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Good news for Spanish property owners - 16 March 2009

A British couple has become the first successful claimants in Spain to have a proportion of the Capital Gains Tax repaid to them after it emerged that they and thousands of other British owners of property in Spain were illegally overcharged by the government in Spain.

A tax loophole by which British buyers who were not classed as resident in Spain paid a rate of income tax on their Capital Gains of 35 per cent, compared to the 15 per cent rate paid by Spanish residents. This separate tax rate contravenes European Community Treaty rules and means that up to 10,000 Brits could be in line to reclaim the excess tax they have paid as a result of being charged 133 per cent more tax than Spanish residents.

The case has taken the couple in question over a year to win, but their success in claiming against the Spanish government paves the way for thousands more Brits to claim back their excess tax charges. It is estimated that the average claim size stands at £14,100, but could grow as claimants are also permitted to add on missing interest at a rate of six per cent from the date the reclaim is presented.

Currency exchange brokers HiFX and Spanish lawyers Costa, Alvarez, Manglano & Associates originally exposed the tax loophole, and allowed the claimants to proceed in the courts. They launched the website www.spanishtaxreclaim.co.uk in March 2008 to provide a place for those keen to reclaim their excess tax charges to register their interest. Following the presentation of the case of Mr. and Mrs. Roy to the Spanish courts, it was decided that the facts were so compelling that there was no need for the case to be referred to the European Courts of Justice, as is the usual procedure.

Mark Bodega, Director of HiFX said, “We launched the website www.spanishtaxreclaim.co.uk last year in a bid to help those British people affected by this CGT loophole to put their cases forward before thwe Spanish Government. 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 £8.4million plus interest, based on the average reclaim figure of £14,100, but it is also absolutely vital that anyone who believes they are affected comes forward to reclaim what they have been wrongly overcharged by the Spanish Government. £8.4million is a lot of money but really just a small fraction of what could potentially be reclaimed by Brits, which could be as much as £140million.”

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