A British couple have paved the way for massive rebates after becoming the first successful reclaimants in capital gains tax case against the Spanish government.
They were illegally charged more than twice the amount of Capital Gains Tax than Spanish residents on property they sold in Spain. The decision by the Spanish courts that this contravened European Community Treaty rules paves the way for £140 million tax rebate for British property investors.
It is a huge blow for the Spanish authorities as it also means that other foreign property investors who are European citizens could come forward to reclaim more than £350 million.
Hundreds of Britons who sold a property in Spain between approximately July 2004 and the end of December 2006 will now put their cases before the Spanish Courts to reclaim the money which they were illegally overcharged.
The tax loophole, which was originally exposed by currency exchange brokers HiFX and Spanish lawyers, Costa, Alvarez, Manglano & Associates, came about after British non residents paid a Spanish Non Residents' Income Tax rate of 35% on any capital gains, compared to a rate of 15% paid by Spanish nationals.
This 133% overpayment not only totals a profit somewhere in the region of an estimated £350 million for the Spanish Government, but also contravenes European Community Treaty rules on discrimination and therefore was unduly charged by the Spanish Government.
British people applying for a refund are also set to add on missing interest at a rate of 6% to their reclaims from the date the reclaim is presented, making the total reclaim even higher.
HiFX has launched a website – www.spanishtaxreclaim.co.uk – to help people who think they have a right to reclaim the tax. They are urging anyone else who believes they have been affected to come forward now with their cases. Currently 260 British property investors are in the process of putting their cases before the Spanish High Courts and an additional 340 have registered their details. But thousands more are still to come forward.
'It is fantastic news that the first British couple has been successful and that a total of 600 other British claimants are now in the process of putting their cases forward. Between them they could reclaim £8.4 million plus interest, based on the average reclaim figure at the moment of £14,100,' said Mark Bodega, Director of currency specialists HiFX.
'But it is absolutely vital that anyone who believes they are affected comes forward to reclaim what they have wrongly been overcharged by the Spanish Government,' he added.
Spanish Lawyer Emilio Alvarez said timing is tight under Spanish law so those who have a right to claim the money need to register their case as soon as they can.
'We have successfully put forward to the Spanish Government and won the first British case and we are now able to lead other British people forward and reclaim the money they were wrongly overcharged,' he added.
