Claim back thousands from the Spanish government on homes sold before 2007

Did you pay 35% CGT (Capital Gains Tax) as a non-resident when you sold your property in Spain? You may now be able to claim back the difference between what you paid and the 15% that a Spanish resident would have paid.

Many people who paid 35% CGT when they sold their Spanish home before 1 January 2007 may now be entitled to claim back a substantial proportion of that tax. 

This could be very good news for the many people who lived in their own home in Spain, but who have since sold that property.

The European Court recently ruled that the Spanish practice of charging 15% CGT on assets held for more than 12 months sold by Spanish residents and 35% CGT to non-residents is an infringement of the freedom of the movement of capital. The difference in CGT treatment of residents and non-residents existed until 31 Dec 2006.

“If a property was purchased in 2000 for €89,000 and sold in 2006 for €199,000, the taxable profit would have been €110,000, The non-resident’s CGT would have been €38,500 while the resident’s CGT would have been €16,500, a difference of €22,000 that could potentially be reclaimed,” said Richard Mannion, tax director at Smith & Williamson, the accountancy and financial services group.

“However, there is a four year time limit on reclaiming this tax, which for non-residents runs from 30 days after the date of disposal of an asset, i.e. the due date for payment of the tax. This means that unless a claim has already been submitted, it is only possible to make new claims for disposals made within four years of the current date. For example, as of today (1 December 2009), you could only make claims on disposals made on or after 2 November 2005, provided the disposal was made on or before 31 December 2006. If you have already made a claim in respect of an earlier disposal, and the claim had been stood over pending the outcome of Spain’s appeal, then the reclaim should now be processed,” continued Richard.

For more information contact:

Richard Mannion, Tax director on  020 7131 4252

Email Richard Mannion

PR queries:

Kate Harrison / Jess Koslow  020 7131 4228 / 4264

Disclaimer

By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

Note to editors

Smith & Williamson is an independent professional and financial services group employing about 1,500 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Bristol, Glasgow, Guildford, Salisbury, Southampton, and Worcester.

Smith & Williamson Limited

Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International, a worldwide network of independent accounting firms