Pliego - Murcia Gazette

Property News

€944 million tax refund is owed to EXPATS

A possible 90,000 British expats who have sold their holiday home in Spain at some point in the past 12 years could now be owed thousands of pounds by the Spanish tax authority. In a landmark legal case The European Court of Justice (ECJ) has ruled that the Spanish government has illegally overcharged non Spanish residents Capital Gains Tax (CGT) by 133% from 1997 up until December 2006.

Spanish natives paid just 15 per cent in capital gains tax (CGT) on their profits when they sold while Brits and other non-residents were charged a huge 35 per cent and looking at the figures it is clear that expats who sold their property since 1997 could be due, on average, over £13,000 in the form of a tax refund adding up to a total payout buy the Spanish government of some £283 million. Homeowners who paid the 15% tax will also be able to claim with the average payout looking to be around £7,000.

Other Europeans are also now looking at the ruling with many having paid out the excess tax now looking to claim a refund which, according to the figures suggested could be around €944 million.

Interest can also be claimed on the amount – at a rate of 6% per year – after the Spanish court changed the law in 2007 following a court case involving a British couple who claimed that the Spanish government had no right to charge them more than a Spanish national.

The amounts owed will be boosted by the exchange rate as the euro has soared 27 per cent against the pound in the past two years.

Valencia-based lawyer Emilio Alvarez, who is handling hundreds of claims, has stated to press: 'There is a conflict between the European Court and our domestic procedure, which has a statute of limitation of four years.

'The Spanish legal procedures are complex. We are concerned that the authorities will reject claims. They may force people to go to the Supreme Court to uphold their claims.' However, the Spanish tax authorities will hold proof of how much tax non-residents paid originally on their sales.

But things are never as simple as they appear (or as we would like them to be) and it is not just a case of adding up what you think you are owed and making a claim for it as anyone who claims will have to declare, and allow, for Capital Gains Tax to be paid under the UK tax rules. So depending on tax levels and where you pay them (Spain or the UK) you may be handing some over to the taxman in the UK (or wherever you live)

One expat who lived in Spain from 2002 to 2006 sold her three-bedroom villa in Alcaidesa having made a €100,000 profit. On that figure she realised that she would have paid around €35,000 in tax as a British resident but as a Spanish national the bill would have been just €15,000. So now she is entitled to a rebate of €20,000 (£17,850) - though as I stated earlier, the British tax man will want to get his paws on some of it.

Donna says: 'I had made tentative inquiries before about reclaiming the tax because it was so much. I basically only took home about €3,000 profit from the sale, despite the property going up in value by €100,000. There were so many taxes and charges.

Does this affect you? Visit www.spanishtaxreclaim.co.uk to find out more or call the Spanish Tax Reclaim Helpline on 0845 680 3849