand why but I wish to be fully compliant as I am a tax advisor myself.  From the discussions on your forum, nobody has discussed this point.  

One of your contributors wrote "Property owners are taxed on their property income. The tax base is the property cadastral value (valor catastral), which can be found on any I.B.I receipt. Tax base rate is 25% of a 2% of the cadastral value." 

I believe this quote applies to a situation where there is no actual declared rental income - my situation is that I will have my apartment let on a long term lease, so there will potentially be actual rental income.  Nobody seems to discuss the actual reality that there is a 24% charge on gross rental turnover.

I would appreciate some feedback.

TaxLady

 

 

Thread: Spanish Income Tax on rental income for non residents

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