Capital gains tax - refund ?

Hi

My mother sold her house in Calpe about 16 months ago, and at the time had to pay almost 5,000 euros capital gains tax that her solicitor said she had to pay but then could simply claim it back. A long story about inheritance and not submitting tax returns whilst she lived there as a pensioner.......... Her solicitor stated that this was a formality and completed the refund paper work and submitted it at the same time as making the payment. My mother was told just to sit back and wait for the refund and this often takes up to six months to materialise.

As I said that was 16 months ago with no sign of the money, I have of course contacted my mother's solicitor to enquire but each time I have been told that there's no news and we simply have to wait. All this time my mother is still paying bank charges as she has been told that the refund will go directly into her bank account so it must be keep open.

I hope this makes sense and does anyone have any advice, can I chase matters up my self etc?  I don't necessarily distrust the word of my mother's solicitor but time is dragging on.

Best regards for Christmas and the New Year, Ian Simkins

Had your mother (whom you say lived here as a pensioner) been registered as being resident in Spain, had lived as such in the property for 3 years and was over 65, she would not have had any capital gains tax to pay.

That she appear not to have complied with the law, made tax returns as required, etc. it may not be straightforward.

Without all the facts, I would suggest that no one can give any advice which would be more than a guess.

the ·3% is not to cover outstanding debts but  QUOTE:

When a non-resident sells property in Spain, they buyer is obliged to retain 3% of the price and pay it to the tax authorities to cover the vendor’s tax liabilities. If the vendor is due a refund after the tax has been paid, it can take years to get money back. And if the vendor’s tax bill is greater than the 3% retention, the Spanish tax authorities may chase the vendor back home.

The retention payment is a withholding on account of any Capital Gains Tax so they are not two separate taxes, but rather, one and the same tax.  This is why it is correct to state that the amount withheld is Capital Gains Tax.   It is not withheld to check outstanding debts on the property but collected as a prepayment of Capital Gains Tax.   If no Capital Gains Tax is payable, it will be refunded but it may take some time.   Sixteen months would not be unusually high in some areas.

You could contact the appropriate tax office and try to determine if there is a reason for the delay and if it will be refunded eventually.  It is adviseable to go in person and with a Spanish speaker if you are not.  You will need a copy of the refund request but your solicitor should be able to provide this.

Many thanks for all the informative replies, 'lobin' seams to have hit the nail on the head with his description of why the funds were held back in the first place.

I will make arrangements to try to chase up the appropriate tax office in the new year

Incidentally My mother was over 65 and had been a resident for over 3 years.

Best regards Ian

IHS,    ...........  My mother was over 65 and had been a resident for over 3 years............

If she resided in the same house for 3 years, then she is exempt from any capital gains and there should not have been any retention.

That said, if she did not make the obligatory income tax declarations in Spain (obligatory even if the income was under the tax free limit, say just a UK OAP) then she would have had difficulty showing she was tax resident for that period, and thus the buyer may have insisted on retaining the 3%, which he/she would have paid into the Hacienda account for that purpose.  Your mother should have receipt for that deposit

NB  Some think that they can choose where to pay their tax,  i.e. in UK on UK pensions and income, that is completely wrong.  If you live (reside) in Spain you must declare here (with a couple of exceptions, including government pensions to former government employees, police, military etc. although all other income of those people, including OAP, must be declared in Spain, not UK). 

Johnzx

You are spot on, she did not submit any tax returns in Spain as she was informed by her UK accountant that non was due. This information was correct however she still should have submtted returns in Spain, as it would have saved all this hastle and delay.

At the time of completion she was told that she would get a full refund in time, this comes back to my original question - How long should it take, as I feel 16 months is a tad excessive when she was lead to belive that it could take up to 6

Regads Ian

“…….. she did not submit any tax returns in Spain as she was informed by her UK accountant that non was due. This information was correct however……….  “

I do not understand how you can say that it was correct, when she was obliged to make the returns in Spain .

Not making tax returns which are obligatory, might result in fines being imposed

Baddly worded on my part, what I meant was there were no taxes to be paid in Spain due to her income. However, Yes she should have submitted returns.

Ian

Last year I had to pay tax on my OAP as it was over the Spanish tax free allowance.  As I said,  if the guy in UK said she did not have to make a tax return, then at least that was wrong, so maybe saying she had no tax to pay was also wrong. 

Incidentally she would have had Plus Valir to pay on the property, to the local town hall, Within 3 months of the sale I seem to remember.  So maybe that had something to do with retention.  And maybe the IBI (rates) for the year, as legally the person who is the owner on 1^st Jan is responsible and has to paying for the whole year.

I would suggest you get in touch the person who acted for your mum on the sale and find out exactly what the position is as he understands it.

Many thanks once again for taking time to reply. My mothers finaces were checked at the time of the sale by a Spanish accountant (who' told her off' for not submitting any tax returns during her 6 years in Spain) This was done at the insistance of my mothers solicitor (good advice indeed) She did confirm that no tax was due to be paid, but my mother still had to have the 3% retention enforced due to her not following correct procedures, the accountant assured my mother that these monies (approx 4500 euros) would be returned in full in due course.

All other outstanding bills/taxes etc were fully paid at the time of the sale as my mother was returning to the UK.

 Regards Ian

I can relate exactly to what your mother is going through!  I've been waiting 3 years for our refund!  I am in constant contact with the solicitor I instructed (who acted for us when we sold our house) and he tells me, "it's been a very difficult case", "we are almost there", but I do wonder if we'll ever see the money again (3,300 euros)!  Frustrated is an understatement.

Incidentally, I decided to close my bank account down in Spain because of the charges (like you, this was the only reason I was keeping it open) and I was told that this would cause further delays!  I have now provided my UK bank account details to them.

I am sure if the situation was reversed and we owed them money, it would be a very different matter!

Hi

Hang in their it will be worth it in the end, my mothers took just under 2 years but she got it

Ian

Hello. I appreciate this is an old thread and I have read some of the posts. I just wondered if anything had changed with regards to the 3% non resident retention tax and how long it takes to get it back.

The reason being, my sale goes through on Friday, fingers crossed, I have sold for less than I purchased, so have no capital gains tax to pay. Would this necessarily mean I will get the 3% back much quicker or am I looking at it taking a long time?

Many thanks.

P.S. Maybe they owe me with me losing money on the sale!!!!

"Maybe they owe me with me losing money on the sale!" Wishful thinking!

As far as I know, as long as your application for a rebate is completed and filed correctly, you should receive it within 6 months. Any longer, you should be entitled to interest as well. BUT - any error (real or perceived, I should imagine) and your application will have to be re-submitted, and the clock starts again. So I suggest you use a reliable, trusted professional gestor (good luck with that!)

Hello. I sold my property on Costa del Sol in September 2015 and had the 3% tax withheld, refund applied for by my Spanish Lawyer (who said it could take up to 9 months for the refund to appear) and waited. It is now March 2017 and I am still waiting. My Lawyer says that the refund has been approved but that all Spanish tax offices have been told (by the Government) that they are not to make any tax repayments - presumably in an effort to save money.

Frustrating - yes! Not only because the money would be more useful to me in my bank account but also because I want to move permanently to Spain and need the funds to help me do so.

It strikes me too that the Spanish are acting against European Law by treating "foreigners" differently from Spanish residents in forcing the 3% tax deduction to be made. All EU citizens are supposed to be treated equally in all EU countries but in my experience of doing business in Spain, Germany, France, Austria, Belgium, The Netherlands, Italy, this is not always the case. It seems the UK is the only country in the EU that bends over backwards to make sure all foreigners are taken care of in all respects.

Rant over! I am afraid I have not helped the original problem but I am hoping to persuade my Lawyer to find a number of people waiting for the refund and take a joint action against the Spanish Government.

I shall update this thread when there is anything to report.

Therosy1

We sold our property in Nov 2015, still no refund nearly 2 years later! Any advise would be appreciated.

i had the same problem, i waited 2 1/2 years i paid another solicitor to get it back think i paid  250euro to the new solicitor it turned out the first solicitor had not done the paper work right and was a long time after we had sold puting the claim in, and my file had been moved from a Murcia tax office to tax office in Cartagena, i got it back 6 weeks after my 2nd solicitor had put in the tax return.