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What's really happening in the real estate world in Spain? The EOS Team are going to be keeping you up to date with everything that's happening from a market perspective.

UK homeowners in Spanish victory
Thursday, March 12, 2009 @ 1:17 AM

 A court decision in Spain has opened the way for thousands of UK citizens to reclaim some of the tax they paid when they sold their homes there.

 
The High Court in the region of Valencia has ruled in favour of a British couple, Mr and Mrs Roy.
 
It told the Spanish tax authorities to repay them for being charged a capital gains tax levied at 35% instead of 15%.
 
A spokesman for the Roys' law firm said it was gathering similar cases, with an average claim worth £14,100.
 
"This discriminatory law was in force for many years," said Emilio Alvarez of Valencian law firm Costa, Alvarez, Manglano.
 
"It will have affected thousands of people," he added.
 
Law change
 
The opportunity to lodge a tax reclaim hinges on a change to the Spanish tax laws in December 2006.
 
Until then, people who sold homes in Spain, but who were officially non-resident, were taxed at 35% of their profits, rather than at the 15% rate applied to Spanish nationals.
 
The law was changed after pressure from the European Commission, unhappy that the Spanish government was enforcing discriminatory tax laws.
 
However, the Spanish tax authorities have resisted caving in to retrospective demands for refunds and only now, after the Valencian court decision last month concluded a year-long case, has the first ruling gone in favour of a claimant.
 
There is a four-year limit on making reclaims from the time when the tax was paid - typically six months after the sale went through.
 
So Mr Alvarez estimates that about 10,000 UK citizens who sold their homes between July 2004 and December 2006 still have an opportunity to press their claims.
 
Long drawn out
 
Several hundred people have signed up to pursue claims, but the process will not be straightforward.
 
Firstly they must lodge a claim at their Spanish tax office. Assuming this is rejected, they have just one month to appeal to an "economic tribunal".
 
If that, too, rejects the claim, then there are only two months in which to start pursuing the issue through the courts, which involves employing a Spanish lawyer.
 
Failure to take make a claim to the tribunal, or doing so incorrectly, can lead to the claim being struck out completely.
 
"We expect other tax offices to reject their claims," said Mr Alvarez.
 
"But the decision [in Valencia] was so clear, we don't expect other High Courts in Spain to come to a different decision," he added.
 
Other EU citizens who sold property in Spain will also be able to take similar action, if they want to reclaim some of the non-residents' income tax they were over-charged.


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