Capital gains tax reclaims

admin — Wed, 08 Apr 2009 11:48:52 +0000

A British couple have successfully taken the Spanish tax authorities to court, winning £10,000 after it was proved that they had been illegally charged more than twice the amount of capital gains tax that would have been charged to Spanish residents when they sold a property in 2004.
After a battle lasting more than a year, they have successfully reclaimed their overpayment and the case now paves the way for thousands of other Britons to make similar claims from the Spanish government.
Until recently, British residents who owned Spanish property had to pay thirty five percent tax on any gains made when selling on Spanish property. This compared to just fifteen percent paid by Spanish nationals. The European Union challenged the rules, claiming they were discriminatory, and since the beginning of 2007 the Spanish tax authorities have charged the same fifteen pecent tax rate to Spanish and overseas property owners.
The Spanish court ruled that the initial case put forward by solicitors Costa, Alvarez, Manglano & Associates on behalf of Mr and Mrs Roy from the UK was so convincing that there was no need for it to be passed on to the European Courts of Justice (ECJ), which would be the usual procedure.
“Anyone else who believes they have been affected should come forward now with their cases,” said Emilio Alvarez, from the law firm. Six hundred other British couples are now putting cases forward, and all the cases will be decided separately by the Spanish court.
Whilst it is thought that thousands more British people could be affected, as a result of the Spanish legal system, claims can only be made if the tax bill was paid within the past four years.
Currency broker HiFX estimate that between 2002 and 2006 the average UK family selling property in Spain paid a tax bill of £14,000, compared with just £6,000 for a Spanish resident.
Taxpayers are also entitled to claim a refund for loss of interest at a rate of six percent from the date the reclaim is presented, making the total value of the claim even higher.
Mark Bodega, from HiFX, said “It is fantastic news that the first British couple has been successful and that a total of 600 other British claimants are now in the process of putting their cases forward. Between them they could reclaim £8.4m plus interest, based on the average reclaim figure at the moment of £14,100, but it is absolutely vital that anyone who believes they are affected comes forward to reclaim what they have wrongly been overcharged by the Spanish Government; £8.4m is a lot of money but really just a small fraction of what could potentially be reclaimed by Brits, which could be as much as £140m.”
The legal action up to now has been pursued on a ”no-win no-fee basis” with successful claimants paying thirty five percent of their tax reclaim to the lawyers. If clients were awarded an £11,000 rebate, they would end up with £7,150 after legal fees.
Derrick Howitt, 66, from Hampshire, is one of the property sellers effected who hopes to benefit from the ruling. “The Spanish Government is going to consider each case on an individual basis,” he said. “I hope they pay out soon, because the euro-sterling exchange rate is so good at the moment.”
Each case will be reviewed and decided upon by a Spanish court on its own merits and if you think you may be eligible the following are steps you can take to start the process.
1. Check you are eligible
You are if you sold a property in Spain between July 2004 and December 31 2006 and were not a fiscal resident in Spain when you sold it. You also have to have paid capital gains tax on the property to claim and need to have sold the property as an individual rather than a company.
2. Check you have the correct forms
You need a copy of a tax form called Modelo 212 or 210 to proceed. If you do not have this you will need a copy. The solicitors mentioned below can provide you with one.
3. Contact lawyers
Costa, Alvarez, Manglano & Associates have been handling cases on a no-win no-fee basis. They take a thirty five percent commission if you win, and can be contacted on 0845 680 3849. Thousands of Britons who sold property in Spain in the past few years could claim a tax rebate worth £10,000 or more after a decision from the Spanish courts recently.

Canary Island property blog » Capital gains tax

Capital gains tax reclaims