Sellers of property in Spain prior to January 2007 may well be in line for a tax refund windfall following a recent court decision. The EU commission decided some time ago that the Spanish authorities were not entitled to charge 35pc capital gains tax (CGT) to foreigners while taxing locals at a rate of just 15pc. The High Court in the region of Valencia has now ruled in favour of a British couple, telling the Spanish tax authorities to repay them having charged a CGT rate of 35pc instead of 15pc. This is the first time that a legal case has actually been taken and won on this issue.
The opportunity to lodge a tax reclaim hinges on a change to the Spanish tax laws in December 2006, effected following an EU ruling that the discrepancy in rates charged to locals and foreigners was illegal. The recent judgement sets a legal precedent for thousands of EU citizens to reclaim money owed to them by the Spanish authorities. According to Spanish law firm Costa, Álvarez & Manglano, if you sold a Spanish property between mid-2004 and December 31, 2006, paying CGT at 35pc, you are essentially entitled to a refund. But, due to legal time limits, legal experts say submissions should be made quickly to avoid the expiration to an entitlement to a refund.
Contact us or your legal advisor if you have any questions over this matter.
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