Until 1 December 2007, an individual who was resident in Spain for tax purposes paid tax on the sale of Spanish real estate at a rate of 15% whilst non-residents paid at 35%. The European Commission has now said that the 20% differential contravenes the European Community's Anti-Discrimination Rules and should not have been charged by the Spanish taxman.
Accordingly, individuals may be able to make a claim for repayment of the excess tax.
We hear that a number of claims for refunds have been refused but the taxpayer can appeal that decision through the Spanish system. It is likely that some test cases will be referred to the European Court. Many commentators are saying that this is a clear and obvious case of discrimination and that the European Court will find for the taxpayer.
The refund is restricted to individuals who:
- Sold a Spanish property between August 2004 and 31 December 2006
- Were not resident in Spain at the time of the sale
- Have paid Spanish tax on their capital gain at the higher rate
- Hold or can obtain a tax certificate relating to the payment of the tax (form Modelo 210 or 212)
Whilst the claim could take some time to turn into cash, it seems to us that this is something worth pursuing especially if the 20% differential is high in financial terms, in which case please speak to your usual Vantis contact.
Alternatively please contact Jonathan Hoffman or complete the online enquiry form below.