Expats who sold property in Spain are signing up for tax rebate suit

Just read this on another blog which might be of interest to some of you:

Hundreds of expats who sold property in Spain from 2004 to 2006 have registered for a class-action suit against the Spanish government, alleging they were over-taxed when they sold their properties.

“More people have been affected than we originally thought,” said Mark Bodega of HiFX, the currency exchange company which is helping to recruit cases for a Barcelona-based law firm.

Until the end of 2006, Spain charged foreigners a 35 percent capital gains tax, compared to 15 percent for Spanish citizens. But the European Commission ruled the policy violated the EU’s anti-discrimination laws and Spain eventually switched to an equal taxation system.

The Spanish firm of Costa, Alvarez, Manglano & Associates is organizing a case to bring before the European Court of Justice demanding Spain rebate the overpaid taxes, plus six-percent interest. The average claim is about €25,000 (about $37,000), the law firm says. A Web site set up for claims can be found here.

The lawyers registered more than 300 cases in its initial recruitment effort earlier this year and people continue to sign up, Bodega said, although he couldn’t put a number on the recent activity.

The Spanish government is rejecting efforts by property owners to claim the rebate through normal channels, Bodega says. Foreigners who sold property before 2004 are simply out of luck; the statue of limitations has run out on property owners who sold before 2004, he says.

Even claimants who fall into the time frame will have a long road to travel to see any money. The case could take years to wind through the system, even if the claims are deemed valid. Costa, Alvarez, Manglano & Associates is working the case on a contingency basis and will take a 35 percent cut, plus expenses, if the suit is successful.