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24 Jul 2015 10:20 by floella Star rating in SE Spain. 772 posts Send private message

A non tax resident sells a property and 3% is automatically retained however there is a possibly 21% more to pay on an assumed profit and this, according to  what I have read, isn't calculated and collected for about 3 months. 

If this is true then isn't it possible that those who dont want to pay will disappear. If so through which route will the hacienda try to find them.





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24 Jul 2015 12:39 by johnzx Star rating in Spain. 5239 posts Send private message

The 3%  ( originally it was 5%) is of the purchase  price.   The CGT is on the increased value between buying and selling price.  If the seller disappears, certainly previously I have never heard of anyone being chased by Hacienda to say UK.  But I think they could.  Hacienda and HMRC freely communicate and exchange info. regularly. In the case of a UK national tracing them would be simple.





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24 Jul 2015 13:06 by floella Star rating in SE Spain. 772 posts Send private message

Thx John. I was amazed when I read that the difference between the cat.value and sale value, less legit expenditure, wasn't calculated before signing over at notary so had to ask because, although I realise Spain is disorganised, this is ridiculous.

Many folk say..." They have to find me first" and as I have read lo who sell up dont bother, apparently, to claim back their 3% so as to stay under the radar. There is no way HMRC would know unless it was on the UK tax form and as it seems everyone and their uncle is trying to fiddle the system, that won't happen.

 





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24 Jul 2015 15:16 by johnzx Star rating in Spain. 5239 posts Send private message

It was to this Q, "If so through which route will the hacienda try to find them." That I said, "Hacienda and HMRC freely communicate and exchange info. regularly. In the case of a UK national tracing them would be simple. "

Unless very devious, we all leave paper trails which can be easily followed.





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25 Jul 2015 13:02 by Roberto Star rating in Torremolinos. 4493 posts Send private message

Roberto´s avatar

"the difference between the cat.value and sale value, less legit expenditure"

What's that? CGT is charged on the difference between the purchase price and the sale price (declared). Plus Valia is charged on a calculation based on the valor catastral. Looks like you're combining two seperate taxes to come up with a new one - God forbid!

And it's not HMRC who need to know (via a UK tax return) about the sale, as this is a Spanish tax we're talking about. John's point is that Hacienda (Spain) can contact the tax authority of the seller's country of origin to try and track them down. HMRC will cooperate in such circumstances.



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25 Jul 2015 15:40 by floella Star rating in SE Spain. 772 posts Send private message

I am fully aware of how CGT is calculated guys, thx.

So are you saying Roberto that estate agents, averaging 12K euros and lawyers/ notary fees plus any bills for recent improvements I.e " legit bills " are not permitted to be deducted from assumed profit. Find that hard to believe.

However this has nothing to do with my opening posting which was querying IF it were true that the hacienda allowed non tax residents to remove their money from Spain before any assumed profit had been assessed allowing those who want to " disappear" time to do so.

This is probably the reason many don't request their 3% returned because the last thing one is going to do is to have the hacienda bring to the notice of HMRC they haven't declared money from sale of a 2nd home on their tax forms.

 

 

 

 

 

 





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25 Jul 2015 16:59 by johnzx Star rating in Spain. 5239 posts Send private message

This is probably the reason many don't request their 3% returned because the last thing one is going to do is to have the hacienda bring to the notice of HMRC they haven't declared money from sale of a 2nd home on their tax forms.

Sorry Floella but I think you seriously under estimate Hacienda.   Not claiming the retention does not mean Hacienda will not know.   All property sales are registered through the property registries.   

That they reduced the retention from 5% to 3% probably means that they do not lose tax over all. 

If  a large sum was involved,  as Roberto and I have been pointing out, Hacienda could very easily trace the debtors.  Even some finance companies/banks have followed people to UK and successfully claimed against property and assets they had there.

 

PS     I do not think Roberto was saying the costs of legitimate work on properties, properly registered and on which IVA has been paid, along with certain other expenses (legal and selling costs I believe) cannot be used to off set CGT.  That you said, " ......   was amazed when I read that the difference between the cat.value and sale value" confused the issue. 

 


This message was last edited by johnzx on 25/07/2015.



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25 Jul 2015 20:00 by Roberto Star rating in Torremolinos. 4493 posts Send private message

Roberto´s avatar

"So are you saying Roberto that estate agents, averaging 12K euros and lawyers/ notary fees plus any bills for recent improvements I.e " legit bills " are not permitted to be deducted from assumed profit."

No, I didn't say anything of the sort. I never mentioned deductable expenditure at all. Where are you getting this from? As John clearly understood, all I said was that your calculation of "the difference between the cat.value and sale value" has no relevance to CGT (or anything else that I'm aware of). 

The 3% retention is/was intended to cover any & all CGT liability, leaving the (non-res) seller to reclaim any overpaid. For example, if you bought for 180,000 and sold for 200,000 - the 3% of the sale price would cover the tax payable on the 20k (less expenses) gain. In this particular example, the difference would probably be neglible, and many people wouldn't bother reclaiming the difference because it's too much hassle. The extra tax collected by Hacienda this way probably compensated for the cases where more tax was due, and for that reason Hacienda didn't bother chasing them. 

These days very few sellers are actually realising a gain anyway, but Hacienda still take 3% from the sale. Again, the onus is on the seller to reclaim any overpaid, and there probably aren't too many cases where any more tax is actually due, making the question of Hacienda chasing sellers abroad a mute one. But if they had to/wanted to, as John says, they would, and very easily. 

As for your last statement: "...many don't request their 3% returned because the last thing one is going to do is to have the hacienda bring to the notice of HMRC they haven't declared money from sale of a 2nd home ", I really don't know about UK tax on 2nd home sales, but if a seller is eligible to reclaim the 3% it must be because they made no capital gain on the sale. So why would HMRC care?



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"Politicians and diapers must be changed often, and for the same reason"

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25 Jul 2015 23:25 by Team GB Star rating. 1245 posts Send private message

Team GB´s avatar

Sorry to butt in

Hacienda will also check that IBI and Basura payments are up to date before returning the 3%

And to answer the OP. yes a seller does have time to remove thier proceeds from Spain, they are given a euro denominated cheque at the notary which can be deposited anywhere, many down this part of the world use Gibraltar.

As far as I know no CGT computation is requied before receiving the notary cheque

 


This message was last edited by Team GB on 25/07/2015.

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26 Jul 2015 10:35 by floella Star rating in SE Spain. 772 posts Send private message

Thank goodness you did TeamGB. 

Was beginning to wonder if I was from another planet because although asking the simplest of questions only you answered it without trying to belittle what I was saying.

Cheers

 

 

 





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26 Jul 2015 13:19 by Roberto Star rating in Torremolinos. 4493 posts Send private message

Roberto´s avatar

OK, in response to your original "simple" question, yes, like many taxes, this one is calculated and collected retropectively and the onus is on the taxpayer. As with any tax, if you try to avoid it, the authorities have ways and means to chase you. As both John and I stated, Hacienda can and will communicate with the tax authorities in the taxpayer's country of origin if they so desire. As far as I know, the Plus Valia due is not deducted from the sale proceeds at the notary either. Again, it's up to the seller to pay this voluntarily within 30 days. If they choose not to, there's nothing to stop them - but that doesn't mean they'll necessarily get away with it.

As for "belittling" you, we were merely pointing out that your formula for calculating CGT appeared to be flawed. When you post on a forum seeking the opinions of others who have some knowledge on a particular subject, to  then say that you know best seems somewhat arrogant. 



_______________________

 

"Politicians and diapers must be changed often, and for the same reason"

Mark Twain

 

 

 




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26 Jul 2015 17:30 by floella Star rating in SE Spain. 772 posts Send private message

"As for "belittling" you, we were merely pointing out that your formula for calculating CGT appeared to be flawed. When you post on a forum seeking the opinions of others who have some knowledge on a particular subject, to  then say that you know best seems somewhat arrogant"..

...actually, being pedantic, Roberto it's the declared price not the price at which property was purchased......BIG difference.

My initially post required a simple " yes or no" answer. Instead of an answer I was treated to a diatribe of how clever you ( are you twins) ? were.  Now I am the one accused of arrogance...... Don't know how you guys live with yourselves !!!... Lol

My reasoning behind my initial posting this was to highlight how Spain is probably losing millions through this lax method of official accounting . Even though all intelligent people are aware that within the UK, possibly the World now, there is a free exchange of data, the cost involved sometimes out weigh the required result. That is what people count on.

 

 





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26 Jul 2015 18:54 by Roberto Star rating in Torremolinos. 4493 posts Send private message

Roberto´s avatar
Actually, being pedantic, this is what I said: " CGT is charged on the difference between the purchase price and the sale price (declared). " Notice the word declared? There is of course a big difference between catastral value and sale price, declared or otherwise. I suggest in future when you post you make it clear that you just require people to agree with you rather than engage in any form of discussion. Answer: yes

_______________________

 

"Politicians and diapers must be changed often, and for the same reason"

Mark Twain

 

 

 




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27 Jul 2015 14:06 by johnzx Star rating in Spain. 5239 posts Send private message

Floella,  The declared value is always the sale/purchase price, unless of course one chooses to commit a crime, by lying to evade some of the legal taxes and other charges. Something  I am sure you would not do.

Sorry, if like Roberto you may have thought I too was being pedantic.  We were just saying it how it is, and hopefully that will have avoided readers, who are not experienced in this area,  from being misled by incorrect terminology..

 


This message was last edited by johnzx on 27/07/2015.



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