#advice spain

[askspain3]

Happy Christmas from CAB Spain

[askspain3]

The latest Tweets from CitizensAdviceBureau (@CitzAdviceSpain). A free information, help and advice service for the Citizens and Residents of Spain. Spain and the Islands

Follow us..

[askspain3]

Citizens Advice Bureau Spain - FREE Information, Help & Advice

The home of Citizens Advice Bureau Spain - www.citizensadvice.org.es - FREE Information, Help and Advice. Articles, News, Directory, Blogs and much more!

[askspain3]

‘EEO’ European Enforcement Order and your Property Abroad

I have to date avoided writing on the subject of the ‘European Enforcement orders’ for various reasons. One being that I did not want to jump onto the ‘scaremongering’ bandwagon. Two, which may seem presumptuous of me but do know that our website is navigated not only by members but by professionals. I was concerned about providing the information to some Spanish entities with information they not as yet been party to. Three, I wanted some first hand information on this important matter which I now have. I have been involved in a process associated with a EEO. Following the case as it unfolds both here in Spain and the UK.

The group lawyers were asked by me to step in when a client from a previous business of mine who lives in the UK, contacted me after being served with an EEO at his home. This client had bought two properties as an investment at the height of the boom only to find that with illegal clauses and the sudden increase in interest rates, was no longer able to meet the mortgage repayments. The courts only sent a few emails communicating that the mortgage was in arrears. The next he knew, was when he was served the said papers at his UK home to appear in court. The Spanish bank via UK lawyers are asking for the courts to embargo his home to pay the debt.

What is an EEO? EC 805/2004 This regulation creates a European enforcement order for claims which are uncontested by debtors. The European enforcement order is a certificate which enables judgments, court settlements and authentic instruments on uncontested claims to be recognised and enforced automatically in another Member State, without any intermediate proceedings.

What does it mean? That anyone in Spain or other EU countries who claim that you are a debtor, can take direct action to have you appear in a court, in any country where you have assets so these can be embargoed to pay the alleged debt.

The process to obtain the EEO are relatively simple. Some banks are already using this authentic instrument to chase those who have not been able to pay a mortgage debt. This does not include those who have been able to procure ‘dacion en pago’ (where the bank has agreed to take the property in lieu of debt) The latter must be signed by the bank and debtor at the notary to be assured that the debt is no longer pending.

You may or have not been negotiating with a bank or other about a debt. You may find that instead that you have a EEO served on you after a search has been made to find your assets. It is important to be aware of these measures as the court date and the notification can arrive without enough warning for you to take the necessary steps to challenge the order.

Our lawyers have enough experience and knowledge of this regulation to be able to act quickly. In the case mentioned above, they have been able to collaborate and provide information to the British lawyers so that the case has been stayed in the courts in order to have time to take the necessary actions in Spain.

Those who are finding problems paying their mortgages, do not let the proceedings reach this extreme, contact our lawyers for any options you may have. There are actions that can be taken that you may not have contemplated. Due to abusive clauses in many mortgage contracts, the probabilities of having a property repossessed have been lessened.

Contact Juan Espejo for more information on:

[email protected]

[askspain3]

Inheritance Tax Benefits for Non-residents and Expats in Spain

The Kingdom of Spain was condemned by the Court of Justice of the European Communities in its Judgment of 3 September 2014, case C-127/12, because the Spanish regulation of the Inheritance and Gift Tax (IGT) does not comply with the principle of free movement of capitals within the EU. In its present form, this regulation has resulted in a quite clear case of discrimination for non-residents that arises from the application of the State-level legislation to international inheritance cases, while IGT benefits of the Autonomous Communities are applied only to purely internal cases.

 Now this state of affairs is going to change. First, as a result of the ECJ Judgment in case C-127/12, if you have paid IGT in Spain in the last four years, you can claim for a tax refund of the excess, on the ground that the non-application of the Autonomous Communities IGT benefits was against EU law. Second, IGT reform already enacted by the Spanish Parliament on 20 November 2014 (in force on 1 January 2015), gives to non-residents the right to the application of the existing tax benefits under the laws of the different Autonomous Communities.

 Autonomous Communities IGT benefits may result in a great reduction of the amount of taxes to be paid, especially for surviving spouses and descendants. Depending on the Autonomous Community and the degree of relationship between the beneficiaries and the deceased person, IGT can be reduced up to 99% in someAutonomous Communities. The Autonomous Communities of Madrid, Balearic Islands, Cantabria, Castilla-La Mancha, La Rioja, or Murcia, are in the group where IGT benefits reach a higher percentage. On the contrary, Andalucia, or Catalonia, are in the opposite group.

 A very clear group of beneficiaries of IGT reform is non-residents who might inherit property in Spain from tax residents, but a second group of beneficiaries are all those (non-residents and residents) inheriting properties located in Spain from a deceased person with last residence in another country of the EU. In addition, a third category of beneficiaries of IGT reform, would be tax residents inheriting properties located in another country of the EU from a deceased person with last residence also in another country of the EU.

Therefore, good news with regard to future IGT Taxes in Spain for both non-residents and expats, but a word of caution should be added in the case of Andalucia because this Autonomous Community is among those offering less IGT benefits.

  For further information, please contact Juan Espejo at: [email protected]

[askspain3]

Taxman Has No Boundaries

The Spanish Tax Agency has sent out letters to owners of properties in over a 1.000 towns in Spain, informing them of the start of proceedings (´expediente´), regarding non-declared alterations to the construction of their property. Could either be an amplification of the square meters, or a reform that changed the registered use of the property (former shed or stable converted into living quarters for example).

Cost to pay for the catastral ´expediente´: 60 euros.

Stemming from an extraordinary ´catastral regularisation´ that was approved in 2013 and will last till 2016. In this period, over 3 million households will receive this communication from Hacienda.

Aim of this regularisation is of course to get more revenue on IBI-bills, as more square meters means the registration of a higher catastral value, and thus higher IBI income for town halls. Once the proceedings have been finalised, the owner of the property involved can not only expect higher IBI bills in the years to come, but will also be obliged to pay the difference over up to 4 previous years, plus interest.

Higher catastral value also means more IRPF to pay for non-residents or 2nd home owners and any future Plusvalia when the property is sold.

How is Hacienda going to organise this?

They will make use of aerial photographs and will check records of building licences from Town Halls to verify whether a building licence has been followed-up by a request to add info to catastral registration or not. Should have been done at Town Hall, within 2 months after completion of the building works involved, so that they could have communicated the change with the Catastro. In this case, it is irrelevant whether the owner did not report completion of the works, or that the relevant Town Hall failed to communicate the change to the Catastral Register.

Majority of cases will deal with swimming pools, sheds, guest houses, balconies or terraces that have been closed-in, garages, amplifications on ground floor. Plus those properties that have been built with intentional fraud, on non-urban terrain.

This regularisation, that affects all communities except Basque Country and Navarra, started in 2013 with just 176 towns, adding another 1000 in 2014. By sending out over 1.5 million letters this year alone, the original catastro-mapping that only exists since the eighties and was not very complete to begin with, should give a much more accurate representation of reality once the ´expedientes´ have been processed.

If you have not received a notification yet, this does not mean that you will not in the near future. Towns with big urbanisations with lots of chalets and neat rows of houses have been approached first (as more visible and easy to detect discrepancies) as well as those in coastal areas like Oropesa, Fuengirola, Benalmádena, Benidorm, Calpe or Denia.

Big cities, with large numbers of voters, will be left for last… especially those with municipal elections coming up next year… only Alicante, Murcia and Salamanca are on the list so far.

No figures have been published as to the possible revenues that will come from this regularisation, but the cost of this exercise superceeds 124 million euros, so they are assumed to amount to a whole lot more than that.

If you want to check if your town is on ´the list´ you can do so by entering data on the website of the Catastro, link here, scroll down to end of page.

http://www.catastro.meh.es/eng/regularizacion_sec.asp

[askspain3]

Automatic exchange of information within the EU

It is often said that when America sneezes the world catches a cold, well recent US legislation has Europe reaching for the Kleenex. After committing to the American tax evasion legislation FATCA (Foreign Account Tax Compliance Act) the EU began revising its current savings directive and has introduced one of the most comprehensive systems of automatic information exchange in the world.

Since 2005 the EU Savings Tax Directive has ensured that member states collect data on the savings of non-resident individuals, and automatically provide this data to the tax authorities where those individuals reside.

From January 2015 this will be extended to include income from employment, directors’ fees, life insurance,pensions and property. Furthermore, agreements in 2014 have paved the way for income from dividends, capital gains and all other forms of financial income and account balances to be added to the list of categories subject to the automatic information exchange within the EU by January 2017.

Since 2012 the Spanish tax authority has required residents to complete and submit the Modelo 720. This requires each tax resident to report foreign assets in various categories including cash deposits, investments and real estate where the total value in each category is over €50,000.

As law abiding citizens this should not be a worry. However, it is important to ensure that your current tax reporting is up to date, your form 720 matches the information that the Spanish tax authority will now receive under the latest automatic exchange of information, you are fully aware of your legal country of residence for taxation purposes and that your savings, investments and pensions are as tax efficient as possible and compliant with your country of residence.

The idea of offshore tax exiles is a thing of the past as all income and capital will be reported to the tax authority of the country that you live in. Far too often I meet clients who believe that they are under the radar and therefore have buried their heads in the sand despite all of the information about the increased activity of the Spanish tax authorities.

If you are based in Spain but unsure of your tax residency, or would like to confirm that your pension, savings and investments are as tax efficient as possible then get in touch for a no obligation review of your current financial situation.

Email: [email protected]

[askspain3]