Investors to get tax rebate

Hundreds of thousands of foreign investors who have sold property in Spain over the last few years could be owed a tax rebate of around £11,000 each, it has been confirmed by lawyers.

Spain changed its capital gains tax legislation last year, prior to which foreigners who sold property in the country were charged 35% on any capital gain, while Spanish nationals paid 15%.

Now, according to Costa, Alvarez, Manglano & Associates, a firm of Spanish lawyers, the punitive rate for foreign investors was in contravention of the European Community Treaty. The firm has led the way in exposing the illegal move and is planning to take the Spanish Government to the European Court of Justice.

Around 4,500 Britons alone are thought to have been involved in property sales under the old tax regime and the law firm estimates that they could reclaim a collective £50 million.

Residents of other European countries are also to take action and those who are successful will be due interest on the illegally gathered tax.

However, the Spanish authorities will only be liable for claims that are made within four years of a sale. Anyone who sold their home between March 2004 and December 2006 could benefit. Thousands more people who sold their homes in Spain before 2004 may also have lost money, but they have already missed out as claims can only date back over a four-year period.

Spanish Lawyer Emilio Álvarez said: 'Anyone who has sold a Spanish property between March 2004 and December 2006 will have been victim to this inflated capital gains tax rate, which saw non residents scammed into paying inflated CGT bills by as much as 20 per cent. This tax trap is thought to have affected hundreds of thousands of people across Europe and in the UK.

'A change in the law at the start of 2007, which saw the standard Capital Gains Tax for non residents being brought in line – a reduction from 35 per cent to 15 per cent , passed by largely unnoticed. As a result, thousands of people who had previously sold property in Spain are entitled to a 20 per cent rebate, thought to average at £11,000 each, including interest. Due to stringent legal restrictions people who bought at the end of 2003 have already missed out, as claimants must register within four years, but thousands of Brits can still join forces and fight to get the Spanish tax authorities to pay back the money owed,' he added.

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